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The 'good' of a drought

08/24/2012 @ 10:35am

The good side of a drought is that I do not have to spend a lot of time mowing my lawn or grass in turn rows and waterways. That gives me time to do odds jobs that are easy to put off when crops are good. This week, I made new doors for an old machine shed which had been destroyed by the wind last year. I also started making a roll over protective structure for an antique tractor that I still use for odd jobs around the farm. The bad side of the drought is that with all of the unknown factors affecting this year’s income, I do not feel like spending money unless it is absolutely necessary.

I have been treasurer of the local cemetery board for many years. I have jokingly said that there are only two ways for a cemetery to stay financially solvent. Both ways are bad. The first is for a lot of people to die, so that we sell burial plots. The second it to have a drought so that we do not have to spend money having the grass mowed. Unfortunately, this year we have been able to save maintenance money, because the mowing has been done only once a month instead of every two weeks. At least we have not had a rush on plot sales!

The unknowns in the grain markets point to lower yields with each passing dry day. A recent crop tour reported, on our local radio station, that they had estimated a field of corn in eastern Nebraska at 114 bushels per acre. When the farmer harvested it with his combine the result was between 40 and 50 bushels per acre. That is a big margin of error! However, my guess is that experience will be typical of farms everywhere in the drought area. In my own case, what looked like an acceptable yield turned into a disaster during a wind storm on August 8. The insurance adjuster estimates the loss at 62.8 percent from the wind, without taking the dry weather damage into the picture.

Last week, it appeared that the grain markets were trying to make a high. However, the long term charts show that the next three weeks, soybean prices are generally in rally mode until the day before the September crop report. Those charts proved accurate early this week, with soybean prices sharply higher on Tuesday. Prices need to hold above the gap made this week, to prove that Tuesday’s action was the beginning of another move higher. My charts indicate that there is a high probability that the rally can continue. My usual observation in prior years has been making sales a day before the September crop report has better results than selling during harvest.  For those whose production is in doubt as mine is, the decision to sell before the beans are harvested will be much more difficult! Unless rain comes this weekend, I will probably hold off on further sales until I know how many bushels are really available.

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