Its no secret anymore to most folks, we're in the midst of record breaking temperatures and drought conditions. The county I live in right now in Indiana just had a state of emergency declared, along with thousands of other counties across the US.
Many other Kossacks have already dutifully pointed to the correct culprit here, that being global warming so really I do not plan to rehash out those points. No this diary is going to be another facet on why it is so important we elect President Obama for another four years. It's something that could have very long lasting impacts on the direction this world takes.
Join me over the burnt corn husk for more
The diary was inspired by a recent one on the spotlight... CORN
In that diary the writer correctly predicted some of the conditions we can expect for food prices here in the states. That if conditions persist we stand to lose a substantial amount of our crop this year to heat and drought conditions. I won't rehash here, suffice to say the writer pretty accurately nails how important corn is to our modern society.
No, this diary is about the implications of losing such a large amount of what amounts to a staple crop for this nation and the world at large.
Corn is important, as the diary pointed out, but it is also equally important to the rest of the world. Indeed it may actually be MORE important to the rest of the world than many might realize. You see, corn amounts for nearly two thirds of the grain trade in the entire world. Yes, take that in for a second...two thirds.
Now lets throw some numbers at ya, all these are available on the USDA's website by the way.
The US leads the corn export and trade market with our current share at around 60% of the total world trade. Meaning that the two thirds grain market up there? Yes we own 60% of that. In the year 2008 we maxed out at close to 61 million metric tons of various corn product exported by the United States.
I'll give you a moment to get your jaw off the floor.....Suffice to say, that's A LOT of corn. Now realize that this year of that say 61 million metric tons, this year we are on track to loose 18 to 20 metric tons of it. Go on, pick up that jaw and lets continue.
The closest trade competitor for corn in the world market is China, and even then their trade on corn is often sometimes wonky with them actually IMPORTING corn at times. This is because of China's wonky government control on production which sometimes means they let their fields lay fallow. This year they look to have a very bountiful corn harvest, but because they had a winter wheat blight, expect exports to fall. Even then, market experts are expecting another year where yellow maize tops the markets for import in China.
In any event, because the US literally dominates the market for corn in the world it means that the world corn prices are set mostly...by us. Our supply and demand set the prevailing market prices. Also because it is traded on the dollar, it often means that via exchange rates, a corn producer in say, Argentina, has to not only compete with demand in the states but also exchange rates between currencies to export their corn should they want to sell on the world market.
Add into that equation trade agreements, duties, tariffs, etc.. very often what happens is that to sell on the world market many global corn producers would have to sell at a loss, so they lower production and keep sales domestic at times, or at times like in Russia during the fall of the Soviet Union they just let the fields lay fallow and only grow what is necessary to survive personally. One need only look at how NAFTA literally gutted the Mexican agriculture market to see how trade agreements can have wide impacts on market shifts.
I tend to get long winded, so I'll try and wrap it up and get to the point of the diary.
The big buyers are important, but what is more important is to take a look at the third column. Scroll down the list and look for the negatives, specifically look for those -100% markers. Notice some names?
Peruse the list some more and look for some more of those negative numbers, you'll see many countries which often have out reaching humanitarian programs into African nations. Much of the down trending is due to the economic collapse as a whole, but realize that as markets and economies rebound the total amount will never recover to previous levels because well, corn is just going to cost more.
Here, contemplate this, prices are going up on corn.. Futures are on the rise upwards of 30% and it looks like it may go higher. In fact, expect price world wide to spike as the full brunt and effect this US drought has wrought becomes apparent.
So pivot slightly. Many of you have already recognized where I am going with this, but I feel it necessary to really nail it home.
We just witnessed some of the most amazing things in the middle east recently, the Arab Spring. However there are dark clouds on the horizon regarding food supply. Many of these nations are struggling to get back on their feet and provide for their people. Imagine having to live with bread at 10 dollars a loaf instead of the normal 3, now imagine waking up with the promise to return to normal only to find out that the bread only came down to 6 dollars a loaf.
Food is intrinsically linked to unrest, we know this. Typically however the US has been able to buffer the market and stabilize prices because of our bountiful harvest. This year is not going to be one of those years, and it comes at a moment in our world history where the world is literally topsy turvy. With the middle east still in turmoil, African nations suffering droughts and lost crops, and now the US most likely unable to buffer the market...well its like I said above.
Get Ready For A Wild Ride
And for conclusion of this diary?
With all this unrest, with all these possible conflicts and hot spots growing around the world...who would you rather have as president?
12:42 PM PT: Took a break from being Cinderfella (on my knees scrubbing the kitchen floor today) and saw this on the spotlight. Thank you Rangers. One thing I wanted to point out as pointed out in comments below, this drought does not even begin to assess the possible dangers we may be facing to summer crops but also winter crops like wheat. The wheat grown in this nation is a staple food item of many third world nations.
Wild ride indeed, but as kamarvt noted below "A wild ride, indeed, but not a thrilling one."