Guest Post: The U.S. Drought Is Hitting Harder Than Most Realize

Tyler Durden's picture

Submitted by Chris Martenson of Peak Prosperity,


This is an important update on the U.S. drought of 2012, the combined record-setting July land temperatures, and their impact on food prices, water availability, energy, and even U.S. GDP. 

Even though the mainstream media seems to have lost some interest in the drought, we should keep it front and center in our minds, as it has already led to sharply higher grain prices, increased gasoline costs (via the pass-through of higher ethanol costs), impeded oil and gas drilling activity in some areas (due to a lack of water), caused the shutdown of a few operating electricity plants, temporarily reduced red meat prices (but will also make them climb sharply later) as cattle are dumped in response to feed- and pasture-management concerns, and blocked and/or reduced shipping on the Mississippi River.  All this and there's also a strong chance that today's drought will negatively impact next year's Winter wheat harvest, unless a lot of rain starts falling soon. 

The good news from Hurricane Isaac is that he's traveling on a perfect path to deliver relief to one of the most heavily drought-impacted areas:

There are steps that everyone can and should take to become more food- and fuel-resilient in case the drought persists – as some experts think is quite possible – into next year and perhaps a few more. We'll get to those steps shortly.

Further, there will be a definite impact to U.S. GDP, which could add to pressures (excuses?) that the Fed may use to justify additional quantitative easing (QE) measures (otherwise known as 'printing more money'). 

U.S. Drought Intensifies

The drought in the U.S. has intensified in the recent weeks, even though it has somewhat dropped from the front pages of mainstream media, possibly because the story is stale or possibly because it's just too serious to dwell on for long:

Extreme drought in the U.S. intensifies

Aug 17, 2012

The drought in the United States is continuing to intensify, according to the National Oceanic and Atmospheric Administration (NOAA).


The latest Drought Monitor says 61 percent of the contiguous United States faces moderate or worse drought conditions this week.


Nearly 30 percent is experiencing extreme to exceptional drought, exceptional being the most severe category.


Officials say the amount of land that's currently affected across the U.S. is larger than the entire state of California.

In this next image, it is notable that the areas of the highest drought classification -- 'exceptional' -- have dramatically expanded from the prior week (the August 7, 2012 report).


Much of the drought is centered squarely over the U.S. 'breadbasket' region and has really dented this year's harvests in a big way.

Crop Losses

Certainly the number one story around the U.S. drought centers on its impact on grain production, specifically corn and soybeans.  In a minute we'll discuss the other impacts, but we'll start with the one that has the greatest potential to cause both suffering and strife over the coming months (and possibly years), especially for those on limited budgets.   

In 2011, the U.S. reaped a corn harvest of some 314 million tons.  In 2012, the USDA has estimated a harvest of 274 million tons – a shortfall of 40 million tons – despite record acreage being planted.

While the USDA has been steadily reducing their crop estimates, practically with every passing week, it seems likely that the USDA remains behind the curve today, as it has been every step of the way. A different source for information comes from the Pro Farmer Midwest Crops Tour, which is coming in slightly under the current USDA estimates:

Crop Tour Points to Sharper Drought Impact on Soy, Corn

Aug 21, 2012

Initial reports from the closely watched Pro Farmer Midwest Crop Tour suggested more crop damage than expected from the drought, raising the potential for diminished soybean production this fall and sending futures sharply higher.


The disappointing crop reports from scouts touring fields on the Pro Farmer crop tour in states such as Ohio and South Dakota make it hard to believe soybean yields will reach current U.S. government crop projections, said Don Roose, president of advisory and brokerage firm U.S. Commodities in West Des Moines, Iowa.


The market is in the "watch and worry" mode on all fronts as shrinking crop forecasts will further tighten supplies already projected to dwindle to precariously tight levels in 2013, Mr. Roose said.


On the annual Pro Farmer tour, analysts and investors walk corn and soybean fields in seven Midwestern states over four days to assess prospects prior to the fall harvest. Pro Farmer is an agricultural advisory firm. The Pro Farmer tour, which wraps up Thursday, reported diminished potential for the soybean crop in both Ohio and South Dakota.


The crop tour doesn't estimate soybean yields, but it reported an average 584.9 pods per 3-foot-by-3-foot square area in South Dakota, down 47% from a year ago. In Ohio, scouts reported soybean counts at an average of 1,033.72 pods per 3-foot-by-3-foot square area, down from 1,253.2 pods a year ago.


Soybeans entered their critical growing phases in recent weeks, and the crop has benefited in some regions from recent rains across the eastern Farm Belt.


Meanwhile, scouts with the Pro Farmer Midwest Crop Tour on Monday reported an average estimated corn yield in Ohio of 110.5 bushels per acre, down from the tour's estimate of 156.3 bushels a year ago. In South Dakota, tour scouts reported an average yield estimate of just 74.3 bushels per acre, down from 141.1 bushels a year ago.


While commodities traders and agronomists have braced for weeks for the prospect of a crop decimated by drought, the estimates were lower than many had expected.

The summary here is that the Pro Farmer Tour is reporting crop yields to be 2% - 3% lower than current USDA forecasts, which is a big deal when it comes to food.  We're talking a few tens-of-millions-of-bushels' difference.

The somewhat sour note in this unfolding drama is the fact that 40% of the nation's corn crop goes to ethanol producers, which means that food will be burned in the nation's auto fleet instead of helping to keep prices down for consumers and animal feed.  Another 40% goes to animal feed (chicken, cattle, hogs, etc.), and the remaining balance goes to direct human consumption. 

However, the ethanol mandate is a congressional requirement for our fuel blenders, so they do not have a choice in the matter.  It would literally take an act of Congress to even temporarily suspend the ethanol requirement – and in an election year, that's just not going to happen, given the powerful constituencies invested in preserving that mandate.

Of course, higher input costs will ripple through the entire chain, so perhaps Bernanke will get the inflation he seeks, although it won't be the one he wants.  The inflation he wants is simple monetary-driven inflation.  The inflation he will get is nothing more than a supply/demand mismatch.

Still, the USDA has a handy calculation for estimating the future impacts:

U.S.’s inferior corn crop has supply-chain ramifications

Aug 13. 2012

The USDA has provided considerable information about how the drought’s effects were likely to percolate through the economy. Because of a smaller-than-expected corn crop, the USDA said it can make the general prediction that “we will see impacts within two months for beef, pork, poultry and dairy (especially fluid milk). The full effects of the increase in corn prices for packaged and processed foods (cereal, corn flour, etc.) will likely take 10-12 months to move through to retail food prices.”


The USDA has a formula for predicting changes in the rate of inflation caused by gains in prices at the commodity level: if the farm price of corn rises 50%, retail food prices rise by 0.5% to 1% as measured by the Consumer Price Index (CPI).


The price of September corn futures from mid-June until early August advanced 55%, meeting the USDA’s criterion for a measurable increase in the CPI Lapp presented a more extreme scenario than the USDA.  He predicted that the damage to the 2012 corn crop will translate into a food inflation rate of 4% to 5% in 2013. In his view, the dollar cost of the drought already was $30 billion, which accrued rapidly over the summer.


“This is a cost that somebody has to bear,” Lapp said. “Some price hikes are fairly quick and others take a while.”


He said high feed costs will have to be absorbed by producers, who will likely liquidate part of their cattle and swine herds and poultry populations. At the retail level, the drought’s effects will translate into narrower margins — and expected higher prices — for processed food and soft drink manufacturers among others.


Lapp offered his opinion that legislation that has effectively required 40% of the corn crop be used in making biofuels has made everything worse.


“The situation has been aided and abetted in a negative way by the biofuels mandates,” he said. “Shame on us for having mandated so much to corn ethanol” without creating contingencies for a bad crop year. 

Because corn is the base unit for so many things (especially in the form of high-fructose corn sweetener), and because it's a primary feed component for finishing cattle and raising chickens and hogs, it tends to have a pretty decent impact on food prices.

However, it takes time for those price hikes to work through the system. So it will not be until 2013 sometime that we really begin to feel it in the U.S.  And for the rest of the world that lives more directly on grains?  They're not as lucky.  The price hikes hit them almost immediately.

It looks like the harvest in Russia will be below expectations as well:

Russia harvest forecasts cut as drought hits crop in east

Aug 20, 2012

(Reuters) - Two leading Russian agricultural analysts cut their forecasts for Russia's grain harvest on Monday after harvest data from two drought-stricken eastern growing regions reduced the outlook for the overall crop.


SovEcon narrowed their grain forecast to 71-72.5 million metric tonnes (...)


The government's official grain harvest forecast is 75-80 million tonnes, of which 45 million tonnes could be wheat. The government has put this season's exportable surplus at 10-12 million tonnes, a level seen by traders as an informal cap on exports.


The government has tried to reassure markets there will be no repeat of August 2010, when Russia's government shocked markets with a snap decision to ban grain exports when the scale of losses from major drought became clear.


The government has indicated that protective tariffs could be an option, though only after the end of the calendar year.


But traders widely expect limits to be imposed in some form, perhaps as early as November, after heavy exports in the early months of the season showed Russia could hit the 10-12 million tonne mark sooner than January.

Russia is still officially projecting 75-80 million tonnes but may only get 71 tonnes.  If the projected exportable surplus is 10-12 million tonnes, but Russia actually harvests 9 million tonnes less than their hoped-for projection, then its exports will have to decrease to plug that gap.

Here's the kicker: Russia has already exported a good deal of that amount. That is, the prospect of another Russian export ban this year is quite realistic. If we get one, then we can expect a repeat of the turmoil in the grain markets that we saw in 2010.

But there's another much more fundamental reason why we can expect higher prices going forward.

Need for Even Higher Prices

The good news is that there's still plenty of supply to carry us through to the next harvest.  However, demand is going to have to go down some, and the way we accomplish that is through the price mechanism. 

Right now, physical grain traders are saying that prices are too low and that unless they rise, we're going to run out of grain before the next harvest.  Obviously, that's not truly going to happen – increasing scarcity will cause prices to rise until current demand levels are reduced.

Fall in corn price disguises real picture

Aug 20, 2012

Corn prices surged this month to an all-time high of $8.4375 a bushel on the back of the worst drought in the US in nearly half a century. But prices have since fallen roughly 5 per cent. The impression is the rally has run out of steam.


This is far from the real picture.  Prices need to rise again – probably setting all-time highs – to dampen consumption that is running ahead of supply.


If demand does not slow down, silos will be all but empty before the next harvest arrives in late 2013.


On paper, the balance sheet for corn supply and demand published by the US Department of Agriculture seems good enough. But in practice, the numbers look a bit shaky. The agency, whose figures are closely watched by the market, first estimates supply and, after that, adjusts the demand data to maintain a minimum level of inventories.


This time the USDA is asking for monumental rationing on the demand side. For example, US corn feed and export demand will need to drop to their lowest levels in nearly 20 years.


The USDA is also forecasting lower ethanol production – and thus corn demand. Ethanol output has fallen, but not nearly enough. Worse, the rise in wholesale petrol prices back above $3 a gallon means that ethanol producers are profitable again, even when paying record corn prices.


Corn is now trading just above $8 a bushel – but traders in the physical market say that prices need to rise to $9-$10 to force demand down enough to meet the consumption levels anticipated by the USDA.


The retreat in corn prices over the past couple of weeks has given inflation watchers a false sense of security. The market should not relax, however. More food inflation is just waiting around the corner.

The idea here is that the cash market will have to lead the futures market higher, an odd situation because it is usually the other way around.  With so many hedge funds now playing in the commodity space, one explanation is that they are simply playing paper games with each other – those playing the short side will get a lesson in the importance of keeping one eye on reality.

A truly shocking event would be if the U.S. ever gets to the position of limiting exports of corn or even soybeans.  That is a very unlikely proposition to consider, but if the silos get drained because we have dysfunctional markets that saw fit to keep prices bizarrely low while our free trade agreements allow the too-low grains to be exported, threatening domestic supplies, then that possibility notches up a little bit.

Dairy, Meat, and Even Higher Gasoline Costs

While it is clear that basic grain prices are heading higher, the knock-on effects into other soft commodities are a little less clear, but are definitely still important to consider. 

The most obvious of these are higher grain feed costs that will hit both livestock and dairy producers especially hard:

The withering crops are translating into higher feed costs for livestock producers. "This is different than anything I've ever experienced," said Kent Pruismann, who raises cattle and hogs on a farm in Sioux County, Iowa, and saw his costs for feed jump by 20% in July.


The higher corn, soybean and wheat prices will reach food makers, exporters and eventually consumers. Drivers already have seen fuel costs climb because of higher prices for ethanol, a corn-based fuel that is blended into gas. The drought also has reignited the debate over whether ethanol production is a drain on global food supplies.


Some are already turning to, shall we say, other means to keep their herds fed:

Kentucky cows eat candy instead of corn

Aug 14, 2012

LOUISVILLE, KY (WAVE) – When you think of cattle feed, you probably don't think of candy, but due to the drought that's exactly what one farmer chose to do.


At Mayfield's United Livestock in Western Kentucky, owner Joseph Watson feeds his herd second hand candy.


Watson started feeding his cattle the candy because corn prices were so high.


He mixes the candy with an ethanol by-product and a mineral nutrient. He monitors the daily intake and said the cows have had no real health issues.

Yes, the higher grain costs are going to hit everything from big cattle feedlot operations to my own two-bags-a-month chicken-feed usage.

However, it will be the cost of and even lack of hay that will really create some big problems later this year.  The drought not only harmed the range and pasture lands, forcing greater use of stored hay to offset the decline in forage, but it put a huge crimp in this year's hay production:

Drought Cripples Hay Feed Industry

Aug 19, 2012

Widespread drought has scorched much of the pastureland and hay fields needed to sustain cattle herds in the U.S., forcing many ranchers to find feed alternatives or sell their animals early into what has become a soft beef market.


The shortage has led to higher hay prices, with some farmers saying they have to pay two to three times last year's rates.


Despite farmers setting aside more land to grow hay this year, they are still producing a lot less because of the drought, according to a recent Department of Agriculture estimate.


The harvest of alfalfa, generally considered to make the best hay because of its high nutrient levels, is forecast to be the worst since 1953, according to the USDA.


Pasture grass and hay are what most cattle are fed for the roughly two years they live before being slaughtered, but the drought is threatening to starve the animals.


Illinois rancher Steve Foglesong said that most years he could graze his cattle from spring through November on verdant fields that are now brown, buying them hay bales only in the winter. This year, he and his animals have their eyes on withered corn plants.


"It may not have any ears on it, but it makes pretty good cow feed," he said.


John Erwin, who owns 20 acres of land in Shelbyville, Ill., said he is having trouble growing alfalfa hay, but demand is strong for what he can produce.


"I'm getting calls from ranchers as far away as Wyoming," Mr. Erwin said. "They're desperate."


He said he has been offered $250 a ton for his hay, nearly double the $130 a ton in a non-drought year. His fields didn't produce any hay in July.

A doubling of hay prices is obviously going to create quite a bit of economic hardship for many farming operations, which tend to be marginal profit businesses even when everything is going well.

Here's another view on the hay situation:

I spoke with Caldwell [of Indiana horse rescue] and a number of other horse-rescue organizations around the country by telephone this week. The relentlessly hot dry weather, amplified in many areas by wildfire, has been devastating to farmers, ranchers and other horse owners.


“Everybody is using their winter hay now. The pastures are destroyed and they probably won’t recover before winter,” said Caldwell. “The price of hay has doubled, and the availability is down by 75 percent.”


Caldwell is somewhat sanguine about his own lot, but not optimistic about what lies ahead.


“Today the problem is not nearly as bad as it’s going to be,” he told me. “It’s terribly bad today, but it is going to get a lot worse.”


The drought has done some very serious harm to the nation's hay supply that goes beyond the economics of higher hay costs.  First there's the supply of the hay, and then there's the relatively poor quality of hay that was taken from non-irrigated, drought-stricken fields.  All in all, it's not a good situation. 

To add a bit more difficulty into the situation, it turns out that drought-stricken silage and even the corn itself can be harmful to animals:

Drought makes corn dangerous for livestock

Aug 16, 2012

COLUMBIA, MISSOURI, U.S.  — Tim Evans, an associate professor of veterinary pathobiology and toxicology section head at the Veterinary Medical Diagnostic Laboratory at the University of Missouri College of Veterinary Medicine, Columbia, Missouri, U.S., warns U.S. farmers and livestock producers that drought-damaged corn plants can pose a risk to animal health.

“During severe drought conditions, corn plants, especially those heavily fertilized with nitrogen, can accumulate a chemical called ‘nitrate’,” Evans said.


“This chemical can be very harmful to animals, especially cattle, if they eat corn plants or other vegetation containing too much nitrate. Eating plants with too much nitrate can cause damage to red blood cells, resulting in lethargy, miscarriage, and even sudden death.”


Evans says that in normal conditions, corn crops typically absorb nitrate into only the lower 12-18 inches of the stalk, which does not have to be fed to animals. However, during severe drought conditions, high concentrations of nitrate can accumulate in the upper portions of the stalk, which cattle and other livestock often eat.


Evans also says that many naturally growing plants and weeds in grazing pastures can accumulate nitrate during drought conditions, as well. These plants include many types of grasses and some weeds, which animals might be forced to eat because of limited pasture or hay available as forage for livestock. 

The key here is that nitrates are safe below 2,000 ppm but toxic above 15,000 ppm, and the levels found in the stalks and how high it travels are a function of whether enough rain fell to allow the plant to take it up.  Much of the corn crop was so desiccated that the plants could not even manage to draw up this nutrient, and therefore it is safe as a feed product.

While it's hard to get a read on at this early stage, there are enough warning signs here pointing to much, much higher grain, food, and meat prices in the future.  The worry is whether there will even be enough feed to sustain the animal populations through the Winter and Spring. Given the damage to the harvestable corn, a lot of it is going to be turned into silage

Many ranchers and farmers are faced with a horrible choice here.  Saving their herds may be economically unsound or even impossible where hay and safe silage are not available, and so they are selling their herds, one of the most heart-wrenching decisions anyone could have to make.

So many are doing this that recently the price for cattle has dropped, as everyone is selling into an increasingly soft market.  My advice is to enjoy these low meat prices while they last, because the next stage of this story involves much higher meat prices.

The problem with understanding just how bad the hay situation might (or might not) be is that there are no national statistics collected that could tell us whether or not there's even enough hay available to sustain the current commercial and recreational livestock populations. 

The Importance of Positioning Yourself

So, with all of these repercussions building during the current drought – to which there's yet no end in sight – what can you do today to minimize their impact on your budget and lifestyle?

Part II: Positioning for the Drought's Aftermath looks at the likeliest outcomes in food prices, food availability, energy prices, and macroeconomic consequences (of which there will no doubt be many from this drought). We have a national food distribution system that runs significantly on a just-in-time basis, which leaves it vulnerable to price and inventory shocks when there are supply disruptions. The reduced water levels caused by the drought are handicapping electrical power generation in growing regions in the country; electrical thermal plants are the number one biggest user of water in the U.S.  The global financial markets are similarly tenuous these days, as resources are already taxed in trying to stimulate the moribund U.S. economy and dig Europe out of its massive credit woes.

This is one of those moments where taking simple, prudent steps now can have an outsized effect on preserving your quality of life. 

Click here to read Part II of this report (free executive summary; paid enrollment required for full access).

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SheepDog-One's picture

Just get in there and print up some water and grain Fed magicians!

no life's picture

Some of us experienced a drought much longer than that one.. it sucks

dwdollar's picture

Nothing some printing can't fix!

jmeyer's picture

The US drought monitor chart is WAAAY OFF for the Atlanta area. We are no where near a drought and have had more rain this year than I can remember.

sbenard's picture

The chart is also waaay off where I live in the area surrounding the Great Salt Lake. It shows us with normal rainfall, but we haven't had 30 minutes of rainfall since early May. We're bone dry and have been since then. It's BAD!

UGrev's picture

wait, what? are you telling me that we have inaccurate data? can't be... not possible.. 

ParkAveFlasher's picture

So, which "ethanol byproduct" are those cattle washing down their Smarties and SweetTarts with, vodka? 

Overfed's picture

Ooh. That's gonna be even better than Kobe beef! :-)

Cthonic's picture

Distillers grains, stillage leftovers from dry milling and fermentation, can be fed to cattle. Also the rest of the plant (stover) can be grazed or collected and stored as fodder.

ParkAveFlasher's picture

Thanks.  Sounds like one potent bovine fart-up!

Cthonic's picture

Better than some of the other stuff that's been fed to cows, like chicken litter and feathers.

sbenard's picture

And what happens if a dought in 2012 continues in 2013?

We change the word "drought" to the word FAMINE!

blunderdog's picture

I dunno much about farmin' but maybe they could try waterin' them crops with Gatorade.  It's got electrolytes.

walküre's picture

Folks, this farmer has been saying here for over a year now THEY CANNOT CHEAT YIELD

However, it will be the cost of and even lack of hay that will really create some big problems later this year.  The drought not only harmed the range and pasture lands, forcing greater use of stored hay to offset the decline in forage, but it put a huge crimp in this year's hay production:

The damage is already done. There is no turning back. We gave it all up for a few cheap trinkets and thingy majjiggies since 2008. We were duped and kept quiet while the vermin bankers have offloaded their crap balance sheets and passed their calculated losses to the tax payer. The taxpayers balance sheet is horrific and the bankers are clean, well situated and living high on the hog.

Don't tell me Obama or Romney are going to make a difference. They're bought and paid for by the banker cabal.

We need a junta to clean out the rot and restart the system or we shall all perish, die of starvation, poverty and watching the banking oligarchy rape our women and children until they're blind.

LawsofPhysics's picture

So has this farmer.  Physical yields require physical inputs, of all kinds. If the input costs go up or are unavailable the output costs will go up or the output will be less.  Common fucking sense.  Just remember, food is not part of the the CPI - FAIL.  Thank your bought-and-paid for politician and central banker for this.  Long guillotines until we get a sound monetary system.

walküre's picture

I cannot even begin to count how many horses we were offered for free this year. Hay is too expensive is the common reason. Of course cattle prices are in the dumpster since May. Hogs are still good. But in the end it's all irrelevant because people HAVE TO EAT and our yields are maxxed out.

They print, print, print more funny money that has no value anymore. We are supposed to sell our goods and production in exchange for their worthless paper. I don't care if they offered millions of their paper when that doesn't feed my family.

Farmers I know are looking at the paper and saying, who cares? What else do you have?

LMAOLORI's picture



Same here.  We have 5 acres that we put into hay we had 4 people ask us for it.  We gave it to our closest neighbor in exchange for free range butchered chickens & some other food to fill the freezer.

Totentänzerlied's picture

"we need a junta"

Thanks for the moronic non-solution just begging for a repeat of the French Revolution and genocide, got any other gems of wisdom, professor?

PS It won't happen because the sheeple do not care. Some percentage of the 50 million SNAP recipients, and many others, will run not walk to the nearest FEMA camp if/when the time comes - has anyone forgotten about the Superdome???

The massive overestimation of the character and intellect of the average person in modern times must stop. The most profitable social, political, and economic arrangement for the superwealthy is pretty damn close to the one we have - it leaves all other and previous systems of exploitation in the dust because it multiplies the debt any given serf can accumulate 1000-fold AND has a far, far lower requirement for direct control. It is the most profitable scam in history and because it is based solely on illusions can be repeated anywhere anytime at no additional cost to the political/economic system.

walküre's picture

Yes, I realize it's a long long shot. But propbably the only one we've got at correcting the unsustainable path we're currently sailing on.

I doubt that the plebs were any more educated or smarter during the revolutionary times in France or elsewhere. They were just hungry and didn't have anything left to do but revolt. Notice, how quickly the revolution got organized and which groups assumed power in the vacuum left by the now powerless royals.

The Kings and Queens of New are living in ivory towers and frolicking around. Not noticing how the rest of the population is near starvation. Take away SNAP cards and you have wide spread HUNGER and possibly FAMINE.

Problem with the socialist-lite approach to enrich the top and enslave the masses with a few crumbs here and there is that the underlying currency to finance their games is becoming worthless. Now coupled with a severe drought and ever DECREASING yields.

Something will have to give. The wealthy can try and confiscate land and farms and establish a quasi full communist landscape where they manage and control the output. Good luck. That was tried before and it hurt the Soviets badly.

Corruption, manipulation, propaganda, lies and deceit are rampant and widespread in our political and financial nerve-centers. The rot is too deep to be corrected from either political party. The military can possibly declare a takeover of the political system and establish a rule of law that would close down Washington for a few weeks and sort out the mess.

Once HUNGRY, a people will revolt. The military will be given the order to establish the rule of the OLIGARCHY as the OLIGARCHY is signing the paycheques. Military however has in the past DISREGARDED the orders of the oligarchy and taken over control short term until the oligarchy has been driven out of power. It all depends on the military more so than the people.

Where is the American military in all this? Surely, they understand the fraud that's going on and how they are being used as tools by the oligarchy to expand the fraud instead of doing what their creeds authorized them to do which is to protect the country from foreign enemies.

blunderdog's picture

Just a bit of a reality check here....

The US military isn't big enough to do anything significant across the entire country.  They could build a few outposts and probably lock down a city or two, but the manpower ratio is all wrong for a REAL occuption.

Think back: they didn't even occupy Iraq successfully, and it's less than a TENTH the size.

-1Delta's picture

FWIW guesses on yield... going to be a long year for meat and ethanol industries



yogibear's picture

Good enough excuse for companies to raise prices by 100 to 200%.

Add in Bernanke and the Fed's QE to infinity policy and prices going forward will take whatever discretionary $$ people have.

The NY Fed's Dudley can do his "Let them eat I-Pods" speech again touting how much cheaper I-pods are. 


pazmaker's picture

I'm in an area that is not showing up as in a drought on that map but we are very very dry.  I just put in some fall crops for our own consumption(cabbage,kale, turnips, spinach and lettuce) and the soil is very dry.  I had to give them a good soaking and it hasn't rained in weeks.  Good thing for deep water wells

yochananmichael's picture

What effect will hurricane Issac have on this.

IridiumRebel's picture

I grew up in that area of Kansas that looks blood red and bleeding drought. They are absolutely starved for water. I mentioned to my KS friends there that we were seeing rain again in our area of the East coast and they pretty much sounded like they would kick me in the nuts if it meant that they could have any of the rainfall. The wheat, soy and corn is absolutely destroyed and means that EVERYTHING that has anything to do with these crops will be exponentially higher cost wise.



Quinvarius's picture

I love the continued inaccurate shots at corn ethanol.

Dude, corn ethanol is CHEAPER than gasoline.  LOL.  How does mixing corn ethanol with gasoline make it more expensive?  Look at the futures pricing.

And there are no production subsides on corn ethanol.  So don't even go there.  I spent an hour on that topic with an antiethanol fanatic earlier this week.

Corn used to make ethanol is still used as cattlefeed afterwards.

Stop getting your information from CNBC.  We add alcohol to our gasoline to fight polution.  Ethanol replaced MTBE, which causes cancer and seeped into the water supply.  You want cellulosic ethanol, which is subsidized, MTBE which kills you, smog, or corn ethanol? 


LawsofPhysics's picture

Yes, yes.  Using fossil fuels and lot of energy to drive tractors, fix nitrogen, irrigate, and ferment the corn that is planted, grown, harvested, processed, fermented and distilled, transported again and mixed with gasoliine in order to burn it for energy in order to drive a tractor or car makes perfect sense.  Especially when it competes with land that could be used for a legume that fixes it's own nitrogen.

I can see why you would think that it has no affect on food prices (which is the subject of this thread) < sarc off >

What can one say but "winning"

Just the same, my money is on biodiesel from algae.

Quinvarius's picture

Back for more eh?  LOL.

Read what I wrote and realize that the corn is still grown with or without ethanol production and is still used as cattlefeed afterwards.

Now tell me how that is not reducing total cost and increasing profit.

Dude, you don't know what you are talking about.  You are repeating stuff you heard on CNBC.

Corn ethanol is a BYPRODUCT of exitsing farming operations not a stand alone industry.

LawsofPhysics's picture

Corn ethanol is not a by-product of farming.  There are ethanol producers that recieved over 200 million from the government to make corn ethanol "competitive", cargill, Dupont, etc.  Many of these companies do grow their own corn but they also buy it on the market (no subsidies right? - you said this) and they process and ferment, and distill it.

I farm almost 30,000 acres,  I grow some corn, I do not ferment or distill it. please get back to work, you are making a fool of yourself.

pazmaker's picture

Here is is USDA guaranteeing a loan for 170 million dollar ethanol plant in NC.  Did he say no government monies being used?  Albeit this grasses being used to convert to ethanol it is still basically being financed by the government.

LawsofPhysics's picture

Yes, he chooses his words careful to say "corn" ethanol. More to the point of the thread.  Whether it is corn or switchgrass or some other plant, it competes with food production and same the resources I need to bring my harvest in.

Quinvarius's picture

No.  I say exactly what I mean.  You are the one stuck in a series of idiotic comments that have been disproven, yet recorded for history, trying to change the topic.

This is about CORN ethanol.  You just finally realized what I was telling you the whole time...THAT THERE IS NO PRODUCTION SUBSIDY ON CORN ETHANOL.  You didn't know the difference between biodiesel, cellulosic ethanol, or corn ethanol until I explained it to you.

If you want to complain about corn ethanol, in a thread releated to corn ethanol, while replying to posts about corn ethanol, KNOW WHAT CORN ETHANOL IS AND HOW THE BUSINESS WORKS.

Ethanol plants are not corn blackholes.  They are not stand alone.  They take cattlefeed and produce super cattlefeed as well as ethanol.




Quinvarius's picture

Dude.  That has nothing to do with corn ethanol. 

Please just STFU and stick to downvoting true stuff that makes you angry.

And you can tell from my posts, I have enough downvotes to go with my facts to let you know I am not a joiner and I don't get my info from CNBC.

Quinvarius's picture



Corn ethanol has no production subsides.  They just don't exist. 

Corn ethanol is a byproduct of regular corn farming.  Cattlefeed goes in cattlefeed comes out with ethanol. 

You don't farm corn.  If you did, you would understand how the ethanol process works.  You obviously have no idea what you are talking about.

I_Rowboat's picture

Seems like Jeebus and his Daddy would be taking better care of the pious, God-fearin' "Followers of Christ" down thar' in the Bible Belt.  Perhaps he's just not that into you.

Meanwhile, up here in the Pacific NW (the least pious region with the highest proportion of non-believers), this atheist, his atheist wife, and his atheist children all sat down last night to a delicious supper of home-grown corn, potatoes, and roasted chicken.  2012 is expected to be an excellent year for NW wines.

In other words:  "Neener. Neener."

pazmaker's picture

maybe you never read Matthew 5:45:

"so that you may be sons of your Father who is in heaven; for He causes His sun to rise on the evil and the good, and sends rain on the righteous and the unrighteous."

At least if you are going to bash Christians you should know what they believe.

I thought most atheist were more intelligent then this?

I_Rowboat's picture

Matthew 16:27-28       “For the Son of man shall come in the glory of his Father with his angels; and then he shall reward every man according to his works. Verily I say unto you, there be some standing here, which shall not taste of death, till they see the Son of man coming in his kingdom.”


(translation:  "be right back!")




walküre's picture

Lots of dry timber to burn potentially in the PacNW.

Dr. Sandi's picture

Actually, that's the point. It's pretty normal here in the PNW. No major forest fires burning out the spruce because it's been raining as scheduled.

I don't know what the rest of the country has done to THEIR weather. It's our clean living that makes it rain a lot here.

TheObsoleteMan's picture

I went to Indiana a couple of weeks ago to visit family there. I was in shock at what I saw. Corn should be six to seven feet high right now, ready to harvest in a couple of weeks {depending on when it was planted}. It leaves should be dark green. Instead, the plants were four feet high and had yellow with hints of green leaves. Complete crop failure. Oh sure, some have irrigation, but more than half still rely on rain.Do you know who is going to be paying out all of the claims filed for these crop failures? THE TAXPAYER! That's right, thanks to the Federal crop insurance program, the taxpayer can say:"Just put it on my tab!" Years ago when this program started, the contract was rife with the terms: GOVERNMENT MONIES, FEDERAL FUNDS. It is amazing how many people think the federal government has their own money.

Lednbrass's picture

I don't think the Federal government should be involved in subsidies at all because it does nothing but keep food cost artificially low for an ever more useless and unproductive urban and suburban populace.

Crop insurance isn't as good as people who don't know anything about agriculture think. Average farmer age is nearly 60, the more that are squeezed out the faster we approach the day that the humanoids in the major metropolitan areas can't shop at Walmart for cheap. Personally I'm looking forward to it.

CharlesH's picture

All propaganda ethanol bla bla

Thank you Monsanto, becouse if we don't buy your GM food then we get in trouble of the "drought"

"Business as usual"

q99x2's picture

Too much Monsanto. You ahalt not eat it nor should the your sons and daughters eat whats eats it otherwise they'd be eating worse than shit. It has been deemed unclean and a sin unless used for ethanol and occasional woopie party.

Not to worry this may be the best thing to happen to the fat Americans and Steve Wozniak.

Ill Fates I mean Bill Gates caused drought through weather manipulation with the goal of selling drought resistant Monsanto products.

People had umbrellas when they went out back in the day


mind_imminst's picture

A local apple grower told me today that the apple crop east of the Mississipi might be 1/3 of normal and that apple prices will sky-rocket this fall. Is there a fund that tracks apples? Like the CORN ETF?

kadriana123's picture

I have heard a lot of people who usually can say fruit is too expensive to buy. One friend said peaches were selling for $78 a bushel in her area. I know a late frost took out all our fruit. Luckily, my in-laws will have plenty.