Crop Yields Under Cloud of Doubt
Published: Friday, July 23, 2021
Poor crop conditions from drought in some major producing states will likely diminish total yields nationwide despite relief from Mother Nature in recent days.
That's according to farm economists at Purdue University, who believe some of the damage from lack of rainfall is irreversible.
Jim Mintert, director of the Center for Commercial Agriculture at the West Lafayette campus, said crop conditions particularly in North Dakota, South Dakota and Minnesota along with parts of northern Iowa will be watched closely by market analysts for at least the short term.
Recently, Mintert said rain has fallen in the drought-stricken Great Plains, but the extent of the precipitation and what impact that might have on struggling corn and soybeans was not immediately known.
Mintert added uncertainty over the future health of the crop might lead to more volatility in prices already seeing major swings the past few months.
"Crop progress reports and the six- to 10-day forecast are going to be the words to live by, I think, the next few weeks," he said.
According to the latest USDA crop condition report, 65 percent of corn in the 18 major production states is rated as good to excellent.
Just 35 percent of corn in North Dakota and South Dakota, though, achieved the same rating while 40 percent of corn in Minnesota was deemed good to excellent.
Michael Langemeier, associate director of the Center for Commercial Agriculture, said the three states combined represent 19 percent of the nation's corn production.
"Very low numbers compared to the rest of the country. These are very important corn states," he said.
The outlook for crops in the eastern Corn Belt appeared much brighter, with 73 percent of Indiana corn, for example, in the good to excellent range, according to USDA.
According to USDA, the condition rankings were similar across the board for soybeans.
In other areas like parts of Illinois, conditions were starting to get a bit too dry until enough rain came down recently to cause flooding in some of the fields.
Matt Schafer, a corn and soybean grower from LaCrosse, said all of his corn and soybeans were in excellent shape in somewhat dry soil until receiving 4 inches of rain during a short period in late June.
Lesser amounts of precipitation followed in July when the ground was still a bit waterlogged.
As a result, Schafer said he lost some of his crop, especially in low-lying areas. His corn and soybeans on higher ground, though, are slightly better to much better than average.
"Overall, things look pretty decent," Schafer said.
Despite prices dropping from their recent peak, farmers were advised to lock in at least some of their maturing crop at current price levels.
Nathan Thompson, assistant professor at the Department of Agricultural Economists at Purdue University, said prices are still very good, especially since how low they had been in previous years.
The harvest price for soybeans, for example, is predicted to be a solid $13.31 per bushel.
However, Thompson said there's always a chance future prices will not to live up to high expectations.
"There's still downside risk in these markets," he said.
Langemeier said there's a 20 percent chance based on current market data for corn prices to drop from $5.30 per bushel presently to a more breakeven $4.40 per bushel in the coming months.
The odds for a similar price drop for soybeans is about 30 percent.
Langemeier said farmers should also keep an eye on rising inflation when deciding whether to take advantage of current prices.
Inflation on farm inputs over the past 10-years averaged less than 2 percent annually.
A recent survey found one-third of farmers believe their operational costs over the next 12 months will go up by least 8 percent.
"Inflation is a real concern for agricultural producers right now," Langemeier said.
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