Great Bend Tribune
Published October 25, 2020
The Drought Monitor shows all of Kansas at least abnormally dry with the area of moderate drought creeping eastward towards us. And there is a bullseye of moderate drought encompassing an area centered around Wichita. Also, a substantial area of Southeast Kansas is up to moderate drought. Again, the wheat needs moisture and there is at least a promise of some but as of the day this column was written, how much is unknown. However, this has allowed for a fairly rapid harvest.
The six-to-10-day outlook (October 28 to November 1) indicates slightly above-normal precipitation (more as you move east in the state) and a strong likelihood of well-below normal temperatures for this half of the state while Eastern Kansas should be closer to normal. Looking out eight to fourteen days (October 30 to November 5) indicates normal temperatures here and below normal in Eastern Kansas. Precipitation is predicted as well below-normal. Sitting in the middle of the U.S., we may feel isolated from what goes in the rest of the world. Today, how the rest of the world impacts Kansas agriculture.
Just two months ago, economists were predicting continued low prices for crop commodities. Things changed dramatically and now, while hardly at record highs prices have been bullish and that trend is forecasted to continue. Part of the reason involves weather events here such as the derecho in Iowa and east. Part of it involves other economic factors within our borders. But a large part of this bullishness involves the world stage and highlights how interwoven Kansas agriculture is with the entire world.
So what international factors helped cause this bullishness in the grain markets?
- South America is in spring, heading into summer, and conditions are dry which is delaying planting and will likely lead to a later harvest for them. Their stocks on commodities such as corn are tight.
- Australia, especially Western Australia, is extremely dry or in extreme drought, impacting their wheat production. This helps improve our wheat export prospects.
- Russia and Ukraine have also been experiencing dry conditions and are even looking to place limits on wheat exports. Ukraine is also becoming a player in corn production.
- Similarly, much of Western Europe has been dry and this has impacted grain production.
- Finally, China is steadily in the market for soybeans, milo, and even corn. Why? Several factors are involved. After dealing with ASF in their hog sector, they are trying to ramp up pork production. And then Mother Nature kicked in. Dry conditions impacted the growing season. Then major flooding has occurred in their major corn and soybean growing regions. Finally, a typhoon added to the damage. This means they need feed grains.
- And we have a weaker dollar relative to before the pandemic. This makes our commodities cheaper than our competitors and more attractive.
- While we focus on regions such as East Asia influencing our markets, don’t forget Mexico is also a major export market for Kansas ag products.