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A lot of the Western continental U.S. is in the grip of worsening drought.


onetrack
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I was perusing the NOAAA site last night, and was quite surprised to find that about half of the continental U.S. (the Western half), is already in drought, and the outlook for those areas over the next 3 months is for increasing drought conditions.

In addition, some other areas outside the drought-listed areas are predicted to see an initiation of drought during the next 3 months, as well.

 

The outlook for many places in the U.S. appears a bit grim as regards cropping, and some types of dryland food production - and for bushfire risk as well. I'm not sure about their irrigation supplies, but I guess they are still relatively unaffected at this stage.

 

However, I do recall articles in recent years stating that many major irrigation aquifers in the U.S. are becoming depleted due to overuse and inadequate aquifer recharge levels. That's not a good scenario, but unfortunately one that is common, worldwide.

 

Meantimes - here on the left Coast of Oz, we are having one of our wettest grain-growing seasons for possibly 2 or 3 decades. Some of the Northern wheatbelt areas are already approaching their annual rainfall averages - and Winter has only just officially started! If the rain keeps up like this for the rest of Winter, there won't be enough trucks and trains to haul the grain away!

 

We had a near-record grain production year last year, even though the year was regarded as a "dry-ish" year, and rainfall in most areas was a fair bit below average  - the rain events all came at the right time, to promote good crop growth.

Grain storage points all through the Wheatbelt and SW of W.A. were practically all full early this year, some were using overflow areas for storage (they simply stockpile the grain onto an asphalt area and cover it with huge, heavy-duty tarps).

Grain haulage via rail and road has been pretty heavy all Summer and grain export levels are high. Despite the Chinese being precocious and intransigent over trading with Australia, they're still buying huge quantities of our grains - and they can't afford not to.

 

W.A. farmers have gone into oilseeds in a big way this season, with around 50% of the crop sown, being canola. Oilseed prices are excellent at present, around $550 a tonne, and predicted to stay at that level for the foreseeable future, due to high demand for oilseeds, and no overall increase in oilseed production, worldwide. There was a bit of panic in the last month or two, as canola seed supplies dried up, and farmers went searching for additional canola seed to increase the area sown, as the rain kept up.

 

I went for drive up to my block in the Central West on Saturday, about 130kms NNE of Perth, and the crops are looking beautiful, and fairly jumping out of the ground.

In addition, this wet Winter is going to produce a stunning level of wildflower blooms, which is going to provide a bounty for tourists looking for wildflowers.

My missus and I took a wildflower drive through the Central West and Northern Wheatbelt region in September 2018, when we last had a wet Winter, and the wildflower display then was incredible. But this season promises to be even better.

 

https://www.cpc.ncep.noaa.gov/products/Drought/

 

https://www.agriculture.gov.au/abares/research-topics/agricultural-outlook/oilseeds

 

https://www.farmweekly.com.au/story/7131595/where-in-the-world-is-australian-wheat-going/

 

Edited by onetrack
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onetrack, you only have to blink and that canola price has jumped. Contract price in W.A. is around $800, about $750 in S.A. Add that to good rains in some areas and the growers are understandably optimistic of making a quid this year.

 

You would think the wheat price would stay good this year if the U.S. is in drought. Russia also had less than ideal weather resulting in a crop almost half of the year before. The previous year was their second biggest crop on record. Russia has also introduced an export quota to reduce exports to address high domestic prices. All signs of it being good for growers here in this country.

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I haven't watched all of this, yet... but the very first thing mentioned was some food index had its highest month-on-month jump for a long time.. I wonder if the drought in the US has anything to do with it?

 

Would have to look at the US v world food production history, but it may well be a good time to go long on futures of food stuffs produced in the US, although any projected decline in supply probably is baked into the futures price already (which is where I guess the food indexed mentioned gets its value from -haven't spent much time in the commodities side of the business).

 

I am not sure how much Australia produces as part of the world food economy, but it could be a double win if the prices are up and we have good growing conditions to increase our supply.. If resources prices are going up to, could be in for an increase in the value of the AUD...

 

Edited by Jerry_Atrick
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An interesting report; I especially enjoyed his random visuals.

The feds need a considerable inflation rate to take hold; without it, how can their grandchildren ever pay down the Trillions of debt?

 

I didn’t notice much mention of their drought. Water shortages is shaping as a major issue in the western US, with a recent population exodus from California.

 

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