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Actual drought or perceived

Agriculture.com Staff 02/10/2006 @ 1:46pm

Conditions in the southern Plains, especially the Texas Panhandle, remain abnormally dry and classified as a drought area. Much of the upper Midwest remains dry as well, with subsoil moisture conditions appearing as though they will be low going into spring.

However, we encourage producers to recognize the difference between actual drought and perceived drought. We will use 2005 as our example. As dry weather continued to engulf much of the Midwest in the mid summer months, the general language from farmers was that, "if this continues for another couple of weeks, then we are in trouble." In actuality, what was happening is that, while dry weather was approaching a critical stage for much of the Midwest, it was the perceived drought that had an impact on producers.

The rationale behind pointing this out is that a perceived drought will typically drive prices higher. In actuality, the crop at any particular time may not be suffering as much as anticipated. Parts of the Midwest with continued dry weather did in fact experience a smaller crop.

Many farmers in parts of Illinois, Missouri and elsewhere who did not receive enough rain experienced a drawdown of 30% to 50% of normal production. However, timely rains helped rescue the majority of the crop. In essence, the perceived drought never fully materialized for most producers.

The purpose of this is to recognize that currently the grain markets, especially corn, may be trying to move upward on perceived drought rather than actual drought. As producers, it is important that you recognize this and, for now, anticipate normal production until proven otherwise. Market assuming normal crops; therefore, that means you are taking action now while prices are trending higher.

If you have questions or comments, please contact us at 1-800-TOP-FARM, ext. 129.

Conditions in the southern Plains, especially the Texas Panhandle, remain abnormally dry and classified as a drought area. Much of the upper Midwest remains dry as well, with subsoil moisture conditions appearing as though they will be low going into spring.

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Weather Trumps Demand