La Niña is showing her brutality as places that need to plant soon are snowed in and the places that have planted are dry, dry, dry, with the exception of the Mississippi floodplain.
Here in central Texas, we are hit and miss with the official precip totals a little less than average, but we are not even at seven inches of measurable precipitation so far this year on my farm, which is less than an hour west of Easterwood airport, or the closest National Weather Service gauge. That gauge is at 10 inches of cloud tears for the year. Normally we would be well over a foot, and turning over the soil in March or April, we would not expect the first six inches of depth look like this:
This is dry…abnormally so. With temperature swings hitting new record highs of 92F in April! And it’s not a good indicator for croppage north and to the west of us where the annual precipitation drops off considerably the further from the Gulf Coast you are. Irrigated fields north of us are having to run pivots on the planted corn and soy beans round the clock. We have previously covered silage, to death, as a touch point for consumer goods and feed for animal proteins. Cotton and wheat, however, often get looked over but are equally important to the overall food and commodity profiles for a population. Cotton, while not edible, does produce quite a bit of seed oils, in addition to fabrics and fibers. Wheat, however, is widely used from bread, to beer, animal feed, and virtually all baked goods and meat breadings. A chicken fried steak requires both wheat for the breading and more for the gravy to smother it in. That kind of meal, which used to be inexpensive, is getting it’s turn on the inflation dial. Contrary to popular belief, this is not due to Ukraine, as the majority of wheat imports for the US come from Canada. Ukraine exports to the EU, Egypt, etc.
As the year has progressed, the US Drought Monitor has been blinking red, and going maroon like a Texas A&M homegame.
There a lot of things we can do as farmers to get things working properly on a farm. There is very little we can do if it isn’t raining. Irrigated fields will be pumping full on this season, non-irrigated will suffer crop loss as this seems to be persisting.
With 12 million acres planted with cotton and 97% of Texas in drought, this spring is going to be rough for a lot of farmers. But moreso for consumers, as Texas is 14% of the farmland in the United States encompassing 127 million acres.
The global economy has already seen dramatic inflationary pressures. With food staples and primary inputs inflating at the producer level, this will lead to further consumer and end user inflation six months from now. Commodities markets are already pricing this in:
Wheat futures, Jun’22:
Agricultural commodities are up across the board, current trends of silage:
Corn is now at $8 a bushel, and soybeans up yet again now pricing at $17 a bushel. This daily continual add of 2-3% will ripple through the economy. Of context, the 2011-2012 planting was the last time prices were this high. Texas also was on fire in 2011, with large swatches of the country in dire straights. This looks to be the setup for 2022.
Last year we accredited the historically good/bad figures to base effect, where the year over year comparisons were tainted by the fact that the economy in large part was shut down during the beginning of the Covid pandemic in 2020. The base effects no longer apply to year over year.
My forecasts have not charged, I think there will still be a general pullback in commodities, but my projected probability of that pullback is growing thinner and thinner each day we have unfavorable reports coming from the fields. I still expect commodities in the agriculture sector to remain high, causing further inflationary pressures around third quarter this year. We are currently nationally around 7% planted for the season which is on track with the yearly averages. But I will say, we are on very, very thin, dry topsoil (ice for you Dakotans) and at any point could become a more desperate situation as the drought continues through the summer as forecast.