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'Do-or-die' time for the corn crop

Jeff Caldwell 07/05/2012 @ 1:45pm Agricultural content creator and marketer.

"Hot or cold, wet or dry, price the crop before the 4th of July."

That's the old adage that Agriculture.com senior contributor Red Steele says he's considered in the past when marketing grain. But, this year, that's all out the window.

"Today has proven this old adage wrong...the question now is by how much and when the screw turns," he says.

The grains have traded sharply higher the last few days as more and more market attention is focused on the growing drought in corn and soybean country. The current soybean price for the July contract marks a 4-year high, while July corn was, on Thursday, sitting at a 10-month high.

The market commotion comes as the red continues to spread on the U.S. Drought Monitor map. Red color signifies "extreme" drought conditions on that map, and on the latest version, updated Thursday, virtually all of Missouri and Kansas are under either severe or extreme drought conditions, while the amount of land in the latter category has expanded immensely in the southern Corn Belt in the last 2 weeks.

While the driest parts of the Delta and western Plains could see some relief in the coming days, the 6- to 10-day outlook shows conditions will likely continue to spiral downward in the heart of the Corn Belt, where mounting drought losses have some farmers already calling this year's crop a failure.

"The continued dry pattern across the central Midwest will allow drought conditions there to increase further," says MDA EarthSast Weather senior ag meteorologist Don Keeney. "The 6-10 day outlook offers more improvements across the Delta, Southeast, and southern and western Plains, while further reductions in moisture are expected across the central and western Midwest and east-central Plains."

New information out Thursday shows just how much those "further reductions" could trim this year's corn yield. Trend yields are out of the question for a lot of farmers this year. That doesn't come as a surprise to many, including those in the eastern Corn Belt who say they may not even see a corn crop this fall.

A new estimate from Commodity Weather Group (CWG), LLC, out Thursday shows just how far below trend the crop could wind up this year; it shows from the central Plains to the eastern Corn Belt, much of the corn crop could fall further than 10% below trend.

According to CWG, farmers in Nebraska, Oklahoma and Arkansas will likely raise a crop that's between 6% and 10% below trend yield, while those in Kansas, Missouri, Illinois, Indiana, Kentucky, Tennessee and Alabama will struggle to raise a crop that's within 11% or more of trend. Farmers in Minnesota, South Dakota, Wisconsin, Ohio and Iowa still have a a chance to make a crop "near trend," the CWG report shows, while at this stage in the year, North Dakota farmers could still raise an above-trend crop. Altogether, these numbers yield a national average forecast 7% below trend.

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