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Markets Weighed Down By Overseas Harvests

posted on October 26, 2001

Financial markets have been on a roller coaster ride since the terrorist attacks. But despite a slowdown in consumer demand, lingering doubts about corporate earnings, and a slew of dismal economic reports ... the Dow has climbed to within about 100 points of where it stood on September 11.

The trend continued this week. The markets glided higher amid reports that jobless claims shot skyward last month ... and that sales of new homes and orders to factories for big-ticket items plunged.

The administration responded by pushing a $100 billion dollar economic stimulus plan, which the House narrowly approved this week. Democrats who oppose the plan argue its focus on tax cuts does little for average Americans.

In the country, meanwhile, the immediate concerns are climactic in nature ... and international in scope.


Markets Weighed Down By Overseas Harvests

Wet conditions have been slowing the movement of grain from field to bin. Nationwide, 59 percent of the corn has been harvested, eleven percent behind the four-year average. Only one-third of the harvest has been completed in Iowa and Minnesota at a time when producers in the two states typically have reaped twice that amount.

The soybean harvest is lagging somewhat as well. Seventy percent of the crop is out of the field, off eight percent from the average pace.

Cotton harvest, however, is on schedule with nearly half of the fiber out of the fields.

(slug: traders)

Weather issues typically mean good news for the markets, but sluggish export demand has dampened any price support offered by a wet harvest. Weighing heavily on the world market are burgeoning supplies of grain from perennial importers Russia and Ukraine. Grain crops in Ukraine are nearly twice the size of last year, and Russian production saw a 25 percent bump.

The result has been massive exports to northern Africa and southern Europe and to traditional exporters such as France and Canada where tight domestic markets have required imports from eastern Europe. Analysts claim the impact of grain from the Black Sea region could continue well into next year.

With the markets pondering the nation's export woes, a bipartisan agreement on administrative trade authority has surfaced from committee. The bill would allow the president to negotiate trade agreements with other countries, but also retains the authority of Congress to either accept or turn down each agreement.

Also outlined in the bill are agricultural provisions which would encourage the administration to overcome various trade barriers. Among them, market- diminishing subsidies and labeling provisions.

Tags: agriculture crops harvest markets news