Market Skeptics

Fed Buys Another 71 Billion Mortgage-backed Securities

2009-11-19T21:02:00.000-08:00

The Fed has bought another 71 billion mortgage-backed securities in the last week, as you can see in the chart below,

Two important points to note:

1) The Fed's balance sheet is now overflowing with assets it cannot sell: Treasury securities (politically difficult to unload in large numbers) and toxic assets (no one wants to buy them).

2) The Fed can’t keep buying more US debt (ie: treasuries and mortgage debt) without expanding its balance sheet (essentially printing more money).

49 mn Americans food insecure: USDA study

2009-11-19T01:13:00.000-08:00

Commodity Online reports that 49 million Americans food insecure.

(emphasis mine) [my comment]

49 mn Americans food insecure: USDA study
2009-11-17 23:50:00

CHICAGO (Commodity Online): The U.S. Department of Agriculture's Economic Research Service reported on Monday that 49 million Americans, including nearly 17 million children, are food insecure. The 2009 report on Household Food Insecurity in the United States paints an alarming picture of the pervasiveness of hunger.

This is an increase of 36 percent over the numbers released one year ago by the USDA, which found that 36.2 million American were at risk of hunger. "It is tragic that so many people in this nation of plenty don't have access to adequate amounts of nutritious food," said Vicki Escarra, president and CEO of Feeding America. "Although these new numbers are staggering, it should be noted that these numbers reflect the state of the nation one year ago, in 2008. Since then, the economy has significantly weakened, and there are likely many more people struggling with hunger than this report states.

The new data reinforces recent findings from a research study conducted by Feeding America, the nation's leading hunger-relief organization, reflecting a dramatic increase in requests for emergency food assistance from food banks across the country.

Conducted in September, the Feeding America study shows that its network food banks experienced an average increase in need of nearly 30 percent this year. While the numbers vary geographically, some food banks are reporting increases of more than 50 percent in requests for emergency food assistance over a year prior.

"National socio-economic indicators, including the escalating unemployment rate and the number of working-poor, lead us to believe that the number of people facing hunger will continue to rise significantly over the coming year," added Escarra. "Research on previous economic recessions indicates that people who fall into the grips of poverty in a time of recession do not recover financially. Many of those people are likely to be in need of our services now or in the future.

"Feeding America's 200 food banks continue to work on the front lines feeding more than 25 million people each year, through our country's food pantries, soup kitchens, and emergency feeding centers - more than 63,000 agencies in total," said Escarra. "These establishments, many of which are grass root and faith based centers operated solely by volunteers, serve as an oasis for the more than 4 million people who seek relief weekly to help feed themselves and their families. Emergency food assistance is a critical link in the nation's response chain to help people through times of crisis."

Escarra observes, "Our network food banks are calling us every day, telling us that demand for emergency food is higher than it has ever been in our history. Feeding America will continue to work closely with our partners at USDA to ensure that the public and charitable sectors are keeping pace - as best we can - with the dramatically increasing needs for food assistance." [Imagine what is going to happen as food prices double then triple over the next few months as the dollar/food panic unfolds]

Feeding America provides low-income individuals and families with the fuel to survive and even thrive. As the nation's leading domestic hunger-relief charity, our network members supply food to more than 25 million Americans each year, including 9 million children and 3 million seniors. (Courtesy: PRNewswire)

Commodity Online reports that US role in world economy shrinking alarmingly.

US role in world economy shrinking alarmingly
2009-11-18 09:15:00

BALTIMORE, USA (Commodity Online): For the first time in 200 years, American consumers are no longer the driving force behind the world's economy. In his book, Fiscal Hangover, Keith Fitz-Gerald--one of the world's leading experts on global investing--picks apart every important change and identifies unprecedented opportunities.

Investors will discover how the U.S. role in the world economy is shrinking at unheard-of rates; how and why government intervention may well prevent the U.S. markets from normalizing in years to come; why Asia is already well on its way to becoming the next great financial center; and why China's Yuan is quietly replacing the U.S. dollar as the world's reserve currency.

Commodity Online reports that dollar collapse to ravage US economy and Obama.

Dollar collapse to ravage US economy and Obama
2009-11-18 08:35:00
By Christopher G. Galakoutis

…
As discussed last post, I don’t believe the US will resort to outright money printing as per Weimar Germany in the 1920’s or more recently Zimbabwe. The bond market has a gun to Ben Bernanke’s temple, and is telling him in no uncertain terms that if he were to drop dollar bills from helicopters, he would get his head blown off. Think of it as the bond market staring down the Fed and telling it that the dollar had better start behaving like gold. [This is flawed logic. The reason Bernanke will print money like a madman is to prevent the treasury market from collapsing.]

All sides agree we will see deflation in terms of gold. What happens in nominal terms is the big question. A bond market up until now going along with Fed actions is not signaling that the Fed has or will lose control of the dollar. ~~In fact, it is signaling the opposite~~ [The Fed has bought over 1 trillion US debt in the last year. This is the only reason interests rates aren’t higher]. ~~Bernanke’s SAT score was 1590 out of 1600. He’s no dummy~~ [Bernanke’s intelligence is irrelevant, he is a mere pawn of the US Treasury department]. He knows who his bosses are, and he will do what they ask [The US treasury (Bernanke’s master) will demand he print money]. He and the government tipped their hands in that respect during the crisis, when they chose who they chose to bail out in a massive way, while the first tent cities where going up across the country.

That leaves a loss of confidence in all paper currencies and specifically a collapse of the US dollar as the only other trigger that takes gold to much higher levels. But that would also mean the US’s friends and allies turning their backs on this country at a time when it could be argued the US is most in need of their continued support. [The global food crisis which will start in two or three months, will cause the world to abandon the dollar]

It would mean the world turning its back on a new administration and a new president loved the world over. And whom might the world have to deal with next, should a collapse of the US dollar ravage the economy and Obama in 2012?

If the world turning its back, and dumping the dollar in a coordinated effort, is the scenario that plays out, then holding dollars will prove to be a bad move. But I don’t see that scenario playing out [if you were aware of the global 2009/10 food shortage, you would]. Sure, at some point foreign creditors will tighten the screws on the US, and it won’t be able to borrow as much as it has been. That is the day of reckoning I have written about.

That is when the US will be forced to make the tough choices. That is, cut deficits and perhaps negotiate repayment terms on its debts. I suppose those are the key issues that all of these arguments rest on.

Will the US make the tough choices and retain some semblance of self-respect [no way in hell], or will it simply print money and go the way of Zimbabwe? [Anyone who even has to asks this question knows nothing of history or how the world works.]

I would argue that anyone who believes there is no difference between a Zimbabwe and the US [me] -- in that the US takes the easy way out and literally prints greenbacks to pay off creditors -- simply does not understand how the world works [you kidding me? THE US HAS ALWAYS TAKEN THE EASY WAY OUT THE EASY WAY OUT IN THE LAST FEW DECADES. Did the US deal with social security crisis, the budget deficit, the trade deficit, etc? No. The Idea that the US would start being responsible at this point is ludicrous], and should they be investing in anticipation of such an outcome, will be looking at substantial loses in the near future [bullshit].

My reaction: It isn’t a pleasant subject, so I don’t write about it too often. Things are going to get much worst in the US over the next year.

With 49 million Americans food insecure and a looming global food shortage/dollar collapse, it shouldn’t take too much imagination to understand just how bad things will be. I have already written about the potential for famine in the US earlier this year…

The imminent collapse of the dollar leaves the US vulnerable to Famine.

1) There is no fixed relation between food and famine.

2) Many large famines have taken place despite moderate-to-good food availability

3) A famine develops when a sizeable number of people lose the economic means of acquiring food.

4) This can result from unemployment or from a sharp drop in earnings compared with food prices (ie: hyperinflation), even when there is no fall in food output or supply [although food shortages do also increase the potential for famine].

5) Market-based movements of food are related to demand and purchasing power.

6) The general prevalence of poverty and weakness of the economy in the country or region is an important pre-requisite for famine.

7) The sense of distance between the ruler and the ruled (between 'us' and 'them') is a crucial feature of famines. [ie: the distance Goldman and the average American]

Conclusion: Famine is caused by sudden loss of purchasing power by a portion of the population already living near poverty. If the dollar collapses and the food stamps one out of nine Americans depends on become worthless, the US would meet all the criteria for a potential famine.

Famine in Weimar Germany as an example

In January 1922, hyperinflation exploded in Germany. By December 1922, Germany was unable to feed its population or provide employment for even 60 per cent of the labor force. People began to die in the streets from starvation and hypothermia…

USDA Designates Mississippi As Disaster Area

2009-11-18T13:50:00.000-08:00

The Daily Comet reports that USDA designates 79 Mississippi counties as disaster areas.

(emphasis mine) [my comment]

November 18, 2009
79 counties declared disaster
$500M in Miss. crops damaged by heavy rain, drought
LaRaye Brown

The federal government on Tuesday agreed to assist the state's farmers after excessive rains in the spring and fall and a summer drought damaged nearly $500 million in crops.

The Department of Agriculture designated 79 of the state's 82 counties natural disaster areas, opening the doors for farmers to apply for federal assistance programs. Farmers in three other counties - Kemper, Neshoba and Newton - also will be able to apply for assistance because they are contiguous to those declared primary disaster areas.

Among the state's five largest crops - soybeans, corn, cotton, rice and sweet potatoes - losses total more than $459.4 million, Mississippi State University's Agricultural Extension Service estimates show.

Tuesday's disaster declaration gives farmers up to eight months to apply for low-interest loans. They also can apply for the Supplemental Revenue Assistance Program, or SURE.

If approved for SURE, farmers could receive grant payments to help make up for revenue losses not covered by crop insurance. In order to apply for SURE, farmers must have crop insurance.

"It's a start," said George King, who farms in Chatham, about 25 miles south of Greenville, a region of the state hit hard by excessive rainfall. He won't be sure how he feels about the declaration until he learns more about the programs being offered. "A lot of those programs are hard to qualify for."

In this, his 22nd crop, King got only 40 percent of his expected yield on cotton and had to leave some soybean acreage unharvested because of excessive damage. This was the first time he had to plow over crops.

It's been a year of painful firsts for many farmers. Spring rains forced them to plant late or washed away seeds, leading many to replant.

Recent unseasonably heavy rains kept farmers from harvesting. What was harvested was of poorer quality and - in many instances - excessive moisture rotted crops which had to be plowed over.

To qualify for the declaration, counties had to show at least 30 percent crop damage.

The state office of the Farm Service Agency did not release information about losses in counties. But MSU Extension Service figures show many crops will take substantial hits this year.

The state's sweet potato crop is expected to record about a 64 percent loss. Soybeans are down nearly 44 percent and cotton suffered a 48 percent value loss.

The Daily Comet reports that disaster declaration for farm losses in 5 states.

Disaster declaration for farm losses in 5 states
The Associated Press
Published: Wednesday, November 18, 2009 at 7:00 a.m.
Last Modified: Wednesday, November 18, 2009 at 7:00 a.m.

JACKSON, Miss. - Federal agriculture authorities have declared disaster areas in parts of Alabama, Arkansas, Louisiana, Mississippi and Tennessee due to crop losses from a combination of severe spring and fall flooding and summer drought.

Agriculture Secretary Tom Vilsack said the declaration will "provide help to hundreds of farmers who suffered significant production losses to a wide variety of crops."

The declaration qualifies many farmers in the designated areas for low interest emergency loans from the U.S. Department of Agriculture's Farm Service Agency.

The primary disaster areas are in 79 Mississippi counties and contiguous counties and parishes in the other states.
…
To qualify for the declaration, counties and parishes in the five states had to show at least 30 percent crop damage.

"Unless something equivalent to the wasted money that we put into the (banking) bailout is done for farmers, they are going to have a long, difficult road, after which they still may not be able to come out of this," said Ernie Flint, an agronomist with MSU's Extension Service.

Flint said many farmers had debt before this season and giving them new loans - even if they are low interest - will only add to the burden.

Mississippi Gov. Haley Barbour began the process of getting the disaster declaration last month when he wrote a letter to the USDA asking the state's Farm Service Agency to begin tallying damages.

"While I am pleased these areas can qualify for much-needed assistance, we have to understand this crop disaster will continue to put downward pressure on tax revenues," Barbour said in a statement Tuesday. "The important agriculture sector faces a long road to recovery, just as does the state's economy as a whole."

The Daily Comet reports that USDA designates 79 Mississippi counties as disaster areas.

79 Mississippi counties disaster areas
Nov 17, 2009 4:50 PM

The U.S. Department of Agriculture has designated 79 counties in Mississippi as primary natural disaster areas due to losses caused by the combined effects of severe spring and fall flooding, and summer drought, that occurred March 1, 2009, and continuing.

The 79 counties are:

Adams, Alcorn, Amite, Attala, Benton, Bolivar, Calhoun, Carroll, Chickasaw, Choctaw, Claiborne, Clarke, Clay, Coahoma, Copiah, Covington, De Soto,

Forrest, Franklin, George, Greene, Grenada, Hancock, Harrison, Hinds, Holmes, Humphreys, Issaquena, Itawamba, Jackson, Jasper, Jefferson, Jefferson Davis, Jones,

Lafayette, Lamar, Lauderdale, Lawrence, Leake, Lee, Leflore, Lincoln, Lowndes, Madison, Marion, Marshall, Monroe, Montgomery, Noxubee, Oktibbeha,

Panola, Pearl River, Perry, Pike, Pontotoc, Prentiss, Quitman, Rankin, Scott, Sharkey, Simpson, Smith, Stone, Sunflower,

Tallahatchie, Tate, Tippah, Tishomingo, Tunica, Union, Walthall, Warren, Washington, Wayne, Webster, Wilkinson, Winston, Yalobusha, and Yazoo.

“President Obama and I understand these conditions caused severe damage to the area and serious harm to farms in Mississippi and we want to help,” said Agriculture Secretary Tom Vilsack. “This action will provide help to hundreds of farmers who suffered significant production losses to a wide variety of crops including corn, cotton, rice, soybeans, wheat, pasture and forage crops.”

Farm operators in Kemper, Neshoba and Newton counties in Mississippi also qualify for natural disaster assistance because their counties are contiguous.

Farm operators in the counties and parishes listed below in the adjacent states of Alabama, Arkansas, Louisiana and Tennessee also qualify for natural disaster assistance because their counties are contiguous.

Alabama: Choctaw, Colbert, Franklin, Lamar, Lauderdale, Marion, Mobile, Pickens, Sumter and Washington.

Arkansas: Chicot, Crittenden, Desha, Lee and Phillips.

Louisiana: Concordia, East Carroll, East Feliciana, Madison, St. Helena, St. Tammany, Tangipahoa, Tensas, Washington and West Feliciana.

Tennessee: Fayette, Hardeman, Hardin, McNairy and Shelby.

All counties and parishes listed above were designated natural disaster areas Nov. 13, making all qualified farm operators in the designated areas eligible for low interest emergency (EM) loans from USDA’s Farm Service Agency (FSA), provided eligibility requirements are met.

Below is the updated graphic showing counties designated as disaster areas by the U.S. Department of Agriculture (data from USDA).

My reaction: The USDA has basically designated the entire state of Mississippi as a natural disaster area.

But don’t worry, the USDA is also projecting a near record Mississippi soybean crop (sarcasm)! Just look at the chart below.

Conclusion: According to the USDA, both of the following is true:

1) 79 of the Mississippi’s 82 counties have suffered at least 30 percent crop damage.
2) Mississippi soybean production is only going to fall 1.7% from last year's record breaking crop.

Amazing…

China Plans To Drop Dollar Peg to Slow Inflation

2009-11-17T21:04:00.000-08:00

The Globe And Mail reports that China sets plan to let currency move higher.

China sets plan to let currency move higher
Andy Hoffman and Barrie McKenna
Nov. 11, 2009

China signalled it will allow its currency to appreciate against the U.S. dollar, bowing to international pressure days ahead of a visit from U.S. President Barack Obama.

The move to allow the yuan to rise against the greenback would provide much-needed relief to countries trying to compete against China's mighty export machine and put further downward pressure on an already battered U.S. dollar.

China's latest quarterly monetary policy report said its foreign exchange policy will now consider “capital flows and changes in major currencies,” indicating China will carefully expose the yuan's value to fluctuations in global markets.

The statement avoided the government's usual boilerplate language of keeping the yuan “basically stable at a reasonable and balanced level.”

China's trading partners have complained the government keeps the yuan at artificially low levels, providing an unfair price advantage for China's goods as they compete for market share around the world. Until now, China has largely ignored calls for greater currency flexibility.

The decision to allow the yuan to climb also points to the maturing of China's rapidly expanding economy, while giving its people and companies more purchasing power for goods and assets produced outside the country.

“China is exporting blood and sweat and importing copper and oil. Is that really good in the long term? You are sacrificing the local people's purchasing power in pursuing export growth,” said Na Liu, China analyst at Scotia Capital.

The rise in the yuan is expected to be gradual and is not likely to occur until next year. Still, China is likely to quickly draw increased capital flows into the country as international investors aim to benefit from an eventual rise in the currency and local assets. But that trend brings the risk of potential unsustainable bubbles in its real estate and stock markets.

Other Asian exporting countries such as South Korea, Singapore and Thailand, which should be able to compete better with China as the yuan appreciates, are likely to follow suit and let their currencies appreciate as well.

“A little gradual appreciation in the yuan will not naturally hurt China's exports because other Asian countries will follow,” Mr. Liu said.

China's currency has been pegged to the U.S. dollar since July of 2008 in an effort to shield exports from the global recession. But the latest economic data released Wednesday suggest a recovery is well under way in China. Industrial production rose 16.1 per cent in October, the most since March of 2008. Exports declined 13.8 per cent, the smallest drop recorded this year.

“It was inevitable,” Benjamin Reitzes, an economist at BMO Nesbitt Burns said of China's hint it will shift its foreign exchange policy.

“The reason they can do it now is because they see external demand from the global economy is improving,” he added.

Bloomberg reports that China will allow yuan gains to slow inflation.

China Will Allow Yuan Gains to Slow Inflation, Riverfront Says
By Allen Wan

Nov. 11 (Bloomberg) -- China will allow for faster appreciation of the yuan against the dollar next year as it seeks to curb accelerating inflation, according to Riverfront Investment Group and RBC Capital Markets.

“China can either let the yuan appreciate or allow inflation to accelerate at the risk of causing social unrest,” said Michael Jones, who manages $1.4 billion in stocks, including Chinese equities, at Richmond, Virginia-based Riverfront. “Inflation pressures will push China to allow substantial yuan appreciation.” [this is what I have been predicting]

The world’s third-biggest economy expanded 8.9 percent in the past quarter, the fastest pace in a year, according to official data. Money supply increased a record 29.4 percent in October from a year earlier, the central bank said today.

“Rapid Chinese money supply growth led to inflation in 2004 and 2008," Jones said. "It ~~could~~ [will] happen again."

He predicts the inflation rate may rise as high as 7 percent next year, with food prices double that estimate. Under that worst-case scenario, Chinese policymakers may be forced to revalue the currency by 25 percent, Jones said.

Consumer prices fell 0.5 percent last month, the smallest drop since declines began in February, according to a Bloomberg survey. Prices will rise 2.7 percent in 2010, according to the average of 16 economist estimates compiled by Bloomberg.

"Pressure from the international community to allow yuan appreciation is not that big," People's Bank of China Governor Zhou Xiaochuan said Nov. 6.

Economic Stimulus

China's 4 trillion yuan ($586 billion) stimulus spending and record lending may lead to a pick-up in inflation, prompting the government to allow for an appreciation of the yuan, said RBC's global head of emerging research Nick Chamie.

"Strong stimulus and very easy liquidity conditions are likely to stoke inflation pressures in the months ahead, suggesting that tighter policy will be needed -- currency appreciation will likely be part of the package," Chamie wrote in a note to clients.

…
"We believe that as other currencies continue to rally, China will likely resume a crawling peg strategy against the dollar," Jones said. "Such a shift in policy will likely motivate a rally as global financial markets breathe a collective sigh of relief."

'Material Revaluation'

China may resume the crawling peg as early as next week, when U.S. President Barack Obama visits the Asian country, Jones said.

Asian currencies such as the Taiwanese dollar and South Korean won may appreciate further if the yuan gains as governments in the region have been reluctant to risk further gains on concern they may become less competitive, he said.

"A material revaluation of the yuan could potentially unleash substantial domestic consumption in China, be a catalyst for a boom in global trade, and spark a secular bull market in equities,” Jones said. [“unleash substantial domestic consumption” would drastically increase the demand for food in the face of a global food shortage]

People’s Daily Online asks will China suffer from imported inflation?

Will China suffer from imported inflation?
11:12, November 12, 2009

When the shadow of the financial crisis still lingers on in the world, China's National Bureau of Statistics' recent statement that China will achieve its goal of 8 percent GDP growth for the whole year indicated its earlier recovery than other countries. Experts warned that early recovery may make China the first country to encounter inflation. In Fact, with dollar depreciation and rising commodity prices in the world market, there's now mounting imported inflation pressure on China.
…
Emerging pressure

Inflation, especially imported inflation, becomes another problem facing China. Countries around the world have injected huge liquidity into their markets.

U.S. monetary base, the stock of money in its banking system, doubled to 1.70 trillion U.S. dollars in August from 842 billion a year earlier. Central banks in Britain and Japan also implemented unprecedented loose monetary policies. In the first ten months, new Renminbi-dominated loans totaled 8.92 trillion yuan (1.31 trillion U.S. dollars) in China. Huge liquidity has generated increasing inflation expectations.

Driven by the depreciated dollar, rising commodity prices in the world market are adding the pressure of imported inflation to China. A report presented in October by Chinese Academy of Social Sciences (CASS) showed that oil prices have increased by 60 percent compared with the beginning of this year, and prices of nonferrous metal and iron ore have grown by around 40 percent. The pressure of imported inflation has increasingly direct influence on China's consumer prices.

The hike of commodity prices was the result of dollar depreciation. As Renminbi exchange rate to dollar remains stable, China will inevitably feel the pressure of imported inflation, explained Zhao Qingming, a senior researcher with China Construction Bank.

…
Zhao said China should allow Renminbi to appreciate moderately to reduce the influence of the price hike of imported products.

Bloomberg reports that dollar overwhelms central banks from Brazil to Korea.

Dollar Overwhelms Central Banks From Brazil to Korea
By Oliver Biggadike and Matthew Brown

Nov. 13 (Bloomberg) -- Brazil, South Korea and Russia are losing the battle among developing nations to reduce gains in their currencies and keep exports competitive as the demand for their financial assets, driven by the slumping dollar, is proving more than central banks can handle.

South Korea Deputy Finance Minister Shin Je Yoon said yesterday the country will leave the level of its currency to market forces after adding about $63 billion to its foreign exchange reserves this year to slow the appreciation of the won. Chile Finance Minister Andres Velasco said the same day that lawmakers approved an increase in local debt sales to finance spending, a move that will allow the government to keep more of its dollar-based savings overseas and slow the peso's rally.

Governments are amassing record foreign-exchange reserves as they direct central banks to buy dollars in an attempt to stem the greenback's slide and keep their currencies from appreciating too fast and making their exports too expensive. Half of the 10-best performers in the currency market this year came from developing markets, gaining at least 14 percent on average, according to data compiled by Bloomberg.

'Slow the Advance'

"It looked for a while like the Bank of Korea was trying to defend 1,200, but it looks like they've given up and are just trying to slow the advance," said Collin Crownover, head of currency management in London at State Street Global Advisors, which has $1.7 trillion under management.

…
International Investment

An unprecedented net $47 billion flowed into equities in India, Indonesia, the Philippines, South Korea, Taiwan and Thailand in the last three quarters, according to data compiled by Bloomberg. That eclipsed the previous full-year high of $33 billion in 2005, nine year of data show.

"The dollar is weakening because the U.S. has the lowest short-term interest rates in the world will be the sell side of the carry trade as long as that remains true," Chris Low, chief economist at FTN Financial in New York, wrote in a note to clients yesterday.

…
'Hard to Fight'

Brazil's economy emerged from a recession in the second quarter, swinging to a 1.9 percent expansion after six months of contraction, a Sept. 11 report from the statistics agency showed. Six straight months of job growth, coupled with tax breaks and record low borrowing costs, pushed up consumer spending and helped Latin America's largest economy rebound from the global financial crisis.

"I hear a lot of noise reflecting the government's discomfort with the exchange rate, but it is hard to fight this," said Rodrigo Azevedo, the monetary policy director of Brazil's central bank from 2004 to 2007. "There is very little Brazil can do," said Azevedo, who runs $1.8 billion at JGP SA in Rio de Janeiro, in an Oct. 16 interview. [Brazil could buy more dollars to weaken its currency, but that is evidently not even being considered.]

My reaction: China is signaling that it will drop the dollar peg and appreciate the yuan to contain inflation. So when food prices start rising fast in the next few months, the dollar will start falling just as fast.

Keep in mind that:

Chinese (and world) CPI numbers are about to turn positive

Below is a chart showing China’s monthly CPI. As you can see, since February, CPI numbers have been negative, but that is about to change…

The reason CPI turned negative last year was the collapse of commodity prices. Oil and agricultural commodities started trading at lower prices than they did a year yearlier, which drove the cost of food and gas down. However, this November things are about to change.

Below is a chart of oil prices last year. See the price plunged from $90 in October to $60 in November?

Oil prices are now at $80 higher, which is $20 more than a year ago. Higher year on year commodity prices will quickly start showing up as positive CPI numbers around the world and in China.

"The stimulus is working" (humor)

2009-11-17T09:02:00.000-08:00

Below is a fun clip from last week’s Saturday Night Live about how “the stimulus is working”.

Two other bits of news:

1) The Globe And Mail reports that China sets plan to let currency move higher.

2) Gold is still going up:

Worst Harvest Season Ever Seen

2009-11-16T14:45:00.000-08:00

Below are extracts from all the entries I have made on the US’s 2009 harvest, in chronological order. Points to notice and consider as you read through them:

1) How the crop losses continue to grow due to excessive rains.

2) The number of times “ever seen” and “worst” are mentioned.

3) Remember that the USDA is projecting the largest U.S. soy crop on record (at 3.3 billion bushels) and the second-largest corn crop (at 12.9 billion bushels).

(emphasis mine) [my comment]

[Iowa, June 29]

"I'd say this year is one of the most unusual years we've had in the last 20 years," said Don Fry, executive director of the Des Moines County USDA Farm Services Agency. "Because it seems like it rains every second or third day, the ground is constantly kept wet. We've heard a lot of reports from people with wet spots turning up in fields that they and their parents ... don't ever remember being a wet spot."

The combination of constant rain and cool temperatures this spring kept farm fields saturated, making planting difficult and hampering crop growth. Also, frequent rains have rinsed a portion of nitrogen fertilizers from fields and hindered the application of herbicides, all of which cuts into yields, Kester said.

"This spring has just been a terrible struggle," Kester said. "Anybody that mowed hay within the last three weeks probably lost their hay crop because it got wet."

[Texas, July 08]

If not for the triple-digit heat, central Texas rancher Debbie Davis could almost think it was a different season entirely.

"The (pasture) grass looks like it's the dead of winter,'' said Davis, who raises beef cattle and Texas Longhorns northwest of San Antonio. The region is enduring its driest 22-month span going back to 1885. "It's horrible. It's probably the worst I've ever seen.''

[Maine, July 25]

This has been a bad year for dairy farmers: Milk prices have plummeted and rain has prevented them from getting onto their fields to harvest hay. Fertilizer they applied simply washed away in the rain.

The longer hay grows without a cutting, the poorer the nutritional quality and the more money farmers will spend this winter to supplement it. Cornfields are rotting without enough sun or heat to ripen the plants.

"The season is lost," Julie Marie Bickford of the Maine Dairy Industry Association said Friday. "With milk prices so low and this feed disaster on top of it, farmers are like deer in the headlights."

[Maine, July 25]

Hay and corn are critical components of livestock feed, Bickford said. "This stunted corn and alfalfa is forcing farmers to purchase grain and feeds. That is a very bad situation. Prices are extremely high because of the Midwest floods earlier this year. Maine's farmers couldn't come up with a worse situation in their worst dreams."

On Thursday, a 75-year-old former dairy farmer visited the Wright Place in Clinton. He recalled delivering glass bottles of milk and told Brian Wright that he never remembered a rainier summer.

"This is unreal," Wright said. He cut back from 700 acres of feed corn to 600 acres to trim his budget this year, and now he may not get to harvest much of that.

[New York, Aug 14]

WEST WINFIELD - A panel of political representatives and aides sat for over three hours at a rally Friday in Mount Markham Middle School gym as over 200 upstate New York dairy farmers pleaded for action on a range of issues crippling their industry.

One after another dairy farmers and others involved in the industry took a microphone to berate county, state and federal representatives from throughout the region.

Some were brought to tears describing their inability to make a living, a few simply screamed in frustration and others demanded answers. But the dire situation facing the men and women speaking was painfully clear.

“We are in a disaster,” declared Ken Dibbell, of Chenango County.
…
“The people who feed the nation can’t feed themselves,” Gretchen Maine, a dairy farmer from Waterville, “what’s wrong this picture.”
…
The time frames for both solutions seemed in contrast from farmers need for help, with many emotionally explaining they have either already abandon businesses or are on the brink.

“I don’t think they get the message yet,” Tewksbury said, referring politicians unaware of the uncharacteristic display of emotions from prideful farmers. They don’t have until 2010. They have the next couple of months to decide if they can stay in business, he said.

[South Dakota, August 21]

Mark Tubbs, who ranches in southwest South Dakota and inside the Wyoming border, plans to sell about a third of his cows this fall after putting up a sixth of the hay he usually does. He had been expecting a decent cutting — until the grasshoppers started chomping.

"This year we had a good start but they just took it," said Tubbs, 57. "The grasshoppers have taken it down to the dirt. They've eaten everything but the cactus."

[South Dakota, August 21]

That's little comfort to David Kane, a rancher near Sheridan, Wyo., who said the grasshoppers on his ranch are the worst they've been in more than 20 years. Kane already sold off part of his herd because the pests ate his cows' food.

"They're devastating," Kane said. "They were so bad here on the ranch that we sprayed our meadows because the second-cutting of alfalfa wouldn't green up because they were eating it as fast as it was trying to grow."
…
"We've had one good year in the last 10 years, and that was in 2005," he said. "That's the problem we're having with the grasshoppers. It's just taking the will and the heart out of us."

[South Dakota, September 2]

Butte County, which borders Wyoming just north of the Black Hills, is an area that's been hit hard, said Steve Smeenk, a farmer and rancher who is a member of the county commission.

"Grasshoppers are just about as bad as most people around here have ever seen them," said Smeenk, 61. "There's tremendous numbers. The ground moves when you walk."

"All of a sudden, they just exploded," Smeenk said. "I've killed millions and millions of them, but I haven't killed enough to make a dent. There's billions and billions of them out there."

[Mississippi, September 22]

“They are deteriorating in the field by the hour,” Glenn Mast, a Brooksville farmer, reported of his corn, soybean and cotton crops. “Some of the crops have sprouted and are regrowing and some are just plain rotting. What percentage we don’t even know at this point; it’s too wet to go out and check.

“This is very unusual,” he added, noting he’s been farming for 40 years. “It’s always hard to say which is the worst, but this is as bad as I’ve seen it for this time of year.” [Mississippi then proceeded to have a month and a half of the record rain.]

[Oklahoma, September 22]

Continuing showers are further fueling concerns about Leflore County farmers’ harvests.

Jerry Singleton, an agent with the Leflore County Extension Service, said farmers are concerned about this year’s crop. Heavy rains have kept them out of the fields, and many are uncertain about their yields.

“A lot of the farmers out here are really starting to hope for the rain to let up,” Singleton said. “The amount of rain we have been seeing is usually associated with hurricanes.”

“It’s so hard to tell what is being affected by this rainfall, and I think most farmers are really just wanting to get out there and see what is going on and just how much this has affected their crop,” Singleton said. “It could be a loss in yield, or it may be a loss in quality. We’ll have to wait and see.”

[Oklahoma, September 22]

Darrin Dodds, Extension cotton specialist, said cotton farmers have to worry about boll lock and boll rot, both of which can cause devastating losses in both yield quality and quantity.
…
“These hot, humid conditions just provide the perfect environment for disease to develop,” Dodds said.

The wet weather also causes other problems.

“A lot of the farmers are prepared to start defoliating, but they have to wait because of the rain,” Dodds said. “It’s possible that with all this moisture, seeds may start sprouting in the boll.”

When that happens, Dodds said, it not only makes a seed worthless for resale but also risks staining the crop.

“This weather pattern is creating a lot of problems for farmers across the board,” Dodds said. “It’s a problem for corn, cotton and soybean farmers. It’s hard to find an optimistic side to this recent weather, although too much rain is usually better than none.”

[Mississippi, September 23]

After a spring and summer marked by prolonged wet and dry spells that hampered some of the state's crops, fall is beginning with waterlogged soybeans.

Bolton soybean farmer Bobby Mashburn hasn't been able to assess the steady rain's impact on his crop - it's been too wet for him to do any serious work in his fields.

But he's hoping for a weather let-up soon, or else he says his yield likely will be less than he projected, perhaps up to 20 percent less.

"They're deteriorating each day it rains," he says of his soybeans. "It hasn't dried out enough for us to get out and take a look."

[Arkansas, September 23]

For area farmers, the excess water has led to reduced yield and quality in their crops, according to Don Plunkett, an agent with the Pine Bluff office of the University of Arkansas Cooperative Extension Service.

“It’s just a nasty situation,” Plunkett said. “We’ve got farmers that have tried to harvest this week, and we’ve had just a couple of days of drying time. We are seeing a lot of damage.”

Rice farmers have been particularly hard hit, Plunkett said.

“We’ve got some rice that’s on the ground, and that makes it extra slow to harvest,” he said. “It just really costs a lot of time and manpower. It’s just a slow go to get that stuff off the ground.”

Plunkett added that rice and corn have been “sprouting.”

“That simply means that the grains are trying to make new plants,” Plunkett said. “That affects the quality of the crop.”

[Arkansas, September 23]

Don Plunkett, Jefferson County extension staff chair for the University of Arkansas Division of Agriculture, said soybean growers and consultants are also complaining about weather-related problems.

"One is that the rain stopped harvest," he said. "Second is that the rains have prevented timely fungicide applications as well as insecticide applications.

"A third problem is soybeans are splitting along the suture of the pod and beginning to sprout. These split pods also allow infections."

According to the National Agricultural Statistics Service, only five percent of the soybean crop had been harvested in Arkansas, some of which was affected by soybean rust and an infestation of aphids.

Unfortunately for Lawrence County farmers, rains are forecast through Sunday.

[Texas, September 23]
Bruce Wetzel has been a farmer in Sherman all his life, learning from his father back in the 1960's.

He's seen all the ups and downs of producing wheat and corn in Texoma, and he says this was one of the worst years for corn.
…
"All the rain we got back in April and May, we got 20 inches of rain in a two week period there, really just damaged our corn. Our corn just never quite recovered from too much water,” said Wetzel.

Wetzel says he lost about 50% of his wheat and corn crops this harvest season, a trend that farmers are experiencing across Texoma.

[Louisiana, September 24]

"There are a lot of beans out there ready to be cut," said Lecompte-area farmer Dale Schexnyder, who fortunately was able to get his corn crop harvested despite the frequent rains. "This isn't helping the cotton or the beans, either."

"Right now it's harvest time, it should be dry," Schexnyder said. "If we keep getting these little, small showers, it's going to be hard. Hopefully, next week it will dry up."

[Louisiana, September 24]

Three months ago, area farmers were praying for rain. Now, some are praying for it to stop.

"We had significant yield loss due to dryness in the summer," said Matt Martin, county agent with the Rapides Parish office of the LSU AgCenter. "Now, we're looking at the possibility of seeing some quality loss due to too much rain at harvest."

"Right now, all the farmers are kind of wishing it would quit," Martin said. "We have soybeans ready to harvest, we have cotton ready to harvest, and we have a little bit of corn ready to harvest. This rain is preventing that."

[New Jersey, September 26]

South Jersey farmers are coping with heavy crop losses after steady summer rains saturated fields, creating an environment ripe for overgrown weeds, rot and disease.

The downpours damaged crops, from tomatoes, green bell peppers and corn, to barley, peaches and watermelon, decimating whole crops or severely reducing yield.

"The rains have just killed me this year," said Tucker Gant, 51, a vegetable and fruit farmer in Elk, who estimates his total losses this year at nearly $220,000.
…
"Nobody has ever seen rain as drastic as this year, even talking to old-time farmers," said Grasso, a third-generation farmer who estimates losses so far at roughly $50,000.
…
"It's never been that bad as far as I can remember," said Gant, pointing to water pooling in a field as he drove his pickup truck along a bumpy dirt trail toward 35 acres of barley overrun by tall weeds. "I have never seen water lay there more than two days. It should have been harvested, but you can't harvest weeds taller than barley."

[Louisiana, September 27]

Farmers that delayed stinkbug apps for two weeks due to weather will notice considerable damage. How much will be left to the discretion of the tester at the elevator. Some we hulled out had over 80% damage early last week. But we have also done this earlier this year and the soybeans graded less than 10% damaged. We cannot manage the numbers of stinkbugs that are now entering soybean fields. Threshold levels are returning too quickly. Some farmers are talking about planting more late beans next year. Better figure 5 – 8 apps for stinkbugs in that budget.

No soybean is safe from stinkbugs as long as it remains in the field. High numbers can harm even soybeans at R7.

[Mississippi, October 2]

Harvest season rains have robbed soybean growers of strong yields and bean quality, reducing profits in an already challenging year.

“We were harvesting a beautiful crop with outstanding yields before the rains came the last two weeks of September,” said Trey Koger, soybean specialist with the Mississippi State University Extension Service. “Now that farmers are finally back in fields, we are seeing average yield losses of 5 percent to 10 percent.”

In addition to the yield losses, damage estimates average between 5 percent and 20 percent.

“The amount of damage the crop received is extremely variable,” Koger said. “We’re seeing damage from 2 percent to 80 percent. You couple these numbers with the yield losses, and farmers are not seeing as good a harvest as they anticipated just a few weeks ago.”

[Mississippi, October 2]

Rainy weather is not the only thing attacking the state’s soybean crop. Jeff Gore, a Mississippi Agricultural and Forestry Experiment Station research entomologist, said a new, smaller but more aggressive feeding species of stinkbugs has moved into the state.

“The red-banded stinkbug is slowly creeping its way up our state from Louisiana,” Gore said. “We had them in low levels last year and had to treat a couple of fields for these stinkbugs, but they are a lot more widespread this year on the later-planted soybeans.”

Gore said producers have sprayed a significant number of acres for the red-banded stinkbugs. Existing insecticides are effective, but they break down in six to 11 days and the bugs re-infest quickly.

“Either you spray for these stinkbugs or you’re not going to harvest beans,” Gore said. “Since you have to spray more frequently and at a little higher rate, you have to make a management assessment according to how the beans are looking when the stinkbugs move in.”

“I’m afraid this one has the potential to be a lot more of a problem than rust,” Gore said. “They appear to be well-established through most areas of Mississippi now, and it’s likely to be an annual problem that will get worse before it gets better.”

[Louisiana, October 8]

"It's killing us," said Ouachita Parish producer Gary Mathes. "We cut some beans a week ago that we had to sell at a salvage price of $3 a bushel."

Soybean prices have been hovering near $9 a bushel.

"We fought a short corn crop, but we had one heck of a bean crop and the rain is taking it away from us," Mathes said.

[Louisiana, October 8]

Venoy Kinnaird said his farm has been drenched by about 20 inches of rain since Sept. 12.

"I've got some beans that I won't cut; they're not salvageable," Kinnaird said. "And I've got some sweet potatoes that are halfway out of the ground. Cotton has taken a terrible hit, too, even though we don't have that much planted around here this year.

"We're absolutely waterlogged. What's really bad is we're coming off of a disaster last fall."

[Alabama, October 10]

Three weeks ago Jamie Tate thought his 200-acre cotton crop would be the best he's ever harvested from his family's Shelby County farm.

Then near-constant rains fell across the area in September and early this month, dashing his hope for a bumper crop.

"It went from being the best cotton crop I've ever harvested to one of the worst in three weeks," Tate said. "I'm in shock."

[Alabama, October 10]

John DeLoach, a farmer from Vincent, said the large number of days without sunshine has hurt his crop more than the excessive rain. Many of his soybeans were hit by rot and mold because they couldn't dry out.

"They just stayed damp," DeLoach said.

DeLoach recently harvested 90 of his 500 acres in soybeans. About 55 percent of them were classified as damaged. That cost him about $7,000 or more, he said.

[Iowa, October 13]

Edwards and fellow farmer Tim Burrack of Arlington in Fayette County said corn in their fields had heavier moisture than usual, the product of continued wet, cold weather and lack of sunshine.

"We're seeing white mold in the soybeans here, and it could cut the yields down into about 40 bushels per acre," Burrack said. "The farmers here were expecting soybean yields in the mid-50s, maybe 60 bushels per acre."

[Crop Comments, October 26]

10/26 - East Central North Dakota: Total stand still in East Central North Dakota. Too wet to dig beets, too wet to combine soys, 1/2 or more of the dry beans left and too wet. Sunflower moisture went from 17 two weeks ago to 27 yesterday. And weather man says snow for Thursday, Saturday and Sunday of next week...Man are we in trouble...

10/26 - Cedar County, Neb.: Sunshine is getting to be an abnormal object in the sky. We received 2" of rain Tuesday thru Friday and raining this mourning. Harvest is slow, we have two soybean fields out over the scale 69bu.irrigated and 50 on dryland well above average. Corn harvest looks to be great but very wet irr.250 dryland 200. Praying for sun and warm weather. Be careful; safety first!!!!

10/26 - Floyd County, Iowa: We had 4 inches of rain Oct.20 thru Oct.24. Most are 60% to 70% done with beans, of which most were harvested too wet. Corn will vary from 21% to 38% in one pass across the field, rather unusual for 100 day corn planted before April 24th. Yields good, reports of dried corn test weight 48 to 53 lbs. Corn harvesting is practically non existent.

…
10/26 - Bond County, South Central Illinois: Is this really possible? We have had the wettest couple of months in history. Most corn is still 30% and they are calling for 2-3 more inches of rain this week. We are losing crop as we speak. Lodging in the corn is starting to take place. Any suggestions? I am ready to punt!!!!

--------------------------------

10/27 - Northwest Minnesota, along Canadian Border: We had a hard killing frost Sept 27th and now the corn has ear rot on 75 - 90% of the cobs. Federal Crop is releasing thousands of acres and corn choppers are going. There won't be many fields combined in NW MN. The moisture is 45%. Lots of beans left. Moisture is stuck at 18 - 20%.

--------------------------------

10/28 - Far Northern Illinois: Many fields of soybeans untouched some corn being picked but hard to find corn under 30%. Mold is present on almost every ear I looked at yesterday. Stalk quality is starting to slip quickly in some fields. There simply is not enough drying capacity to harvest this crop with any speed. Most guys have drying capacity for a half day of harvesting and two big 12 row combines can bury the local elevator at 32% corn. Feels like a real disaster is just around the corner with any type of wind or snow event. We will be talking about the fall of 2009 for many years to come.

10/28 - Lancaster, Pa.: We are wet and getting wetter. Harvest is at a standstill with 3 inches of rain in the past week. Corn moisture still running in the upper 20's. Quality will soon become an issue as well. It will be a challenge to get the remaining acres of small grain planted.

10/28 - Ramsey County, Northeast North Dakota: Rain again with more rain & snow in the forecast for the next few days. We have only harvested 3 partial days in the past month. Pinto beans are less than 25% harvested, moisture has been over twenty on most, what is left will only be a salvage operation. Soybeans are less than 10% harvested, and they were upper teens to over twenty moisture. We had not planned to even try the corn until after Thanksgiving, may harvest it in the spring, did a lot last year and was pleasantly surprised by the increase in test weight and minimal loss.

10/29 - Clark County, Ark.: If there were any doubts about how nasty it is down here this ought to answer those questions.

-- Clark County, Ark.

--------------------------------

10/30 - Lafayette County Wis.: WET, WET, WET. I guess we are all in the same boat. We are way, way behind. Corn is developing green mold. Broker says when weather straightens out there is a big crop out there. Problem is will the sun ever shine again? Stay safe everyone…a safe harvest is a good harvest.

10/30 - Nebraska Panhandle: Guess we don't have to worry about the irrigated corn blowing over before harvest, the snow is holding it up!

-- Nebraska Panhandle

10/30 - Buena Vista County, Northwest Iowa: Raining here again, close to 10 inches now in October, Still some beans out in the fields here, I just got done, Yields decent in the 50's which is normal. Some have gave up on beans and started corn, most of it from what I've heard is anywhere from 20% to 40% moisture and yields from 120 to 220, with very low test weights. Stalk Rot now a real concern & some guys are finding green snap they didn't know they had, those yields cut in half. I believe this harvest, when it's over, if ever will be one, we all will want to forget!

10/30 - Bond County, South Central Illinois: UN-FREAKIN-BELIEVABLE.

[Crop Comments, November 2]

11/2 - Winnebago County, North Iowa: 9.8 inches of rain last 35 days -Winnebago River is bank-full slowing drainage-beans 40% harvested -corn -5% at most. Corn running from 24-30%. Won't turn a wheel here to at least Wednesday/Thursday on sandy ground. Local elevator can dry only 25,000 bu daily of 25% corn. Almost all reporting points in Iowa are showing from 2x to 3x normal rainfall from history in past 30 days. Tow ropes are sold out. Fields will look like war zones before this December harvest is over!
…
11/2 - Houston County, Minn.: Help me out here. I am confused. Just finished reading the crop comments. No harvest progress, beans to wet to combine or frosted while green. Corn molding, too wet to combine and many reports of very low test weight. Snow burying corn in Colorado and Nebraska. Flooding burying crops in Iowa, Illinois, Indiana, etc., etc. Was at the local elevator yesterday. They are in a bind because they have contracts to fill but either no beans are coming in or they have to reject them because of high moisture. Biggest crop ever coming in??? Where?

[Missouri, Illinois, November 2]

The autumn monsoons are hard to figure, said Benjamin Sittrell, a meteorologist for the National Weather Service office in suburban St. Louis.

"Typically during the late-year period, it's our driest portion of the year," Sittrell said. "To see such astronomically high amounts of precipitation, where we got several inches above the previous record levels, is very abnormal.

Sittrell said thousands of acres of farmland are under water, particularly in the flat areas of southern and western Illinois, where the Illinois, Ohio and Kaskaskia rivers are among several that are flooding.

[Arkansas, November 3]

"It's bad," was the way Ashley County Cooperative Extension Agent-Agriculture Kevin Norton described the status of Ashley County's crops this past week.
…
Overall, Norton said, he expects farmers to carry over a lot of debt this year. "I am afraid we will see a shakeup," he said. "It will be months before we see the full magnitude of how bad this fall has been."

[Iowa, November 3]

Farmer's Coop Association General Manager Randy Broesder has been involved in farming for a long time, but he can't remember a harvest season that's been as scary as this one.
…
“Some of the guys have told me that harvest hasn't been this late since 1962, and that's a long time ago,” Broesder said.

[Iowa, November 3]

Darwin Luedtke, a grain merchandiser for the North Central Cooperative office in Woden, said this harvest has been a major battle for farmers.

“I haven't seen anything like this in 37 years,” Luedtke said. “The fields are wet, beans and corn aren't as mature as they should be because of the cooler weather this summer, and it's going to cost farmers money to dry the crop. It's been a very difficult harvest.”

[Crop Comments, November 3]

11/3 - Central Nebraska: 12 in snow just melted. Fields a saturated and corm is wet with little hope of drying down because of freeze before maturity. The USDA needs to wake up and smell the roses.

11/3 - St. Clair County, Southwestern Illinois: We picked up a mere 14 inches of rain in October. Not only was this the wettest October on record, it was the fourth wettest month ever recorded in our area. Saturday brought about panic for guys farming in the bottoms along the rivers. Many were doing anything possible to get their crops out before any of the rivers crested. It is slow going for everyone as you cannot bring any trucks, wagons, or grain carts into any fields for fear of burying them. The neighbor down the road buried his combine and it took two Caterpillars to get him out. I would put corn harvest at maybe 8 percent complete as some folks have never started due to high moisture and no on the farm drying. Beans are maybe 30 percent complete. I guess we will see how much the beans rotted in the next few days. We are hoping for beans to go on Wednesday or Thursday in this area. It was 70 degrees today and we could use another six weeks of this weather. Many nervous folks around here and who can blame them. Corn yields are running anywhere from 170-240 and beans are running 35-54. Be safe everyone and best of luck with your harvest.

11/4 - Franklin Country, North-Central Iowa: Corn at 28%, we have maybe 10% harvested in this area. The last load of beans I took in was 14.2%, we have around 33% harvested around here. Yields for beans going low-50's to low-60's. Corn yields- only God knows. I would say we will be down around 25 bu from 2004 record yields; probably 190-195 will catch it this year. Certainly no record yield in my part of Iowa as the USDA is saying. Quality will be a big issue this year; I see a lot of corn getting dumped, rather than stored. The old-timers are saying they have not seen a harvest like this for many years and I hope we never see another one like this one for 30 years.

[Arkansas, November 4]
…
And further downstream in near Des Arc, the crest is not expected until Saturday or Sunday. Farmers there are paying the big price. Five-hundred acres of Doyle Burnett's soybeans are already underwater.

THV's Mike Duncan asked Burnett, "What are you going to do with that? Just let it go I guess", Burnett replied. "It will be gone. I don't see any chance of the river coming back down anytime soon. So I think they're totally gone."

[Arkansas, November 4]

“As long as the weather holds, guys will be going 24/7,” Jeremy Ross, extension soybean agronomist for the University of Arkansas Division of Agriculture, said Wednesday. “They were harvesting around my house last night ‘til around 9 p.m.”.
…
Beyond the harvest, there is anxiety about the future for some farmers.

“Some growers expect to go out of business in this region, based on the heavy damage to their soybean and cotton crops,” Ross said.

[Mississippi, November 5]

Hartwell Huddleston returned the extra combine he bought to help harvest what looked to be one of his best soybean crops ever.

After two months with little letup in rain, he figures he got five days' of work out of it, and one was spent just looking for dry ground to cut. And the quality of some of the crop he did bring in from his northwest Mississippi fields was so rough, an elevator refused truckloads.

"We've had a lot of rainy years, but this one puts those to shame," said Huddleston, who also sells crop insurance. "If a person's a farmer you start to think, 'Where am I going to sleep? How am I going to feed my children?'"

[Mississippi, November 5]

Stephen Logan was weighing whether to tear up his water-logged fields to get at a cotton crop speckled in places with mold, mildew and stains. He said he got 28.1 inches of rain on his northwest Louisiana farm last month, more than he said he's seen in some entire years, and the shorter days have meant less sunlight to dry things out.

"This was shaping up to be one of the best cotton crops we ever had, but it's absolutely rotted away on the stalk," Logan said. "It's very frustrating and humbling, to say the least."

[Mississippi, November 5]

In Mississippi, farmer Andy Clark doesn't know what he'll do. He put everything this year into sweet potatoes — an expensive-to-produce crop that in a good year can yield strong returns.

This wasn't a good year. Delays in getting into the fields meant potatoes rotting in the wet soil, and even if one were lucky to harvest some, odds were good — given all the rain — they'd rot in the storage house. And it's hard to justify the labor costs for that, he said.

"It's really going to be hard to sit down and talk with the bank. There's probably not going to be any way to persuade them to give you any more money," he said. "At this point, you're probably going to have to ask them to give you a little more time to pay them back."

Of the 82 acres he'd planted in central Mississippi, he'd harvested about four. His side business, hauling potatoes, "is shot."

[Arkansas, November 5]

Dollar amounts have yet to be placed on crop damages in Lafayette and Miller counties, but estimates by the University of Arkansas Extension Service indicate the losses will be tremendous, especially for soybeans.

The grain elevator companies are turning down soybeans because the damage is “too severe,” said Joe Vestal, Lafayette County Extension agent, staff chair. “We can’t put a dollar amount on the damage yet, but we’ve had lots of damage. It will be tremendous for soybeans. Most of the soybeans ready to be cut, before the rain started in September, will probably be a total loss." About 70 percent of the loads to grain elevators are damaged.

[Alabama, Georgia, north Florida, November 6]

Alabama Commissioner of Agriculture Ron Sparks is calling it a “potential crisis” — the rainy weather conditions throughout most of September and October that have frustrated growers who were eyeing pretty good cotton, peanut, soybean and corn crops.

The same holds true for producers in Georgia and north Florida, where harvest has been delayed by almost continuous rainfall, during what is usually the driest months of the year.

“Prior to September, many producers were expecting to harvest a bumper crop and were very optimistic for the upcoming harvest season,” says Sparks. “Uncommon and unfavorable precipitation during September and October have degraded various crops and caused poor harvesting conditions, which caused the harvest to be behind schedule by around four to six weeks.”

The major crops affected by the recent rainfall are cotton, soybeans, corn and peanuts, says the Commissioner. “Reports indicate that our state is in dire need of dry weather within the next two weeks, which may eliminate a potential state disaster [Area was then hit my 5+ inches of rains from Topical Storm Ida],” he said in early November. “Producers are already suffering from heavy September and October rainfall and dry conditions will not eliminate damage that has already taken place to crops across the state. Many producers are experiencing a sharp decrease in crop yield, lower grading, and crop damage from recent rainfall.”
…
“The bottom line is that Alabama producers are uncertain as to what the commodity markets will bring forth and where agriculture in our state is going,” says Sparks. “The recent weather conditions over the past two months will definitely have a negative impact on Alabama’s crop harvest.”
…
William Birdsong, agronomist at the Wiregrass Research and Extension Center in southwest Alabama, reported that wet and rainy conditions continued to delay harvest for row crops. Cotton yields and lint quality continued to suffer as a result of the wet conditions, he said. Less than 5 percent had been harvested in his area, and this could go down as the worst crop in years if the rain does not subside.

[Mississippi, November 8]

Ray Mosby can't remember tougher times -- and he's not talking about the newspaper business.

For 16 years, his weekly Deer Creek Pilot has chronicled the ups and downs of Mississippi's Issaquena and Sharkey counties, about 175 miles south of Memphis.

Although his 130-year-old newspaper is small, with a circulation of only 1,500, its editor has won state and national recognition for his community-minded journalism.

Lately, though, the news has been discouraging.

The last manufacturing plant in Sharkey County, the Stonecraft tile factory that employed about 70 at one time, closed up shop earlier this year. And recent heavy rains have damaged or destroyed most of the area's cash crops: Soybeans were left to rot in waterlogged fields, and ready-to-harvest cotton is deteriorating as the rains keep coming.

In a community where agriculture is the main source of capital, that spells calamity.

"I've never seen a place that needed as desperately a dose of good news as this place," says Mosby, 58.

[Kansas, November 09]

In far southwestern Kansas, combines are moving furiously through fields at lightning speed. Cory Kinsley, vice president of risk management for Conestoga Energy in Liberal, Kansas, says harvest likely will be done by about the middle of next week. Even better, yields, quality and moisture have all been great.

Others in our area, though, have been less fortunate and are still waiting for fields to dry down. After weeks of constant rain, fog and drizzle, the soil may still be too wet to support heavy machinery. Some fields are still flooded and won’t be drying out any time soon. It likely won’t be until much later this winter that those fields get harvested – if ever. Some portions of fields may ultimately be abandoned if they’re still too wet in the weeks ahead.

Field losses in wet fields are also mounting from lodging. As corn and milo stalks soften and break over in the wind due to the excessive moisture, more bushels inevitably end up on the ground instead of in the combine. That means more field losses long term if harvest drags out any longer.

[Alabama, November 10]

What had started as a good season for cotton could be a complete loss for some farmers if heavy rains hit fields before harvest, said Richard Petcher, agent with the Alabama Cooperative Extension Service.

"It's been a 30 percent loss so far in southwest Alabama, and more rain could make it 40 to 50 percent," Petcher said Monday. "Some fields are already a 100 percent loss."

Financial damage from Ida could be in the millions of dollars for Alabama farmers, he said. Rains have delayed harvests by about three weeks affecting not only cotton but also leaving some peanut crops vulnerable to early frosts.

"The majority of the cotton crop is still in the fields," he said. "Peanuts are about 60 percent harvested. There's been concern about rain, but now it's almost panic."

Soybeans have also been hurt by rain, with crops rotting and sprouting in the fields, Petcher said.

[North Florida, November 11]

Preliminary reports show that Tropical Storm Ida caused or heavily contributed to millions of dollars in losses on Escambia County’s farms.

“Agricultural losses are significant for peanuts, soybeans, hay, and cotton,” said Suzette Cooper, Farm Services Agency. The damage, she said, was not from Ida’s winds, but from four to seven inches of rain in a 12 hour period. That rain only served to further the crop losses from heavy rains in October.
…
“With all of the rain, there is some terrible looking cotton,” according to Libbie Johnson, Escambia County Extension University of Florida IFAS agent. “There is one field I know of on Highway 97 that was so pretty Saturday and Sunday. Some of it was harvested, and now the rest is basically ruined.”

[Mississippi, November 12]

"We're seeing catastrophic losses," Andy Prosser, a spokesman for the Mississippi Department of Agriculture and Commerce, said in a phone interview.

Ida swept in from the Gulf of Mexico into neighboring Alabama on Tuesday. Mississippi was spared a direct hit but still got an unwelcome soaking.

"We got a few counties in east Mississippi that did get a lot of rain. Of course any more rain at this point is not good in terms of crop harvest," Prosser said.

[Arkansas, November 12]

On Nov. 4, Gus Wilson took a sample of soybeans with 100 percent damage.

“It was the first time I’ve seen that,” says the Chicot County, Ark., Extension staff chair. “The situation here is bad, bleak. We’ll be lucky to make half the crop we’ve made in the last three to four years. That’s strictly due to the weather.”

Chicot County in extreme southeast Arkansas has caught huge rains all fall. Now, watching crops deteriorate, Wilson says he’s not seen “a group of growers who’ve been more discouraged. Those who were planning to plant wheat may be out of luck. If there’s wheat planted and emerged in Chicot County, I don’t know where it’s at.”

…
Faced with a seemingly unceasing deluge in 2009, veteran farmers are struggling to come up with a similar year in the past.

“My father is 82 years old and he’s farmed 55 to 60 years,” says Wilson. “He says this is the worst harvest season he’s ever seen. Out of his career, he said only one year comes close — he can’t remember if it was in the late 1950s or early 1960s.

My reaction: 2009 is the worse harvest many farmers have ever seen.

USDA’s latest estimates for the 2009 soybean crop

Don’t worry about all the depressing news above. After all, the USDA increased its estimated 2009 soybean crop to a record-breaking 3.3 billion bushels this month! (HEAVY SARCASM)

Soybeans for Beans: Area Harvested, Yield, and Production by State
and United States, 2008 and Forecasted November 1, 2009
	Production
	1000 bushels
	Prior Years		USDA 2009 Estimates
	2007	2008	Sep	Nov
Alabama	3,885	12,250	16,280	15,910
Arkansas	101,520	123,500	127,300	128,060
Delaware	4,030	5,308	6,768	7,137
Georgia	8,550	12,450	16,320	14,850
Illinois	360,180	427,700	398,200	420,750
Indiana	220,340	244,350	235,640	249,780
Iowa	448,760	444,820	505,960	486,030
Kansas	86,130	120,250	140,000	156,950
Kentucky	30,250	46,920	60,060	64,860
Louisiana	25,800	31,350	35,000	35,890
Maryland	10,725	14,550	18,720	20,425
Michigan	71,600	69,930	75,620	77,610
Minnesota	267,325	264,100	284,000	298,200
Mississippi	58,320	78,400	88,970	77,040
Missouri	175,125	191,140	224,700	233,200
Nebraska	196,350	225,990	237,150	247,000
New Jersey	2,480	2,610	3,150	3,480
New York	7,917	10,396	10,836	10,836
North Carolina	30,360	55,110	59,840	59,840
North Dakota	108,630	105,280	120,000	115,500
Ohio	199,280	161,280	215,260	219,840
Oklahoma	4,680	9,000	8,580	10,360
Pennsylvania	17,630	17,200	20,025	20,915
South Carolina	8,140	16,960	15,930	15,120
South Dakota	136,080	138,040	167,700	172,200
Tennessee	19,190	49,640	62,400	62,730
Texas	3,450	4,920	5,250	4,485
Virginia	13,750	18,240	20,650	21,460
Wisconsin	55,890	55,650	63,570	66,830
Other	750	1,840	1,413	1,982

Total:	2,677,117	2,959,174	3,245,292	3,319,270

Conclusion: There are two possibilities:

1) The USDA numbers above are correct, and drought, colder than normal summers, disease outbreaks, insects infestations, and excessive rainfall are the secret to magically producing record breaking crops. In this case, I suggest we artificially recreate the conditions experienced this year by US farmers so they can continue producing such record crops.

2) The USDA is blatantly lying, and its numbers are miles away from reality.

You decide.

El Niño Wrecks Havok In The US

2009-11-16T14:01:00.000-08:00

The Wauneta Breeze reports that El Niño responsible for cooler than normal summer in Midwest.
(emphasis mine) [my comment]

Warming ocean temps lead to cooler than normal summer for Midwest
Friday, 04 September 2009 20:50
By Tina Kitt
The Wauneta Breeze

This year’s summer weather — cooler and wetter than average — has many scratching their heads and asking “what’s the deal?”

It’s early August and Wauneta still has not hit 100 degrees in 2009, according to official data from the National Weather Service.

The hottest day so far this summer was July 24 when the mercury topped out at 99 degrees. On that day, the high in Imperial was 101 degrees, the only triple-digit high that town has seen this year, according to the NWS.

Similar conditions have dominated statewide, making 2009 one of the “top 10” cool summers on record in Nebraska. For example, Omaha was 4.5 degrees below normal for the month of July, setting a 100-year record, and this weekend Valentine set a record-low for Aug. 1 at 44 degrees, beating the nearly 100-year-old previous record low of 45 degrees set in 1911.
…
Still, there are drawbacks. For farmers whose corn, soybean and sunflower crops went in late due to wet spring conditions — or even worse, had to be replanted due to hail — they are hoping for heat units to catch up to normal as fall approaches.

So what’s behind this unseasonable summer weather?

According to the pros, warming ocean waters have translated into a cooler than normal summer for the northern Great Plains, Upper Midwest and eastern U.S. — as well as record-breaking drought and heat in the southwestern U.S. and the Pacific Northwest region.

Art Douglas, a climatologist who heads the atmospheric sciences department at Creighton University in Omaha, says that an El Niño that began building in late spring can be associated with this year’s wacky weather as jet stream patterns around the world are affected by this phenomenon. El Niño is the periodic warming of tropical Pacific waters that occurs on average every two to five years and typically lasts about 12 months.

El Niño’s impacts depend on a variety of factors, explained Douglas, such as intensity and extent of ocean warming, and the time of year. Its effects include weaker trade winds, increased rainfall over the central tropical Pacific, and decreased rainfall in Indonesia. These vast rainfall patterns in the tropics are responsible for many of El Niño’s effects on global weather patterns.

In early July, National Oceanic and Atmospheric Administration scientists announced the arrival of 2009’s El Niño and expect it will continue developing during the next several months — with further strengthening possible — and lasting through winter 2009-10. [which explains this fall’s record rain]

Jackson Weather Examiner reports that United States recorded its wettest month of October on record.

United States recorded its wettest month of October on record
November 14, 2:13 PMJackson Weather ExaminerJohnny Kelly

According to the National Oceanic and Atmospheric Administration and based on preliminary data from the National Climatic Data Center, October 2009 was the wettest month of October on record overall across the United States.

The nation averaged precipitation amounts of 4.15 inches, nearly doubled the long-term average of 2.04 inches from 1901-2000.

Over 40 states recorded above average precipitation during the month of October!

(NOAA)

Three states recorded their wettest month of October on record! (Iowa, Arkansas, and Louisiana)

Only 3 states: Florida, Utah, and Arizona recorded below normal precipitation.

Nearly 45 percent of the contiguous United States experienced moderately-to-extremely wet conditions at the end of October, according to the Palmer Index, which is the largest such footprint since February 2005.

The very wet month of October has helped many states along the mid- and Lower Mississippi Valley achieve or near their wettest years on record and has decreased drought overall with only 12 percent of the country experiencing drought conditions, which is the second smallest drought footprint of the decade, according to the NOAA report. (El Nino is the likely cause of extremely wet weather across the South)

The Courier Post Online reports that crop losses staggering on South Jersey farms.

September 26, 2009
Crop losses staggering on South Jersey farms
By WILFORD S. SHAMLIN
Courier-Post Staff

South Jersey farmers are coping with heavy crop losses after steady summer rains saturated fields, creating an environment ripe for overgrown weeds, rot and disease.

The downpours damaged crops, from tomatoes, green bell peppers and corn, to barley, peaches and watermelon, decimating whole crops or severely reducing yield.

"The rains have just killed me this year," said Tucker Gant, 51, a vegetable and fruit farmer in Elk, who estimates his total losses this year at nearly $220,000.

In Mullica Hill, Fred Grasso, 52, said late frost damaged his peaches and rot ran through his tomatoes, green bell peppers, zucchini and watermelon.

"Nobody has ever seen rain as drastic as this year, even talking to old-time farmers," said Grasso, a third-generation farmer who estimates losses so far at roughly $50,000.

Gov. Jon S. Corzine has requested that 15 counties -- including Burlington, Camden and Gloucester -- be declared disaster areas by the U.S. Secretary of Agriculture after rain, hail, wind and even a tornado caused crop and property damage across the state, said Lynne Richmond, spokeswoman for the New Jersey Department of Agriculture.

The designation would allow farmers with severe weather-related losses to apply for emergency low-interest loans.

"Weeds are a big issue, especially in a wet year. When it's time to cultivate, you can't and when you finally get in there and cultivate, and it rains day after day, weeds set in and reroot because of the moisture," Grasso said.

Weeds steal nutrients from crops, grow tall and block out sunlight, and prevent plants from drying out after rainfall. And constant rain creates problem because the weeds grow faster and herbicides get washed away before they work.

"It's never been that bad as far as I can remember," said Gant, pointing to water pooling in a field as he drove his pickup truck along a bumpy dirt trail toward 35 acres of barley overrun by tall weeds. "I have never seen water lay there more than two days. It should have been harvested, but you can't harvest weeds taller than barley."

Blueberry and peaches thrived in the wet weather but the same disease responsible for the Irish potato famine attacked South Jersey's tomato crops.

"Farmers' yields will be down this year because a lot of fruit out there wasn't able to be marketed," said Michelle Casella, an agricultural agent for Rutgers Cooperative Extension for Gloucester County.

This year's hay crop was such poor quality that Gant marked down the price for landscapers, making 25 cents profit per bale rather than $1.50.

Though struggling, Gant and Grasso are bent on persevering as operating costs continue to climb.

Gant's losses include $30,000 on bales of straw for mom-and-pop stores that order 15,000 bales and sell it as decoration during the holidays. He grew enough straw to make 10,000 bales but he had to buy the remaining 5,000 bales from a neighboring farmer.

Crop losses have cut into profits that the Gant and the Grasso family normally would have invested back into the farm.

"We have cut every corner we can without hurting the business itself," Grasso said. "We're at just about the limit where we can't cut back anymore. I'm trying to conserve."

Gant said he has depleted his retirement savings and supplements his income by working three days a week repairing tractor-trailers. He often works 16-hour days on the farm. His wife also works full-time.

He has trimmed unnecessary expenses, postponed farm equipment upgrades, and criticizes the federal government for coming to the aid of car dealers and other big businesses, but not farmers.

"Where's the bailout for farmers?" Gant asked.

"When everything went into the toilet, my costs didn't go down one bit," Gant said.

Gant said he would need a $250,000 loan to bail out his farm.

My reaction: El Niño is the culprit for all the strange weather we have been having in the US this year.