Food and energy prices are going to increase dramatically in the next 18 months; a serious setback for any president, regardless of how well their message is spun by the MSM. The re-election prospects of Barack Obama have become much more problematic due to the recent wet and cold weather in the Midwest and the Northern Plains states. Voters vote their pocketbooks, especially when they are making choices between rising food costs or new clothes for their growing kids.

Monday, the National Agricultural Statistics Service (NASS), the Agricultural Statistics Board, and the United States Department of Agriculture (USDA) released the May 31, 2011, Crop Progress report.  This report in conjunction with WOAB (World Agricultural Outlook Board) Weekly Weather and Crop Bulletin gives the reader a clear week-to-week scorecard for how the major crops are maturing.

What were the highlights from these reports? 

Corn: With planting complete or nearing completion in many states, producers had 86 percent of the nation's corn crop in the ground by week's end. This was 11 percentage points behind last year and 9 points behind the 5-year average. The most significant delay was evident in Ohio, where persistently wet weather has severely limited fieldwork during the past several weeks. Overall, emergence advanced to 66 percent complete, 17 percentage points behind last year and 12 points behind the 5-year average.

Corn really is the "Big Kahuna" of US crop production, and due to cold wet weather the projections for a normal harvest are mixed. Let's look at Ohio. Only 19 percent of this year's corn crop was planted by week's end. This was 74 percentage points behind last year and 74 points behind the 5-year average. Another state reporting significant weather related issues was Indiana. . Only 59 percent of this year's corn crop was planted by week's end. This was 34 percentage points behind last year and 28 points behind the 5-year average.  

Remember that ethanol consumes about 40% of US corn production. So if corn prices rise due to a lower than anticipated harvest of corn, those prices are reflected not only in the grocery store but also at the gas pump.  Fewer discretionary dollars in middle class households is unwelcome news for any sitting politician, especially with a Presidential election on the horizon.  Plus voters having to spend more on food and gas, means fewer new cars sold, fewer new appliances bought, infrequent dinners out and shorter vacations.

Soybeans:  By week's end, 51 percent of this year's soybean crop was planted, 20 percentage points behind both last year and the 5-year average. Improved weather conditions toward week's end allowed producers in Illinois and Ohio time to plant a small portion of their acreage. However, planting in those two states was 37 and 68 percentage points, respectively, behind last year. Emergence advanced 15 points during the week to 27 percent complete by May 29. This was16 percentage points behind last year and 12 points behind the 5-year average. 

Winter Wheat: By May 29, heading of the winter wheat crop had advanced to 72 percent complete, slightly behind last year and 4 percentage points behind the 5-year average. Overall, 33 percent of the winter wheat crop was reported in good to excellent condition, up slightly from last week but 32 percentage points below the same time last year.

Spring Wheat: Sixty-eight percent of the spring wheat crop was seeded by week's end, 26 percentage points behind last year and 27 points behind the 5-year average. Progress was behind both last year and the average in all estimating states. By May 29, forty percent of the crop was emerged, 41 percentage points behind both last year and the 5-year average. In Montana and North Dakota, the two largest spring wheat-producing states (which account for nearly 62 percent of the country's crop), emergence was 40 percentage points or more behind last year and 44 points or more behind normal due to cool, wet weather that had limited fieldwork and crop growth.

These late and slow maturing crops are very troubling indeed, but let's read the USDA's World Agricultural Supply and Demand Estimates (WASDA) report for the official government expectations for the 2011/ 12 wheat, corn and soybean harvest. 

Wheat: U.S. wheat supplies for 2011/12 are projected at 2,992 million bushels, down 9 percent from 2010/11. U.S. exports are projected at 1,050 million bushels, down 225 million from the 2010/11 projection. At a projected 702 million bushels, 2011/12 ending stocks are expected down 137 million from 2010/11 and 274 million below 2009/10. The season-average farm price for all wheat is projected at a record $6.80 to $8.20 per bushel, compared with $5.65 for 2010/11.

These shortages foretell of significantly higher wheat prices for the fall, winter and spring of 2012.  Americans can look forward to the wholesale costs of bread and cake flour, and cattle feed wheat, increasing up to 30% in one year. Imagine what food prices in the supermarket will look like a year from now. 

Corn: Corn production for 2011/12 is projected at a record 13.5 billion bushels, up 1.1 billion from 2010/11 as a 4.0-million-acre increase in intended plantings and a recovery from last year's weather-reduced yields boost expected output. Total U.S. corn use for 2011/12 is projected down 1 percent from 2010/11. Corn use for ethanol is projected up 50 million bushels reflecting slow expected growth in gasoline consumption and continued export demand for ethanol in the coming year. U.S. corn ending stocks for 2011/12 are projected at 900 million bushels, up 170 million from the current year projection. Stocks remain historically tight with stocks-to-use projected at 6.7 percent compared with the current year projection of 5.4 percent. The season-average farm price is projected at a record $5.50 to $6.50 per bushel compared with the 2010/11 forecast of $5.10 to $5.40 per bushel.

A more positive forecast than wheat, but still there is a 12%-15% increase in corn prices created by the demand for ethanol.  And why do we export ethanol, after we pay subsidies to produce it here for domestic energy consumption? Are the taxpayers of this country are getting shafted once again? 

Soybeans: Soybean production is projected at 3.285 billion bushels, down 44 million from the 2010 crop mostly due to lower harvested area. Soybean oil used for biodiesel production is projected at 3.5 billion pounds, up 1 billion from 2010/11 reflecting a higher biodiesel use mandate.

Farmers are choosing to grow corn, which is why soybean acreage is declining. And what the heck is a higher biodiesel use mandate? Sounds like another shafting of the American taxpayer.

Corn, soybeans and wheat account for around 70% of the dollar value of US agriculture each year.  In addition, our export dollars are tied closely to our farm exports. As this country has already opened the remaining easily arable land for corn/ethanol production, America and our trading partners have become increasingly dependent on record yields and ideal weather conditions for our food production.  Much like economic cycles, annual growing cycles have peaks and valleys. The real question becomes do we have the elasticity to absorb a couple of years of less than peak production in our food supplies?  No. We are one or two sub-par harvests from a tipping point where sky rocketing food prices will force American voters to end our political classes' adolescent crush on ethanol. Using our crops to power our cars rather than feeding our children and the millions of starving populations around the world remains a black mark on the honor and decency of this nation.