Dry conditions expected to prevail in Corn Belt, will likely trim yields

June 29th, 2012


Category: Grains, Oilseeds

(Farm & Ranch Guide) – Farmers in the Corn Belt heard little in the way of good news from Drew Lerner of World Weather, Inc. during the Allendale Ag Leaders Monthly Webinar Series on June 26. Lerner expects the current dry conditions in the Midwest to remain during the remainder of the growing season.

He noted that soil moisture is very short in an area from the northern delta in the Tennessee River Basin northward into Indiana and parts of Illinois where during May and June they have received at best only 25 to 50 percent of their normal rainfall.

“This is where the core of the problem is,” Lerner said. “We are basically out of moisture at the top and subsoil levels in southeastern Illinois and neighboring southwestern Indiana and extending into areas of western Kentucky.”

The next few weeks is critically important to the corn crop in this region, since it is either in or getting close to being in the pollination stage.

“These next two weeks look to be very tough for the majority of the crops,” he continued. “We may see some scattered showers occur across the Midwest during these two weeks, but the odds are very good that the rain amounts are going to be well below average and we are going to continue to see warm temperatures as well. So what will happen is we will have successful pollination -but the problem is going to be in supporting the kernel development afterwards.”

On the other hand, Lerner noted that much of Minnesota, Wisconsin and portions of Iowa have experienced above normal rainfall during this period.

He expects showers to be a little more numerous in July in the dry regions, with rainfall coming in at maybe 50 to 75 percent of the normal amount, but that will just barely keep up with evaporation rates at that time of the year and won’t improve soil moisture conditions. Looking ahead to July and early August, Lerner predicted the dryness basis will shift further west into the western areas of the Corn Belt such as Nebraska, and portions of Iowa and Missouri.

“So there is a great amount of concern about the potential for losing production potential across the region,” he cautioned.

As for this area, Lerner said the monsoon will starting kicking in the latter part of July and August and that will sweep moisture from Mexico across the Rocky Mountain regions and eventually across the Northern Plains resulting in normal to above normal precipitation. That change in weather patterns should also bring cooler than normal temperatures to this region in August.

“That will take the frontal boundaries coming out of Canada and help produce a little more rainfall and hopefully hold together better for bringing some moisture into the eastern parts of the Midwest,” he said.

Based on a negative Southern Oscillation Index in the month of July, which is expected to occur, Lerner expects rainfall in the Midwest to increase during August, which he said, should be beneficial for the soybean crop, but will be too late for the corn crop.

What could these predicted weather conditions mean for the markets? That question was tackled by Rich Nelson, director of research for Allendale. If weather patterns advanced by Lerner hold true, Nelson expects the U.S. corn crop will fall short of the predicted USDA yield of 166 bushels per acre, which is above the trend line yield of around 161 bushels. This increase in expected yield was due to the early planting activity that a large part of the nation was able to take part in.

Nelson noted that if the 166 bushel average nationwide yield came to pass, it would likely result in a December corn price in the neighborhood of $3.80. However, due to the current moisture conditions, Allendale is estimating the average corn yield will slip to 153.9 bushels per acre, or a 5 percent decrease from the trend average. This would give a December corn target of $5.60. If the current short term and long term forecasts hold, by July 31, Nelson expects the nationwide yield for corn to be at 143.3 bushels per acre. This would represent a full 10 percent decline from the trend yield and the Allendale December corn target price would be $6.80.

This would indicate that we are in a definite weather market and attention will be focused on the Midwest in the next couple weeks as the corn crop enters the crucial pollination period.

Add New Comment

Forgot password? or Register

You are commenting as a guest.