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Weather extremes bring grain up short
‘Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.’
--President Dwight D. Eisenhower
As the statewide drought continues, the ag industry is closely watching the tight supply of corn and soybeans, now costing feedlot operators more. At the same time, meteorologists are questioning if La Niña will return.
Darin Newsom, Telvent DTN senior analyst, and Bryce Anderson, Telvent DTN chief ag meteorologist, discussed weather patterns in the country and the impact they are having on corn prices during a Sept. 7 DTN/The Progressive Farmer webinar.
Newsom said the August U.S. Department of Agriculture’s (USDA) ending inventory and potential yield for corn is the second-tightest in history, and may not be enough to meet demand.
Trade and demand will determine the price of corn.Newsom said of the three sectors depending on adequate corn supplies -- feedlot, ethanol use, and the export market -- the feedlots will be the first to “crack” and pull back their demand for corn. This will be followed by ethanol use, with the export market being the “wild card.”
The September price of corn is estimated at $8 per bushel, up from the previous price of $7.50 per bushel.
“We will see the price at or near $8 [in the fall] unless we see a break in demand,” Newsom said.
Weather is the culprit affecting the grain commodity market. Anderson gave an overview during the webinar of the current weather patterns, with the Texas drought getting several mentions.
Anderson said the drought is listed as severe in the central Corn Belt region, and extreme in the Southeast, continuing into the Southern Plains and Texas.
Houston is 24 inches short of rainfall for the 2011 calendar year, Anderson said.
The driest regions in the country include the Southern Plains, eastward to the Delta area, and the deep South.
With the central Corn Belt temperatures reaching 5 to 5.5 degrees Fahrenheit above normal, crop yields are going down. Temperatures also are above normal in the West and the Midwest, Colorado, the Four Corners region, and the Rio Grande Valley area.
With the dry conditions, the ag industry is concerned about soil moisture for spring planting. Other concerns include reduced winter wheat acreage and stress to the cattle industry in the Southern Plains.
Anderson spoke briefly about winter wheat planting time. If Oklahoma and Texas do not receive 1.5 inches of rain in the next three to four weeks, he anticipates fewer acres of wheat planted.
Northern Kansas, southwestern Nebraska, and Colorado have decent soil moisture for wheat planting, he said.
However, Anderson is worried about central Kansas, Oklahoma, and Texas.
“It is not looking good, with exceptional drought,” Anderson said. If the area receives a minimum of 1.5 inches, wheat has a chance to germinate and start up.
But the La Niña weather pattern is a major concern to the ag industry.
We are “dealing with history,” Anderson said. The 2010-11 La Niña pattern was the strongest since 1988-89.
Anderson said studies indicate a return of a weak La Niña in 2011-12. Historically, if a region comes out of the La Niña, the odds are 50/50 for a weak La Niña to develop the next year. This will bring drought conditions in the Southern Plains, while the Northern Plains will receive heavy moisture.
The Pacific temperatures are below normal, creating “neutral” conditions and trending closer for the La Niña to reform, Anderson explained. A barometric number of +8 -- sustained for 30 days -- must occur for meteorologists to officially declare a La Niña weather pattern.
This data is similar to data received from Jim Helmke, a local weather watcher, on Aug. 4. See “Repeat of 1998?”
All this -- the reduced crop yields and continued extreme weather -- combine to make ag producers concerned for the future.
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