Illustration depicting both male and female flowers of maize Image credit:Wikipedia
Corn is such a cultural cornerstone in America. Lend an ear to John Fahey playing "Give Me Corn Bread When I'm Hungry."
Remember Thoreau buying sacks of cracked corn for his Walden Pond stay? Tortillas and Katchina Dolls, and marbled beef, and corn root borers and Monsanto working together for the good of...
We may soon have to think about a corn price 'bubble' and what that means for American culture, during the rise, and after it "pops."
Farmers will do well this year if they are outside the areas of extended drought or floods. For the rest of us, especially the unemployed and underemployed, there may be increased difficulty.
Bloomberg reports that
Corn rose the most allowed by the Chicago Board of Trade as concerns mounted that food costs will climb after the latest U.S. government forecasts on supplies and acreage.Reuters (via Planet Ark) reports that:
A government survey found corn plantings would be the second-largest since World War Two and soybeans the third highest ever. But traders focused on a companion report that showed unexpectedly small stockpiles, sending corn prices up by 5 percent. Wheat and soybeans surged more than 3 percent.Tractor makers are going do well for the first time in years. Farmland prices are crazy high. From the Illinois State Journal Register: Some of the highest prices were in the Springfield region, where sales of $6,500 to $9,000 an acre were reported for prime land.
"We are not going to run out of (corn and soybeans) but we are in a very tight situation," said Joe Glauber, Agriculture Department chief economist, in an Insider interview.
Less prime farm land is going to be converted to housing developments while those land prices hold.
With corn reserves down and prices up, it is hard to imagine giving very much grain to nations experiencing famine.
American farmers will be pushing marginal land to the brink, trying to wring every dollar they can out of it while demand is up. There will be increased erosion on steep slopes and on plowed over grassed waterways. Water quality will suffer.
Irrigation water will be in high demand: farmers will be competing with cities for that water.
With the real estate scams a bit boxed in, Wall Street will be speculating on grains big time. How well do you think that will fly?
The corn bubble drives other trends that we all need to be thinking about. Chasing after top corn dollars, farmers will be tempted to get loans on new equipment and acreage (from smaller farms or badly managed ones) and seed and fuel and so on. Bankers, seeing the large price that corn can bring (feeling the bubble along with all the others) will grant those loans, backed by Wall Street speculators who's firms are also buying futures contracts on grain based on "the bubble."
When the bubble bursts or if the farmer is hit by extreme weather (climate change I'm saying, yes), taxpayers are left to cover the loan defaults up and down the supply chain and the farmer is screwed.