Autumn Deluge Destroys More Than $1 Billion Of Delta Crops

October 30, 2009

Weeks of almost-continuous, torrential rains have destroyed over a billion dollars worth of what was originally expected to be a bumper fall crop in the U.S. Delta.

ARKANSAS: “It’s a serious problem right now. At this stage, yield/quality losses for Arkansas ‘ major row crops could easily exceed $650 million,” said Arkansas Farm Bureau President Randy Veach Thursday.

The state has received measurable rainfall every day for the past seven consecutive weeks, preventing fields from drying out, and overripe crops from being harvested. Arkansas farmers still have 85% of their cotton, 61% of all soybeans, 10% of their corn and 5% of all grain sorghum remaining to harvest; at a time when picking is usually of most commodities is already complete.

“We’re going to try to do as much as we can as quickly as we can, but assessing the damage—and what the damage is— does require some time,” said Sen. Blanche Lincoln (D., Ark.), chair of the Senate Agriculture Committee. “I wouldn’t be surprised if all 75 counties in this state are declared a disaster,” thus making producers eligible for U.S. Department of Agriculture emergency loans.

On average, all areas of Arkansas have received 17 inches more rain than normal during 2009. Even with two months left to go, 2009 is already the 11th-wettest year on record in Little Rock , which has been flooded with 62.57 inches of rain. That total will only increase, as the National Weather Service was predicting another 2 of rain for portions of Arkansas, by nightfall Friday.

MISSISSIPPI: Non-stop rains have also taken $371 million from the pockets of Mississippi producers this autumn, according to calculations made this week by the Mississippi State University .

“Total losses for row crops are expected to be around 23% of the potential value of the crop,” said MSU agricultural economist John Michael Riley. With nearly 40% of all fields still standing, soybeans have suffered the worst hit in cash-value hit, losing 30.2% of their expected value, or $212 million in all.

“Half of the crop left in the field is very poor, to possibly a complete loss,” said MSU extension soybean specialist Trey Koger. “Damage estimates for the portion of the soybean crop we last harvested nearly two weeks ago, averaged 8%-15%. Final damage to the state’s soybean crop may reach levels as high as 50%.”

Earlier this month the USDA forecast the Mississippi fall grain harvest at 92.3 million bushels of corn, nearly 83.5 million bushels of soybeans, 16.184 million hundredweight of rice, and 888,000 bushels of sorghum. Economic losses have been measured at $91 million for cotton/cottonseed, representing about 47% of that crop’s original prospective value.

“Environmental conditions in 2009 have proven to be the most difficult that many growers have ever experienced,” said Darrin Dodds, MSU cotton specialist.

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Fall Downpours Causing Major Damage To Unharvested US Grain Crop

October 27, 2009

Guide Rock farmer Jim Richardson says the quality of the 2009 corn crop in the Republican River Valley of Nebraska has now deteriorated to the point where the top 3 inches of unharvested ears are simply rotting off and falling to the ground.

“My neighbor say it’s the weirdest thing you’ve ever seen…they pull into the field with the combine and see all these half-ears laying all over,” he said. “It seems to be connected to variety…and all this rain.”

The variety of moisture-loving pathogens reportedly affecting unpicked U.S. row crops reads like the nutrition label of a Halloween witches brew: mycotoxins, mold, mildew, fungus, and other diseases.

Most sections of the U.S. grain belt have received more than twice as much precipitation as normal this month, causing unprecedented delays in the harvest of the nation’s two-most important cash-crops. The resulting quality degradation is so bad that some producers are harvesting their remaining acreage with a plow, instead of a combine.

“We’ve had 28 inches of rain here since Oct. 1,” southwestern Arkansas grower Jim Caswell told Dow Jones Newswires Monday. “There is a big farmer down here who’s disking under 7,000 acres of corn, because it’s got such bad mold that the elevator won’t take it anymore…and it’d been yielding 185 (bushels an acre).”

Overripe grain in the Delta is under the greatest threat of deterioration, with many fields standing exposed to weeks of nearly continuous rain.

“The longer it’s out in the field, the more likely it will develop grain quality problems, weak stalks or seed quality damage,” said Jim Herbek, grain crops specialist with the University of Kentucky.

Harvest figures released by USDA Monday said half of the nation’s top-producing corn states still had more than 80-90% of their corn and half of their soybeans standing in the field, at a time when some are nearing completion.

“You can’t find a year in USDA’s data (which goes back to 1972) on corn harvest activity that is as slow as this year [20% complete]. Period. That underscores just how tough this fall has been,” said Roger Bernard of Pro Farmer. “In soybeans, the 44% complete on harvest is the slowest pace since 1985 and 1986.”

Harvest season rains have robbed southern soybean growers of what was expected to be a bumper crop.

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U.S. bailout program increased moral hazard: watchdog

October 21, 2009

Wed Oct 21, 2009 1:30am EDT
By David Lawder

WASHINGTON (Reuters) – The U.S. government’s $700 billion financial bailout program has increased moral hazard in the markets by infusing capital into banks that caused the financial crisis, a watchdog for the program said on Wednesday.

The special inspector general for the U.S. Treasury’s Troubled Asset Relief Program (TARP) said the plan put in place a year ago was clearly influencing market behavior, and he repeated that taxpayers may never recoup all their money.

The bailout fund may have helped avert a financial system collapse but it could reinforce perceptions the government will step in to keep firms from failing, the quarterly report from inspector general Neil Barofsky said.

He said there continued to be conflicts of interest around credit rating agencies that failed to warn of risks leading up to the financial crisis. The report added that the recent rebound in big bank stocks risked removing urgency of dealing with the financial system’s problems.

“Absent meaningful regulatory reform, TARP runs the risk of merely reanimating markets that had collapsed under the weight of reckless behavior,” the report said. “The firms that were ‘too big to fail’ last October are in many cases bigger still, many as a result of government-supported and -sponsored mergers and acquisitions.”

ANGER, CYNICISM, DISTRUST

The report cites an erosion of government credibility associated with a lack of transparency, particularly in the early handling of the program’s initial investments in large financial institutions.

“Notwithstanding the TARP’s role in bringing the financial system back from the brink of collapse, it has been widely reported that the American people view TARP with anger, cynicism and distrust. These views are fueled by the lack of transparency in the program,” the report said.

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Greenlight’s Einhorn holds gold, says U.S. policies poor

October 19, 2009

Mon Oct 19, 2009 2:25pm EDT

By Jennifer Ablan and Joseph A. Giannone

NEW YORK (Reuters) – Hedge-fund manager David Einhorn, who warned about Lehman Brothers’ (LEH) precarious finances before it collapsed, said on Monday he’s betting on rising interest rates and holding gold as a hedge for what he described as unsound U.S. policies.

“If monetary and fiscal policies go awry” investors should buy physical gold and gold stocks, Einhorn said at the fifth Annual Value Investing Congress in New York. “Gold does well when monetary and fiscal policies are poor and does poorly when they are sensible.”

Einhorn is president of Greenlight Capital, with more than $5 billion in assets under management.

“Over the last couple of years, we have adopted a policy of private profits and socialized risks — you are transferring many private obligations onto the national ledger,” he said.

Einhorn said, “Although our leaders ought to be making some serious choices, they appear too trapped in the short term and special interests to make them.”

According to a joint analysis by the Center on Budget and Policy Priorities, the Committee for Economic Development and the Concord Coalition, the projected U.S. budget deficit between 2004 and 2013 could grow from $1.4 trillion to $5 trillion.

Last week when Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers spoke in interviews and on panel discussions, Einhorn said, “my instinct was to want to short the dollar but then I looked at other major currencies — euro, yen and British pound — and they might be worse.”

Einhorn added, “Picking these currencies is like choosing my favorite dental procedure. And I decided holding gold is better than holding cash, especially now that both offer no yield.”

(Reporting by Jennifer Ablan and Joseph A. Giannone; Editing by Kenneth Barry)


Dow closes above 10,000 for 1st time in a year

October 14, 2009

DJ comeback: Stock market’s best-known barometer closes above 10,000 for 1st time in a year

By Sara Lepro and Tim Paradis, AP Business Writers
5:08 pm EDT, Wednesday October 14, 2009

NEW YORK (AP) — When the Dow Jones industrial average first passed 10,000, traders tossed commemorative caps and uncorked champagne. This time around, the feeling was more like relief.

The best-known barometer of the stock market entered five-figure territory again Wednesday, the most visible sign yet that investors believe the economy is clawing its way back from the worst downturn since the Depression.

The milestone caps a stunning 53 percent comeback for the Dow since early March, when stocks were at their lowest levels in more than a decade.

“It’s almost like an announcement that the bear market is over,” said Arthur Hogan, chief market analyst at Jefferies & Co. (JEF) in Boston. “That is an eye-opener — ‘Hey, you know what, things must be getting better because the Dow is over 10,000.'”

Cheers went up briefly when the Dow eclipsed the milestone in the early afternoon, during a daylong rally driven by encouraging earnings reports from Intel Corp. and JPMorgan Chase & Co. (JPM) The average closed at 10,015.86, up 144.80 points.

It was the first time the Dow had touched 10,000 since October 2008, that time on the way down.

“I think there were times when we were in the deep part of the trough there back in the springtime when it felt like we’d never get back to this level,” said Bernie McSherry, senior vice president of strategic initiatives at Cuttone & Co.

Ethan Harris, head of North America economics at Bank of America Merrill Lynch (BAC), described it as a “relief rally that the world is not coming to an end.”

The mood was far from the euphoria of March 1999, when the Dow surpassed 10,000 for the first time. The Internet then was driving extraordinary gains in productivity, and serious people debated whether there was such a thing as a boom without end.

“If this is a bubble,” The Wall Street Journal marveled on its front page, “it sure is hard to pop.”

It did pop, of course. And then came the lost decade.

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Freddie Mac: 30-yr mortgage average still falling

October 8, 2009

SAN FRANCISCO (MarketWatch) — Freddie Mac (FRE) said Thursday that the 30-year fixed-rate mortgage average declined further to 4.87% with an average 0.7 point for the week ending Oct. 8 from 4.94% last week. The last time the average was this low was May 21, when the average was 4.82%. The average was 5.94% a year ago. “Such low rates are spurring mortgage demand,” said Frank Nothaft, Freddie Mac chief economist, in a statement. “Mortgage applications surged to a 19-week high over the week ending on October 2nd, according to the Mortgage Bankers Association. Moreover, applications for home purchases were at the strongest pace since the beginning of this year.”


Where’s the next boom? Maybe in `cleantech’

October 6, 2009

Energy breakthroughs could be the next big thing, but how many jobs can they generate?

By Jordan Robertson, AP Technology Writer
9:33 pm EDT, Tuesday October 6, 2009

SAN FRANCISCO (AP) — Our economy sure could use the Next Big Thing. Something on the scale of railroads, automobiles or the Internet — the kind of breakthrough that emerges every so often and builds industries, generates jobs and mints fortunes.

Silicon Valley investors are pointing to something called cleantech — alternative energy, more efficient power distribution and new ways to store electricity, all with minimal impact to the environment — as a candidate for the next boom.

And while no two booms are exactly alike, some hallmarks are already showing up.

Despite last fall’s financial meltdown, public and private investments are pouring in, fueling startups and reinvigorating established companies. The political and social climates are favorable. If it takes off, cleantech could seep into every part of the economy and our lives.

Some of the biggest booms first blossomed during recessions. The telephone and phonograph were developed during the depression of the 1870s. The integrated circuit, a milestone in electronics, was invented in the recessionary year of 1958. Personal computers went mainstream, spawning a huge industry, in the slumping early 1980s.

A year into the Great Recession, innovation isn’t slowing. This time, it’s better batteries, more efficient solar cells, smarter appliances and electric cars, not to mention all the infrastructure needed to support the new ways energy will be generated and the new ways we’ll be using it.

Yet for all the benefits that might be spawned by cleantech breakthroughs, no one knows how many jobs might be created — or how many old jobs might be cannibalized. It also remains to be seen whether Americans will clamor for any of its products.

Still, big bets are being placed. The Obama administration is pledging to invest $150 billion over the next decade on energy technology and says that could create 5 million jobs. This recession has wiped out 7.2 million.

And cleantech is on track to be the dominant force in venture capital investments over the next few years, supplanting biotechnology and software. Venture capitalists have poured $8.7 billion into energy-related startups in the U.S. since 2006.

That pales in comparison with the dot-com boom, when venture cash sometimes topped $10 billion in a single quarter. But the momentum surrounding clean energy is reminiscent of the Internet’s early days. Among the similarities: Although big projects are still dominated by large companies, the scale of the challenges requires innovation by smaller firms that hope to be tomorrow’s giants.

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