Wednesday, July 11, 2012

Corn losses due to drought will have wide effects on the entire food chain

Corn is one of the most abundant crops in America's farming complex.  Its uses stem from not just human consumables on the dinner table, but in the production of many processed foods, to animal feed, and even green energy.

So a slowdown in production of corn will automatically have wide ranging effects not just for food and export, but in the thousands of industries that require large amounts to produce items in the global economy.

Who knew the next black swan would be deep fried? The biggest piece of imminent food inflation news over the past months, coupled with what is shaping up to be another record hot summer (for the best tracking of real-time electricity consumption primarily for cooling news we recommend the following PJM RT tracker of power load), has been the collapse in the corn harvest due to the worst drought since 1988 as 56% of America is in drought conditions. Today, the US just added some burning oil to the popcorn by cutting the corn-crop forecast by 12% to 13 billion bushels on expectations of a 13.5 billion harvest. Then again, who needs corn, when you can have cake? - Zerohedge


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