Heat causes Corn Belt concerns
A few weeks ago, we wrote in this column that "Pro Ag senses a change in weather for grains this week that could have huge repercussions for grain producers and buyers across the world."
Also, that, "corn/bean weather is turning more adverse, with warm/dry conditions beginning to envelope the US Corn Belt at a critical stage of development (reproduction). While corn is far enough along that devastating yield losses may not be possible in many areas, soybeans still have the most critical development stage ahead of them (podding)."
This looks pretty prophetic at this stage, as the past 3 weeks have brought increasing stress on crops. While heat has developed across the Corn Belt, there also have been intermittent rains through the central and northern Corn Belt that have kept crops from declining rapidly the past few weeks. Although Pro Ag corn yield projections have now dropped almost 3 bu from just a few weeks ago, we still have a crop estimate just under 150 bu/acre - not much different than USDA's projection last spring (150.3 bu). While we doubt USDA will adjust this estimate much (if at all), it's also true that the number has gone down. The market is nervous about the current heat (4-10 degrees above average forecast at 5 more days), which is unusually hot compared to normal nationwide. It's likely crops will continue to decline, but with advanced corn crops it would be difficult to hurt this crop much. Most corn is already formed in the cob, with it all the way to milk stage even as far north as ND. There isn't much that can hurt this crop now, as not even 3 week early frost dates will cause much damage.
But soybeans could yet be a different story. If not for the unbelievable timing of rains this week in the most critical area (the central Corn Belt), we could have had the beginning of a crop disaster in soybeans similar to 2003. But the recent 2 week wet period in the heart of Corn Belt country (eastern NE, IA, southern MN/WI/MI, and northern ILL/IND/OH/PA) are billion dollar rains in this country, as it will improve crops there (especially where over 2" fell). The good fortune of these growers is evident when you realize their yields are rising while prices are rising due to adversity in the southern Corn Belt and US. It's been nearly 100 degrees in the Delta for over 1 week with little/no rain, and similar weather for southern ILL/IND/OH/TN/KY that will certainly hurt crops in these areas.
HRS wheat harvest is well underway in the spring wheat belt, with yields about average to slightly above average for most growers - kind of a disappointment, considering all the rain they had. But a warmer than normal year is typically not as beneficial for small grains crops (wheat/barley) as for row crops (corn, soybeans, dry beans, sunflowers). While northern areas have above-to- much above average yield potential in row crops, small grains (wheat/barley) might just be slightly above average. Overall, that's not a bad situation for northern Corn Belt producers on a year where prices are attractive.