Investment views based on the cycles and economic fundamentals.
Not all views expressed in this blog are in line with the views of F&C.
Investment Chart Kondratiev Wave
Thursday, 12 July 2012
Drought sends corn price to extremes. El Niño?
Record amounts of corn were planted in the US. It was so much that Monsanto had to give a revenue warning that it seeds were selling much more than thought. So corn prices went down. Then drought arrived as was expected by some that thought el niño would arrive. This seems to happen and now UK/Europe is extremely wet and the US until At least August extremely dry. They started to say it was dry and then it was changed to worse and worse expressions of drought. Now it is near the Dust Belt analogy like in the 30's (not yet completely as bad).
So harvest expectations are going down. In thick black lines you can see the important corn states. So to see not all states are heavily hit, so maybe it is not as bad as everybody is saying.
In India the drought is maybe even worse. MAybe this is also caused by something like el niño. When this should continue it will hit GDP growth at a moment that growth is already weak.