Flooding seen delaying 2011 harvest
CHICAGO (Dow Jones)--Widespread flooding along the Mississippi River will delay early grain harvests in the U.S., further stoking supply fears amid dwindling stockpiles of corn and soybeans.
Many farmers in states such as Missouri and Mississippi will have to replant crops after the floods washed away seeds and sprouting plants, as well as nutrients in the soil.
Farms in the southern Midwest and Mississippi Delta are typically the first in the U.S. to harvest corn and soybeans, making fresh supplies available to ethanol producers, animal feed processors and exporters.
The timing of the fall harvest is particularly critical this year as corn inventories are forecast to fall to a 15-year low by the end of August. The U.S. is the world's largest grower and exporter of corn.
As the damage wreaked by the flooding has become apparent, grain prices have surged. Corn futures are up 12% over the past week and ended near one-month highs, up 1.5% on the day at $7.595 a bushel. Both wheat and soybean prices have also posted big gains this week on the Chicago Board of Trade.
On top of the impact to the local economies, the flooding is likely to pressure food costs higher both at home and abroad.
The high water levels "challenge the availability of early harvested supplies," leaving big corn buyers in the lurch until the Midwest crop comes in, said Dan Basse, president of AgResource Co in Chicago.
Floodwaters have swallowed up corn, cotton, rice and soybean fields across areas along the Mississippi River, a side effect of effort to divert water from populated areas.
More than 1,500 square miles of farmland in Arkansas have been flooded over the past few weeks. In Missouri, where a levee was intentionally blown open to ease the flood threat in the town of Cairo, Ill., more than 200 square miles of croplands were submerged, and more than 2,100 square miles were estimated under water in Mississippi.
Agronomists say in some places it could take many weeks before farmers can return to fields once water levels go down.
But there are signs that water along the river is receding. Commercial traffic has reopened on parts of the Mississippi River that were closed by the Coast Guard earlier in the week.
CME Group Inc. (CME) said Friday that most of the wheat shipping stations used as delivery points for the CBOT futures contract on the Mississippi and Ohio rivers had resumed operations after experiencing flood-related disruptions earlier in the month.
Corn harvested in places like Missouri and Kentucky provides a bridge between last year's crop and corn grown in the U.S. cornbelt that isn't harvested until October. Soybean supplies, while also facing tight domestic inventories, have been buoyed by a record South American harvest, which is helping to meet global demand. Still, according to U.S. Department of Agriculture estimates, the amount of corn and soybeans left over at the end of the current marketing year will cover less than one month of demand.