14

Dismal forecast: The weather as an economic indicator

Corn grows on a farm near Fredericksburg, Iowa.

Get ready for a bump in food prices. Analysts say that consumers could see an increase to their grocery bill based on the latest forecast for farmers this growing season.


Jeremy Hobson: Juli Niemann of Smith Moore and Company in St. Louis says she is worried about the weather. Juli, what's going on?

Juli Niemann: Well Jeremy, it's gorgeous here. It's dry, no humidity, not a cloud in the sky. I think there's a song in this. But crops are getting cooked in the field. The big problem right now is there's no rain. And the pain ahead is that the corn silking and the flower setting is shaping up to be probably the worst in years.

One climatologist we heard from has said the planetary alignment is now what it was in the 1930s and that distorts the gravitational pull on the weather patterns, setting us up for huge global drought.

Hobson: Bring us back to economics then. What does that mean for people as they go out and buy food and that sort of thing?

Niemann: Well, we now have over 7 billion people in the world and they're all hungry, and there's big demand out there for our grain. Russian drought killed the winter wheat crop. South American drought killed sugar, soybeans and corn, which means prices are really going up.

We were the last resort here. We have unseasonably warm dry weather. Very early spring. Killer late frost. All of this is setting up for significantly higher grain and food costs. Of course that passes through to the consumer.

Hobson: Well, of course the consumer is also having a little break when it comes to gas prices right now, right?

Niemann: Yeah but that goes into the gas tank and not into the grocery cart, and that's the big problem. We're getting a break from gasoline, which does help somewhat, but farmers are still paying higher fuel costs than they did last year so that's hurting them as well. So while we're getting a little bit of a break there we're going to see significantly higher food prices unless we get rain. And that directly hits all American consumers just at the time when you're trying to recover from a depression.

Hobson: Julie Niemann, analyst with Smith Moore and Company, thanks as always.

Niemann: You bet.

About the author

Juli Niemann is executive vice-president for research and portfolio management with Smith, Moore and Company.
Log in to post14 Comments

Pages

I too was concerned about that statement in this story so I did some searching on the internet. This is the one reference I could find.
http://www.futuresmag.com/2012/06/25/trading-grains-through-the-drought-...
It was a story by Gary Kamen of Futures magazine.
"Back in 1999 I was speaking to a customer in Ottawa, Canada who was a professor at a university there. ...he told me to watch out and be prepared for 2012. He said I would see an unusually warm dry winter...and America will see a drought like it saw back in the 1930s; he said heard of the 'dust bowl.' His reasoning for this was planetary alignment."

I second dflateau's statement, planetary alignment has absolutely no influence on our weather.

This is even more interesting. I would like to know if Juli Niemann essentially lied (I'm sorry to put it so bluntly, but is there another term that fits?) in her report by googling some terms, grabbing this quote, and attributing it to "One climatologist we heard from." Or did she actually interview or talk to this Canadian?

Pumpkinpie, I think you've hit on something important, and I hope that Marketplace will followup with due diligence on exactly what happened. At a time when the global marketplace is tied to issues of human-made climate change, and the public is being misinformed by a war of science misinformation about climate change, this is an important point to get right for your listeners.

Nice find pumpkinpie24. So it's actually an anecdote of something some guy said three years ago.

Please immediately issue a correction to the assertion in Juli Niemann's interview by Jeremy Hobson in the Morning Report that included this bit:

"One climatologist we heard from has said the planetary alignment is now what it was in the 1930s and that distorts the gravitational pull on the weather patterns, setting us up for huge global drought."

This is ridiculously incorrect. Planetary alignment has absolutely nothing to do with Earth's weather patterns, as I'm sure every other climate scientist, planetary scientist, or astronomer would tell you or her. Actually, I'd love to know the exact source of her information (an "anonymous climatologist"?), and I'm sure your listeners woud as well. In any case, you should get that information to avoid referencing the same source in order to avoid basic embarrassing mistakes like this in the future. I'm actually a big fan of Marketplace, so I'm hoping this will lead to more accurate reporting when it comes to science and the economy, especially when it comes to important climate issues. Thanks!

Pages

With Generous Support From...