The grain harvest in the U.S. South typically kicks off in August, and supplies are quickly grabbed by exporters to be shipped across the globe.
But not this year. Massive flooding that has submerged about three million acres of crop land will delay the start of the export season in the world’s top grain supplier.
There will also be fewer supplies as farmers replant damaged crops or abandon them to claim insurance.
Harvest of the southern corn and soybean crops precedes the larger one in the Midwest in mid-September, and supplies are routed to the nearby Gulf Coast, which handles about 60-65 per cent of grain exports from the U.S.
But with Mississippi flooded after its namesake river crested near a record level on Tuesday, and Louisiana set for a deluge, the harvest will be delayed this year and yields for late-planted crops could also be lower.
This could be a boon for Brazil and Argentina, the world’s second- and third-largest soybean exporters, respectively, which have large corn and soy crops to sell.
“Major importers will just seek corn elsewhere, maybe turn to South American supplies which seem to be ample enough in the export market,” said Terry Reilly, an analyst with Citigroup.
With U.S. corn stocks forecast to be the tightest since 1995-96 this summer and some Midwestern states likely to run low on supplies before the main harvest, end-users like cattle feeders were counting on the southern harvest for some relief.
Nearly three million acres of farmland were underwater or expected to be flooded in Tennessee, Arkansas and Mississippi, according to farm industry sources in each of the states.
Some analysts had expected southern corn to be shipped to the Midwest in large quantities for the first time since 1996, when corn ending stocks were also extremely low.
The U.S. Agriculture Department’s April report had cut the amount of corn used as livestock feed by 50 million bushels on hopes that southern corn and winter wheat harvested in June would become substitutes for high-priced old-crop corn.
A bumper South American soybean crop was already poised to displace some U.S. exports during the last quarter of 2011.
“The fact that Brazil has much larger (soybean) export availability this year means that the U.S. new-crop export season could kick in later than normal,” said Anne Frick, oilseeds analyst with Prudential Bache Commodities.
U.S. farm exports were projected to reach a record $135.5 billion in the fiscal year ending Sept. 30 after reaching an all-time high of $75 billion in the first half of fiscal year 2011, USDA said this week (all figures US$).
About three per cent of the country’s projected corn acreage and 10 per cent of soybean acreage is in Mississippi, Louisiana, Arkansas and Tennessee, the states most acutely impacted by the flooding, according to USDA.
Replant or abandon?
Farmers in the flood-hit states face a choice of whether to replant crops that were washed away, plant different crops, or simply abandon flooded acres and collect insurance.
Soybean seedings will surely increase as the crop can be planted later in the season than the rice, corn or cotton that was washed away by the worst Mississippi River flooding in decades, analysts said.
But it is too soon to forecast accurately the extent to which production shifts will occur as flood waters retreat over the coming weeks, soils dry out enough to facilitate field work, and damage is assessed.
“Soybeans are the crop that are likely to benefit most from the flooding in terms of attracting additional acres, and it is going to come compliments of corn, rice and cotton,” said Rich Feltes, vice-president of research at R.J. O’Brien.
“There will likely be some net reduction in total U.S. planted area as a result of this, but not as great as the headlines would expect. Be mindful that we are looking at high prices across the board, and farmers are going to make every effort to utilize that land.”
Corn to suffer
Corn production in the Delta will also likely suffer as some flooded acres will be reseeded with soybeans. Some producers who have presold new-crop corn may be forced to replant corn, but yields will be lower due to late planting.
“We’ve got a 120-day crop and if we’re trying to plant it some time in June it will have a hard time getting mature before the first frost in the fall,” said Erick Larson, a crop specialist at Mississippi State University extension service.
USDA on Wednesday pegged its average U.S. corn yield outlook for the 2011-12 crop at 152.8 bushels per acre, three bushels below trend-line yields, citing weather-related planting delays.
— Additional reporting for Reuters by Julie Ingwersen.