Ag News: Local Growers Feed the World

Talk to any farmer and he will tell you what is going on in the world. What happens in Russia, for example, has a direct impact on whether or not he can afford the new truck.

Unlike ever before, global events have a direct impact on the pocketbooks of local farmers. The corn, soybeans and wheat grown here feed the world.

Last week's Ag News focused on the affects of Japan on the U.S. grain markets.

This week, the news in agriculture comes out of Argentina, Libya and Egypt.
Starting with Argentina, they are definitely a player in the world's grain market.

March has not been kind to them. They have been plagued with torrential rains as well as possible corruption. Their IRS-equivalent, called Afip, raided 117 offices of grain traders in a multi-national wide-spread tax probe. 

Then Tuesday, Afip issued 16 arrest warrants for people allegedly selling black-market grain to the tune of over $100 million, Afip said in a press release. Several companies have been booted off the trading registry, meaning less grain makes it to market.

When South American supply decreases, the demand for U.S. supply increases.

Next, the events in Libya affect the oil prices. As we saw with Egypt, gas here has been skyrocketing. Libya is keeping the price inflated. 

These outside markets, especially oil and gold, have had the most impact on grain prices, according to Grain Expert Cathy Chismarick of Prairie Creek Grain in Will County. Just in the past four or five years, their impact has grown considerably, she said.

One obvious link is oil to corn, via ethanol. Therefore, when the Middle East oil fields are in an uproar, our local corn growers feel it.

Lastly, this week we have seen a reduction in Egypt's demand of American wheat that is hopefully short term. Even still, Chismarick is optimistic about our global wheat exports. However, that, plus the temporary slow down in Japan's demand, give reason for grain watchers to take notice.

Keep in mind, grain prices right now are at historical highs. These slow downs should cause the markets to contract causing speed bumps, and hopefully not pot holes. 

In general, grain prices are on fire. Globally, we are not meeting the world's demand for food. A major indication comes in six days with the March 31 reports.

The USDA releases the annual Prospective Plantings and the quarterly Grains Stocks report. Look to next week's Ag News to learn what the USDA has to say and how that will affect you.