Category: weather

The drought is over!

It’s official! The drought of 2012 is over! Hooray! BUT, the flood of 2013 has begun! It won’t stop raining! And when it does, it only stops for a day or two, then rains again. The few days in between rainy spells won’t let the fields dry out enough for us to continue to plant. Here’s this week’s forecast:

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Will we get our corn planted by the May 31 deadline for crop insurance? Will we get our soybeans planted by the June 15 deadline? It’s out of our control at this point. The weather is the weather and Mother Nature makes all the decisions around here.

Us farmers are never quite satisfied, are we?

2012 Crop tour yield estimates

If you read this blog, I have focused on the weather most of the summer. The commodity markets turn into a weather market during the summer, and what volatility we have had! The lack of moisture has made prices go up then down then up again then down, etc., etc. Traders pull money out one day, then the next, put it back in.

Many times, traders look at the weather in Chicago only. If Chicago is raining during a dry spell, prices drop, even though it is still dry in Iowa. Traders aren’t farmers.

They also seem to heavily rely on USDA crop reports which are not always (usually) accurate. Again, traders are not farmers.

This week, an industry crop tour took
place, with results confirming that yes, we have a supply issue due to drought across the Midwest. According to their estimates, the corn crop will be 10.478 billion bushels with a yield of 120.25 bushels per acre.

To have a comparison, if the corn producing areas of the country had had adequate rain, we would be yielding on average 180 -190 bushels per acre.

The soybean crop is estimated to be 2.6 billion bushels with a yield of 34.8 bushels per acre. With adequate moisture and normal temperatures, an average yield would be 45 bushels per acre.

With this information in hand, one would think prices would have hit a limit today. But no. Markets got a little excited this morning, then dropped to last week levels. In my opinion, the market feels heavy, like it’s lugging around an 800 pound gorilla on its back. Any rallies lose momentum in a day. We are now exiting the weather market, so those spurts of rain here and there will not have anymore effect on commodity prices…unless do I dare say, we can’t get into the fields to harvest because it won’t stop raining! Oi vay!

So the big question is, is when will the trade realize there is a shortage of grain? I mean, we farmers know better than anyone what our own crops look like and what our average yields will be. And most of us are waiting for prices to move toward and closer to $9. The potential is there, all the ducks are in a row, but something is holding traders back. Someday soon the supply and demand will affect the markets. One would think it would be about now…