December corn closed sharply lower this week, but is well up from the early lows that had taken the market to its lowest level since July 12. Fears of a slow restart to the export facilities in Louisiana, with talk that power could be out for weeks, also helped to pressure the market. In addition, traders see the rains in August as beneficial to stabilizing some of the crops in the northern and western sections of the Corn Belt, which would add to the potential backlog. There was already a general perception that yields could be up slightly from the August USDA update.
Power outages in the busiest agricultural port in the U.S. raised concerns about grain supplies having nowhere to go, which could back up some corn in the country. Hurricane Ida left more than 1 million homes and businesses without electricity in southern Louisiana and shuttered export terminals in New Orleans. The U.S. is the world’s biggest corn supplier, and about two-thirds of its grain and soy exports exit through ports near New Orleans.
If disruptions linger, it could cause a supply glut just as growers in the Midwest Corn Belt start harvesting crops. Talk that power may not be restored for as much as four weeks added to the bearish tone. In addition to the shipping situation, more and more traders are concerned that a bumper corn harvest in China may slow their import demand. Traders are now questioning the 2021/22 import demand estimate from the USDA for China at 26 million tons.
In addition, the Food and Drug Administration is reminding Gulf Coast and Southeast farmers who produce crops for food on how to identify adulteration. “The FDA reminds harvesters that generally, if the edible portion of a crop is exposed to contaminated flood waters, it is considered ‘adulterated’ under the Federal, Food, Drug and Cosmetic Act,” the agency said in a release.
FDA noted underground crops like peanuts and potatoes are included. If the edible portion is not affected, the FDA said producers should still examine the crop for safe human consumption if it’s been damaged by floodwaters.
EDITOR’S TAKE:
No doubt hurricane Ida left a wide swath of destruction in her wake. Part of that devastation was the impact on shipping from the Gulf port of New Orleans, a major hub for grain originating in the Midwest. The article also points to the concern over food safety. It will obviously take some time to assess the complete impact of Ida, but we have not heard the entire extent of damage to crops and livestock as of this date. We certainly hope that recovery can be accomplished as quickly as possible for farmers, ranchers, shippers and everyone concerned.
