Well April showers bring May flowers but April flurries just bring worries, that’s what I say anyway. I have to apologize for not getting a follow up issue to you last week but having just returned from my farm tour and then turning around almost immediately and heading to Baltimore for our editorial meeting left me little time to sit down and really give you a fair look at the situations I see brewing.

Let me first say a big thank you to all the farmers I met with on my latest trip, especially all the farmers who took the time to sit down with Charlie Nedoss and I in Waseca Minnesota. Heck maybe they were just there because it was to muddy to get the tractors rolling anyway, lol. Nah, the meeting was only supposed to be about an hour and it went over two hours so I think it was just as interesting for them as it was insightful for us.

My good friend Geb Singlestad and his son Scott arranged the meeting and I am very grateful for it. Scott took plenty of time to show us around his farm again and Geb took us out to see the 110 million gallon ethanol plant in Janesville. I can’t thank them both enough and I wish them a good growing season. As Charlie and I drove down form Minneapolis last weekend though we saw just how poor planting conditions are.

Mission Critical

The fields were wet and cold with standing water in many and not one tractor rolling as far as the eye could see. The forecast last weekend was for some drier weather heading into last week, it was short lived. Now my calendar says April 28th but even so a blizzard and frosty temperatures hit much of Minnesota and Wisconsin, flurries are expected in Chicago today. Now I heard a few reports that seeders were rolling in Indiana but I think that is the exception and not the rule. Time is running out for farmers and some may be even trying to plant in the mud, not a good idea. ‘Mudding it in” is what it’s called and it can bring some real problems.

Anyway, I got a couple of reports in this morning from my Road Warriors.

Kevin, Just a note to tell you more rain in our forcast today/tonight and a freeze warning for Tuesday morning…a wide spread warning. OH-BOY.
RTA Road warrior

John

Hello from Julie the truck driver.

Recently we have been having a steady run from Louisville KY to Sioux Falls SD. Here is what we heard from the field. South Dakota is getting fields planted but mainly focusing on Wheat. At a restaurant in Kingdom City MO the farmers were gathered in a back room talking over the plight of wet lands making it impossible to seed.

I know when we drive across I65 in Illinois and Indiana the fields look an ancient swamp land. A lot of the water has receded but water still saturates the land.

We were just at a Sams Club in Louisville KY and they are limiting the cooking oil and flour in addition to the rice.

Thank you for all you have do for us keep up the great work.

Julie, RTA Road Warrior

And look at some of these comments from Agweb.com which just confirm what RTA’s Road Warriors are saying.

Here’s a sampling of what some folks are saying:
4/25 – North Central Iowa, Butler County: We received 4″ of rain from 9:30 last night to 5 AM.We haven’t turned a wheel yet, not even done rock pickup detail. Now with cold temperatures dippin into the 30′s over the next few nights, I’m glad to say the corn is still in the bag. We are sticking to our 100% corn plan, but may switch to some earlier varieties if this pattern continues to exist. Good luck to all this spring and be safe.
4/25 – West Central Minnesota: Not a kernel of corn in the ground yet! The ground is white with snow & blizzard warnings out till Saturday pm. I’m a fertilizer dealer & am very concern that transportation of product will be a nightmare when it dries out. Also had a major suppler say, “Sorry, but we over sold, so here is your money back” How am I suppose to provide for my farmers when this is how we get treated?


4/25 – Southwest Illinois-St. Clair/Madison Counties: For the most part we are still wet. Not as wet as two weeks ago, but still to wet for much field work. I little corn planted in the bottoms on some sand, but very limited. A little NH3 going on some of the well drained fields, but probably only a couple of percent. A pretty good line of storms rumbling across MO, so I’m guessing we will wind up with about 1 good day of field work so far. Another shot at rain again on Sunday. Most folks are getting edgy, but no one is talking about switching crop plans as of now. Most wheat is topdressed. Wheat conditions range from good on the rolling ground to average or poor on the flatter ground. I still think we have a chance at a decent wheat crop, but the potential for disease and is also very high. Not huge wheat acres here in the north part of the county so for most it’s merely a topic of discussion.

4/25 – Southeast Nebraska: After several days of fertilizing and planting we have a near 1.5 inch of rain. I have no fertilizing or planting done as bottom land was to wet. No corn planting until May and it will hurt yields in this area if not in the ground by May 1. Calf crop in this area has above usual number of death losses.

So as you can see form reading all of that, 2008 is starting out in pretty poor shape and now with each passing day yields for corn and other crops are threatened. On top of all of that word is out that wheat crops may not only be threatened by this late cold snap but also by disease. More on that in our longer mailbag issue later this week.

I am looking at two more trades right now and I will let you know either way this week. Meanwhile I am preparing to leave on another trip yet again.

Dububble

Ok so you ever wonder what all that $4 gas and $120 crude pays for well I am about to see first hand when I fly over to Abu Dhabi and Dubai this Friday. I will be speaking at the Sovereign Wealth and Resources Conference in Abu Dhabi and also visiting the Rude Awakenings own Joel Bowman in Dubai. He calls it Dububble! Well indoor skiing in the Desert and underwater hotels may only be the tip of the iceberg in the desert , we will see. Meanwhile as oil chugs along there seems to be no help from OPEC who came out this morning and said that oil supplies remain fine. That’s despite the strike at BP and the attack on an oil terminal in Nigeria. Get comfortable with the idea of $4.50 or higher for gas this summer because I think it is almost a certainty.

Here are my comments on oil with the folks at Squawk Box this morning, Take a look! Click Link Below

CNBC Squawk Box

 I will tell you this.  My phone has been ringing off the hook from every media outlet on the planet, at least that ‘s how it seems.  Everyone except CNBC Squawk Box where I seem to be way down the totem pole lately.  That’s fine, their loss. In spite of the fact that  I broke this story with them 3 years ago, now Gartman and others who never talked ag’s before are the guest hosting Squawk Box, typical.    A day late and a dollar short as usual.  I briefly turned up the volume and heard them discussing who was wearing what and whose hair looked good and I had to do a double take if I was watching a business channel or Entertainment Tonight…All I can say is Ugh.

Anyway, I am off to farm country Thursday and excited to see things first hand again this year.  Tonight before I go though I am going to swing down to NY and visit my friend Neil Cavuto to discuss food prices and where we go from here.   Meanwhile my business partner and friend Sean has some spot on analysis of the grain markets and I share it with you now.  From his Money and Markets report.  Enjoy. 

From Money and Markets 

“The United Nations’ Food and Agriculture Organization (FAO) said that world cereal production may jump a record 2.6% this year as farmers boost plantings.

In other words, supply is fine.

Except … wait a minute … what’s that other report I read last month? The one that said world cerealdemand is growing at 3% a year.

Today, I’ll explain why this seemingly insignificant gap between supply and demand scares the bejeezus out of me, and how you can protect yourself.

The gap is only four-tenths of a percent. What could possibly go wrong, you ask?

Well, for starters …

The World’s Food Supplies Have Collapsed …

Worldwide stockpiles of cereals (wheat, corn, etc.) are expected to fall to a 25-year-low of 405 million tonnes in 2008. That’s down 21 million tonnes, or 5%, from their already reduced level last year.

U.S. wheat stockpiles are at a 62-year low, even though farmers are planting from fence-to-fence. And with the U.S. dollar falling fast, foreign buyers are lining up to scoop up as much of Uncle Sam’s grain as they can carry away. Wheat recently soared to the highest price in 28 years.

Meanwhile rice, a staple food for three billion people, is becoming increasingly scarce. World stores of rice have shrunk from 130 million tons eight years ago to today’s stockpile of 72 million tons — enough for only 17% of annual global demand. Result — the price of rice is up 70% in the past year.

And as for corn — well, more and more of that is used for ethanol. The price of corn is up over 70% in the past year and has more than doubled in the past two years.

So to summarize — stockpiles are at record lows. The supply on hand can be measured in days! And growth in production can’t keep up with growth demand.

Now, let me ask you this question …

What If Something Goes Wrong?

What if the increasingly freaky weather the world has been enduring causes droughts on one side of the world and floods on the other? What if there’s blight or some other major crop failure?

You can see why I believe we are one bad harvest away from a serious global food crisis!

People will put up with a lot, but they won’t put up with going hungry … not when they have guns. In fact, blood isalready being spilled over food …

 Egypt — food riots! In the time of Julius Caesar and Cleopatra, Egypt was the bread basket of the Mediterranean. Boy, how times have changed. Food inflation is so bad in Egypt that people are rioting over sky-high prices. The government-owned Egyptian Gazettenewspaper says that seven people have died since the beginning of the year in brawls in bread lines.

And it’s not just Egypt. The World Bank says 33 countries from Mexico toYemen have already experienced unrest because of spiraling food costs, and 37 countries may face more social upheavals if food prices continue to rise.

 China says “no” to hungry Filipinos. The Philippine government recently asked China to provide 200,000 metric tons of milling wheat, equivalent to about 10% of annual consumption. Beijing declined, leaving the Philippines scrambling to find more wheat. Trouble in Uncle Sam’s breadbasket. Cold weather is chilling the fields in the Midwest, and too much rain is sending rivers near their flood levels. Farmers who try to till or plant in soils that are too wet will risk compacting their crops and other problems that result in lower yields. On my blog last week, I published a note from a farmer who complained that he STILL can’t get a crop in the ground:

“In 2006, we finished planting my crops on April 23. In 2007, we were done on April 18. I don’t want to be the first guy planting, but I don’t like being third, either. Early (timely) planting won’t happen this year if the weather forecast for the coming weekend proves accurate. Soils are completely saturated to the point of that erosion has already occurred and will get worse with additional heavy rains, and are COLD. I can’t tell you how cold because I’ve not even checked temps yet. If planting is not done by May 1, there will be some nervous farmers in LaSalle County and I’ll be one of them.”

Now sure, that’s a local story, but it’s not the only one. In fact, just this week, the USDA reported that corn and rice plantings are being delayed by excessive rain. A hungry world is depending on a good U.S. crop — if we don’t get one, those 37 countries the World Bank is talking about could erupt in food riots.

How We Got Here …

Global food prices surged 57% last month from a year earlier, according to the FAO. There are a number of forces driving that price explosion …

Weather: Part of it is weather. Too much rain in the U.S. in 2007, flooding in Indonesia and Bangladesh and drought in Canada and region w:st="on">Australia curbed world stockpiles. As a result, the poorest countries may spend 56% more on grains this year than a year ago. Global warming will affect crop yields, and mostly not in a good way.

Food or fuel? Ethanol production is on course to account for some 30% of the U.S. corn crop by 2010. The International Monetary Fund estimates that corn ethanol production in the U.S. fueled at least half the rise in world corn demand in each of the past three years. As corn prices go up, animal feed goes up, and prices of other crops rise as farmers switch their fields over to government-supported corn.

Rising Demand: World Bank President Robert Zoellick recently told a conference: “As the Indian commerce minister said to me, going from one meal a day to two meals a day for 300 million people increases demand a lot.”

And he’s only talking about the poorest of the poor. There are 1.1 billion people in India, and they’re all improving their diets and eating more Western foods. Meanwhile, 1.3 billion people in China are eating a lot better and eating a lot more meat — and it takes 7 pounds of grain to make one pound of meat! It’s no wonder why food prices in China jumped 28% in February.

Political pressures: China isn’t the only large, populous country that is curbing exports to ease prices — and internal unrest — at home.

• Vietnam, one of the world’s three biggest rice exporters, will reduce shipments by a million tons this year to 3.5 million tons to ensure supplies domestically and curb its highest inflation in more than a decade (20% year over year — ouch!). The government also said it’s considering a tax on rice exports. Egypt, Cambodia and Guyanahave all also put export bans on rice in place.
• Kazakhstan just suspended its wheat exports to tame domestic inflation. Kazakhstan is the breadbasket of Central Asia, and the only state in the region that exports grain, about 50% of the 21 million tons it says it harvested last year.Ukraine stopped wheat exports this month and reduced barley exports.

• Argentina — the world’s fourth largest wheat exporter — has effectively pushed back the date that new shipments can leave the country.
• India has already put restrictions on its rice imports. And its wheat output, second only to that of China, may drop 1 million tons to 74.81 million tons in the March-April harvest because of a drop in acreag
  e.

Coming Next — Hoarding!

What’s more, India may import up to two million tons to build stockpiles — up from imports of 1.8 million tons in 2007 — with an eye on creating a strategic reserve of five million tons of wheat and rice to meet emergencies. Pakistan is also talking about doubling its wheat imports this year.

If other countries start building strategic reserves, it could send prices skyrocketing. And that raises the specter of countries fighting each other over food reserves.

Speaking of reserves, since China reportedly has as much as 200 million tons of grain reserves, you have to wonder why they turned down thePhilippines‘ request for wheat exports … unless, maybe, they don’t have as much as they say they have.

Why would they lie? How about a powder keg with 1.3 billion hungry people sitting on it!

Or maybe the Chinese can see the way that forces in the agriculture market are falling into place and they believe that no stockpile can be big enough!

How You Can Protect Your Portfolio …

No one wants to get rich off hunger. But you do want to protect your portfolio from market turmoil, and the profits on agriculture could cushion the blow for other sectors you own that might be getting hurt.

One way to do it is with the PowerShares DB Agriculture ETF (DBA). It tracks an index composed of futures contracts on corn, wheat, soybeans and sugar. It’s up 17% year-to-date — pretty good compared to the 9.5% loss for the S&P 500.”

CNBC Asia is awesome. Smart, in depth, easy on the eyes… Great discussion on the grain markets.

Grain Drain The reduced global wheat harvest has caused prices to double. Kevin Kerr, president of Kerr Trading Int’l & editor of Resource Trader Alert reviews the dangers facing wheat supplies, with CNBC’s Amanda Drury & Sri Jegarajah.http://www.cnbc.com/id/15840232?video=705301085

Those of you who have been with me a couple of years know I usually try to get out to see some farmers this time of year, and 2008 is no exception. The unusually wet planting conditions have pushed back planting, and an exact date to get all those crops in the ground still seems unclear.

You see, the wet, muddy conditions and continued rain make it next to impossible to get equipment in the fields. Also, farmers run the risk of putting seeds in too early and, basically, losing the crop. The situation is pretty grave this year, as demand for all the grains is very high, as are the costs to plant them. The hope seems to be that we will have another year like last year and Mother Nature will be kind. It may not end up that way.

Real crop conditions, farmers’ and ranchers’ sentiments and concerns and good old home cooking are not things you can get sitting at a desk in New York or Washington, D.C. Nope, you have to go to the fields and see for yourself.

When you’re standing out in a cold, wet, muddy cornfield with no corn in it, but plenty of standing water, you get a sense of what we may be facing. In an effort to bring you the best firsthand information for your trading decisions, I travel far and wide to meet directly with everyone from farmers and ranchers in the Midwest to fund traders in the Middle East. I just returned from the Singapore Plantation Investment Asia conference, as you know.

I will be heading to Minnesota on the 17th for a few days of visiting farms, hog operations and even an under-construction ethanol plant in Janesville, Minn. I am taking my family along, since my mother-in-law is in town from Estonia and has never met my family in Minnesota. That will be very nice.

I plan to interview as many farmers as I can and get a real sense of what they are thinking, not only about this crop year, but also about the next five. Doing this in past years has proven very valuable. After all, I knew corn would be going to $6 three years ago largely because of what I found out by visiting farms and seeing what was going on long before the ethanol boom landed on the front page of Barron’s.

The other thing that has proved very valuable is my farmers/traders network. I have several loyal RTA readers who travel the highways and byways of the Midwest and see crop conditions firsthand during growing season. Best of all, they let me know. This is far better than anything Washington and the USDA put out, and it’s unbiased. Sure, it’s not scientific or regulated by the government. It also doesn’t cost anything… all reasons why it works.

Here is a report I just got from “John,” one of my road warriors:

“Did a drive around central Illinois yesterday… Peoria to Bloomington, up to the Quad Cities and then back to Peoria. Looked at about 265 miles of crop fields. One 50-acre plot had been aerated. That was all. LOTS of fields with standing water. Also lots of washed-out areas and grass waterways covered in mud. The bottom ground told tales of high water from the corn stalk residue all washed to the farthest side, away from the creek. Some fields had large chunks of trees resting hundreds of feet from the banks of the creek or river. More rain is in our forecast for tomorrow.

“Have a good one. I’ll be on the road twice next week. Also… while in Bloomington, I saw diesel fuel for $4.03 and $4.08… OUCH!” Keep them coming, John. If you are in the Farm Belt and would like to send updates all during growing season for your fellow RTA readers and myself, please send them to kevinscottkerr@mac.com . We all really appreciate it. And if you are a farmer, rancher, elevator operator or farm equipment dealer in Minnesota or possibly even Wisconsin, please let me know, as I would love to meet and speak with you during my visit. Just e-mail me at the above address.

So when I get back from the farm tour, there is no rest for the weary. I will be headed down to Baltimore for one day for our editorial meeting — can’t do both days, because I have to get back to New York to prepare to fly to Abu Dhabi and Dubai.

As I said, there is no limit on where I will go to bring you the most cutting-edge information, contacts and trading advice. More on my trip to the Middle East soon.

Well it’s that time of year again.  The flowers are starting to bloom, the temperatures are warming up, baseball fever is starting and crop progress reports are too.

A quick story to tell you from last week in media land: I am not a baseball fan, sorry to say, but there I was at Fox News last week, doing my second interview of the day — this one with Cavuto. Anyway, I sat in the green room with this big guy sitting across from me. His girlfriend and an even bigger, massive guy were there also. I had no idea who they were. As I said, baseball falls far down my list, next to croquet and bowling. I am a hockey guy.

Anyway, on the green room TV, they were talking about gold. All of a sudden, this guy asks the bigger guy, “How can we invest in gold?”

My ears perked up, and I said, “You can talk to me.” They both suddenly looked up at me and I felt a little intimidated. The first guy and I started talking, and I told him why I was there, about RTA, why gold has been going higher, etc.

I gave him one of my Maniac Trader business cards, which he liked a lot. He said he might call me if he wants to learn more about gold. I said, “Sure, great. Take care,” and then the three of them left. I never did get their names.

All of a sudden, one of the producers came up to me and said, “Do you know who that is?”

“Ah, no,” I said.

“That is Jose Canseco.”

I must have looked kind of blank, and then I said, “Oh, he is a baseball player, right?”

The producer said, “Ah yes, that’s right,” in a sort of “man, you are an idiot” tone of voice.

Anyway, the guy went on with Cavuto and was grilled about his new book. At one point, Cavuto said he thought Canseco was going to come over the desk at him. I thought so too.

Meanwhile, the other big guy was not his bodyguard. He was his lawyer. Looked like he had had a little of the magic steroid juice too. Now, that’s the kind of attorney I need. Maybe if my attorneys looked like the Hulk and were on steroids, I could get my regulatory applications for my funds done sooner, rather than the months on end it is taking. Maybe I can do a trade with Canseco and get some steroids for my lawyers and accountant, if I give him advice on gold. I will keep you posted. Here is a link to the video of the interview with Cavuto that was shot right after I talked with him. I swear he looks like he is going to beat Neil up – you can see it here.

And if you want, in the video search box, just type “Canseco” and look for the April 2 interview featuring Canseco. Enjoy