Iowa Public Television

 

Drought Impact Becomes More Localized

posted on February 21, 2003


Hello, I'm Mark Pearson.

While the prospect of War in the Middle East has effectively contained Wall Street, consumers apparently are more optimistic and are continuing to spend.

The Labor Department reports prices at both the wholesale and retail levels jumped sharply last month. New home construction also is on the rise. Low mortgage rates pushed the construction of new homes and apartments to the highest level in 16 years.

Also weighing on much of the investment community this week was sizable snowfall. Rural America was less affected by the winter storms. Even-so, the weather this year is more likely to define the rural economy.

 

Drought Impact Becomes More Localized

The heavy snows that hit the eastern Corn Belt, and then buried the east coast pushed aside many of the drought concerns that have defined prices in commodity trading pits. Also laying on market prices were crop projections issued by the USDA this week. According to the government U.S. farmers this year could produce a record 10.3 billion bushel corn crop. The government also sees higher wheat production -- 2.07 billion bushels -- and higher soybean output --2.82 billion bushels.

But the probability of enough moisture to produce ample crops remains less likely in the western Corn Belt and high plains. There the drought index remains as high as ever, and mountain snow pack is well below normal.

Colorado municipalities are already enacting water restrictions for lawns and gardens as reservoirs fill at less than half the normal pace.

It is likely that a sizable number of irrigated acres will not be planted this year. The effects of a shortfall of local feedgrain production are already being felt in western feed yards. Despite current high price levels for fed cattle, the dearth of local feed supplies is pushing the price of available rations higher and siphoning profit from cattle feeders.

 


Tags: agriculture Congress corn disaster relief drought news weather