Investing in Corn
Buy Corn Now!
Corn investors have been on one hell of a roller coaster ride recently.
From mid 2010 to mid 2012, corn prices soared from $3.50 to $8.30 a bush
Investing in Corn
Buy Corn Now!
Corn investors have been on one hell of a roller coaster ride recently.
From mid 2010 to mid 2012, corn prices soared from $3.50 to $8.30 a bushel, or some 137% in just two years.
Then came a precipitous plunge in 2013 back down to the $4.00 area as new cornfields helped produce a bumper crop of a record 14 billion bushels.
However, according to a new study that examined extreme weather risks facing U.S. corn production, the volatile ride in corn prices is far from over.
Researchers Brooke Barton and Sarah Elizabeth Clark of the non-profit group Ceres recently presented a highly detailed case that America's Corn Belt is about to get crushed.
3 Major Threats
According to Barton and Clark, there are three major threats to U.S. corn production on the horizon: extreme weather conditions, unsustainable water use, and inefficient and damaging fertilizer practices.
Investors should take note.
Dry weather, heat waves, and devastating floods are not allies of corn growers. But that's exactly what may be in store.
And according to the researchers, we should fully expect a trend of extreme weather to accelerate, marked by “increased occurrence of higher temperatures during early spring... increased occurrence of cold air outbreaks during the spring... warmer and longer winters... increased frequency and intensity of heat waves and drought... increasing intensity and frequency of extreme precipitation events.”
I'm bullish corn!
After all, consider the following...
- Small but long-term increases in average temperature shorten the reproductive development period of corn, contributing to yield declines (even when offset by increased CO2 fertilization).
- Heat waves during pollination of corn decrease yields.
- Increase in ‘overwintering’ insect populations has allowed some pests and weeds to survive warmer winters.
- Wetter springs reduce yields if farmers switch to late-planted, shorter-season varieties.
- Increased run-off and flooding will increase nutrient run-off, decrease water quality, and erode soils.
As a result of these weather effects, corn yields are expected to decline by as much as 18% to 30% from 2020 to 2049 and 38% to 85% from 2070 to 2099.
Yes, under the worst-case scenario, corn yields in the U.S. could drop by 85% by the end of this century.
Irrigation Demand and Water Stress
Living in the United States, most folks — even during drought conditions — often take for granted the readily available supply of water. But not farmers.
This is why a number of them are now rightly concerned that corn crops will be subjected to more intense but less frequent precipitation.
Barton and Clark's report explain