The bulk of the bad news regarding the 2012 crops should be in by now, according to Tim Brusnahan with Brock & Associates Inc. Brusnahan, together with Dr. Chris Hurt of Purdue University, was a speaker at WATT’s August 13 webinar, “August Crop Report: Analysis and Implications.”

Brusnahan noted that with corn at $8.00 per bushel, there has been a shifting to alternatives such as feed wheat. Unfortunately, there is not enough feed wheat available to significantly impact corn demand. “So overall, we still have a fairly tight supply around the world,” he said.

Brusnahan also observed that erratic rainfall throughout the Midwest still leaves some volatility in the soybean sector, as final yields may come in lower than U.S. Department of Agriculture estimates. This will also provide opportunities for South America to plant large crops and take advantage of high prices.

He summarized that in regard to money flow, the large speculator remains long corn, soybeans, soybean meal, wheat, cattle, hogs and Class III milk. As to U.S. corn and soybeans, corn prices indicate zero carry and soybeans have a large inverse that should cause producers to move their crop to market at harvest. For ethanol, margins have improved and remain in a state of rebalancing. For DDGS, supplies and use are a little uncertain until more is known of Midwest corn quality.

Hurt, a professor of agricultural economics at Purdue, noted that the current drought will most likely end up being the second or perhaps third largest natural disaster in the U.S. in the last 30 years, after Hurricane Katrina and the 1988 Midwestern drought. “Bottom line, there’s not going to be enough corn to go around,” Hurt said.

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For the animal industry, Hurt described conditions in the short run as being “very bleak.” He indicated that there will be losses for all species across the board for the next 12 to 14 months. “This will result in some liquidation of herds, it’s going to reduce supplies, and over time it’s going to bring up retail prices of those animal products and, therefore, the wholesale prices and the farm-level prices.”

However, Hurt said this will ultimately give cause for some long-term profits in late 2013 and into 2014 and 2015. The challenge, he noted, will be getting through the next 12 to 14 months.

Both Brusnahan and Hurt addressed a number of questions at the end of the webinar relating to various aspects of the crop report.

To view an archived version of this webinar, go to: www.wattagnet.com/ondemandwebinars.aspx