If not actually rotten in the state of Denmark. I been spending some time with friends from DK over the last few days (and trying to get planted of course), and their mood was uncharacteristically downbeat.
DK farmland prices are trending down. Despite record grain prices, their heavy dependence on livestock on their smaller farms has made the last few years very difficult. In fact, they are to the point of liquidation to stop the bleeding. This in a country that has had all the pigs the law will allow for years.
While U of I economists tsk-tsk the use of the term "demand destruction", that is sure what it looks like to me. We are at the least shifting the demand curve as we lose entire farms of corn eaters.
Meanwhile, the crop in Europe is not good. Winter barley in France is down ~20%, German grains are poor as well, and dry weather continues.
Europe’s wheat crop, making up a fifth of global output, is under threat in the U.K., France and Germany from the driest growing conditions in at least 36 years.France’s soft-wheat crop, the European Union’s largest, will drop 12 percent, and German output will slide 7.2 percent, local forecasters said today. Wheat jumped 4.5 percent to the highest level since Feb. 14.Smaller-than-expected harvests may boost wheat prices that already rose 59 percent in a year after crops were hurt in the last growing season by floods in Canada and drought in Russia. This year, China is contending with drought while U.S. farmers are facing dry weather in some areas and too much rain in others. The U.S. Department of Agriculture is forecasting a second consecutive annual decline in global stockpiles.“Given the tight levels of stocks for grains and oilseeds we need everything to go right,” Luke Chandler, global head of agricultural-commodity research at Rabobank in London, said in a phone interview. “Downward revisions such as in Europe have the potential to set us on another bull market over the summer.”French soft-wheat production will slide to 31.65 million metric tons, the least in four years, from 35.7 million tons last year, as drought slashes yields to the lowest in at least 16 years, Agritel, a Paris-based farm adviser, said today. [More]
I think there is a partial inability in the minds of American farmers to entertain the fact the world's growers cannot simply increase production at will, and that a massive shortfall is truly possible. In fact, I think it is unfolding as we speak. One more flood somewhere in the US, another month of drought in the EU/China or a monsoon failure in India and the supply demand curves will have trouble meeting, or at least intersecting anywhere congenial.
On a side note, my driving through central and northern IL was not pretty. Waaaay too much water, and mucho beans to plant.