Agricultural Commodities: Beware the Harvest Moon Rising

By Phil Franz-Warkentin  

It's that time of the year when the days get shorter, the nights longer, and the agriculture markets work themselves up into a tizzy over worries about the first frost of the season. The Harvest Moon is fast approaching, and along with it, perceptions that temperatures will soon plummet to below the freezing mark.

This fall, the timing of the first frost will likely be more critical than usual because wet conditions in the spring delayed planting and most crops are behind their normal development. Those thinking about dipping into soybean or corn markets will need to pay close attention, and one must wonder: Can the brilliance of the moon actually provide us with some clues as to where agriculture markets are heading?

Blame It On The Moon?

The Harvest Moon is the full moon that occurs closest to the Autumnal Equinox and usually takes place in late September or early October. This year, the Harvest Moon will be Sept. 15, just a little before the Autumnal Equinox on Sept. 22. Its name originates from how the unobstructed moon casts sufficient light to allow farmers to finish their harvest chores.

The Harvest Moon is often seen, at least anecdotally, as a potential signal of the first big frost. Part of the reason for its controversy is its unusual way of making an appearance. Throughout the year, the moon rises, on average, about 50 minutes later as each day passes. But during the Harvest Moon period, stretching from several days before the full moon night to several days after, this day-to-day timing of the moon rising is only around 30 minutes.

Heidi Stonehill, senior associate editor with the 200-year-old Old Farmer's Almanac, notes that the first frost often occurs during the Harvest Moon period in many places on the continent, from Alaska to New Mexico.

The first fall frost is usually a radiation frost, produced on clear nights with little or no wind. The clear skies allow heat from the ground to escape into the atmosphere, cooling surface temperatures. The other type of frost - advective - is rarely the first one of the season, and occurs when a cold front sweeps into an area.

Stonehill speculates the long-held fable that a full moon near the Autumnal Equinox would produce frost may originate with outdated beliefs it could clear away clouds to expose clear skies.

Research has been unable to prove a correlation between the full moon and the occurrence of frost.

The chicken-and-egg argument could even be made that the full moon doesn't cause the frost; rather, the clear skies associated with a fall frost simply make it easier to see the moon.

Global Warming Won't Diminish Risk Of Frost Anytime Soon

Even meteorologists often admit that predicting longer-term weather conditions can be a shaky science. One thing that is for certain, despite all the noise over global warming of late, a frost is still guaranteed sooner or later each fall. Farmers are just hoping it will hold off until after September.

Its timing is key, as frost is the main risk that can harm crops at their current late stage of development, by reducing quality and potentially yields. Any damage to crops in the United States would have serious consequences for global markets, given that the nation is the No. 1 exporter of corn and soybeans.

Drew Lerner, president of Kansas City-based World Weather Inc. and veteran agricultural meteorologist, said in an interview with Hard Assets Investor Sept. 8 that the latest forecast models don't point to any risk of frost in the Midwest in conjunction with the Harvest Moon this year. "However, the latest model data is suggesting the 18th and 19th in the Northern Plains and the Upper Midwest as a time period when there might be some risk of frost," he said.

Typically, the northern grain belt should expect to see a frost anywhere from mid-September to early October, according to Lerner. While a typical cold surge wouldn't be a big deal in most years, this year is different because of the lateness of the crops. "These crops are so immature that it would likely have a negative impact on the quality, and probably have a negative impact on the potential production itself," said Lerner.

Weather Research firm Storm Exchange, meanwhile, says the chances of damage from a freeze in Iowa and Minnesota (two of three states most at risk, the other being South Dakota) are 25 to 30 percent higher than they would be in a typical growing season when crops mature on time.

The Market Impact

The Agriculture Department on Friday, Sept. 12, reduced its forecasts for this year's corn and soybean harvests, mostly because of dryer weather this summer.

U.S. corn production is now predicted at 12.1 billion bushels, down from the government's last forecast of 12.3 billion last month. The soybean forecast was downgraded to 2.93 billion bushels, from 2.97 billion.

If the USDA's forecasts come true, the corn crop would be 8 percent less than last year's, but still the second largest in recorded history. The soybean crop would be 13 percent more than last year and the fourth largest ever.

An early frost would undoubtedly make even these revised predictions optimistic. Some analysts estimate that as much as 7 percent of the anticipated U.S. crop would be lost if those cool temperatures arrive early.

Corn and soybean prices hit record highs in late June and early July, but have eased off considerably since, in part because of ideal growing conditions this summer. After the December corn futures contract hit a record high of $7.97 per bushel on June 27, they eased off to near $5 in early August, before recovering to near $6.25 later in the month. They have since been on a downward trend, and appear set to retest the August lows.

Since peaking above $16 per bushel in early July, soybean prices have also been in a downtrend, now trading closer to $12.

An early frost - or even suggestions that it may be coming - could send those prices rallying once again. Whether we could actually see prices rebound to the lofty records of early this summer is another question. But remember, strange things can happen during a full moon.

Disclosure: none

Comments

[bennie:]

A lot of newbies came into commodities the last few yrs,
they don't know much.

McCain is anti ethanol, its is wasteful and non contributory.
That could kill corn.


Next the crop is made, frost at this late date won't damage the crop much and odds are low anyway of an early frost.

Harvest moom, sounds romantic though

2008 Sep 15 08:36 PM

[Halp:]

Bennie, Bennie whats with the romantic stuff???? (Ha ha)

I dont think McCain will kill ethanol if he knows what is good for him.

It is currently to big and to important..during this transitional phase of our "yet undetermined" national energy policy development, to knock off.

Look for a reduction/elimination of the tarriff on its importation for sure. ( Sugar Ethanol-Brazil)

Look for an increase in the blenders credit that most of the oil guys love to take.

Look for some type of incentives for farmers to make up some of the
slack as the corn price drops off.

That way he wont totally, politically, alienate the (corn) ethanol power base and its positive effects on our terrible oil consumption problem.

2008 Sep 16 12:45 PM

[je:]

Halp,

I think that is a good take on the "transitional" aspect of ethanol. I have always felt that this was a stretegic move to get into this in the first place given the geopolitcal possibilities.

I do think at some point in the future our grain will be used in our defense against the rest of our potential enemies with our food supply just as Russia is doing with energy to Europe.

Whatever the downside of corn is I think it will just be temporary. That is not to say that lower prices will not be around long enough to hurt some farmers but low prices will subside if they occur.

I have been looking at the corn around central Ohio and I do not see ths bumper crop that they are predicting. Some areas that I have viewed have water spots in the fields and the ears on average are only 60 to 80 % of recent years. There have been none that was viewed as large and noteworthy so this lower than normal prices may not occur at all.

2008 Sep 16 02:14 PM