Trader: Only weather can save prices
OGDEN – With north central and northwest Iowa farms in the 95th percentile of wettest lands in the nation, about 40 people attended a crop weather and marketing outlook Monday night to understand what may lie ahead of them.
In a nutshell, Dennis Todey, South Dakota’s state climatologist, told the audience it can expect less volatility in rainfall events, but temperatures may be cooler.
Don Roose, president of U.S. Commodities Inc., in West Des Moines, said the nation will have to cut its massive numbers of corn crop acres, “especially if yields go up.”
Quoting the latest estimates from the U.S. Department of Agriculture, Roose said the average price for corn in 2012 will be $7.60, but 2014 will slip to $5.40 and 2015 will fall to $4.10.
The same estimates have average soybean prices for 2013 at $14.90, 2013 at $11.35 and 2015 at $10.35.
Roose explained that the high price of corn throughout the world has encouraged other countries to grow more corn.
Even if the price is similar to the U.S. corn price, lower transportation costs is siphoning some traditional U.S. corn buyers to buy the grain closer to home.
Coupled with that is the U.S. large carryover stock, estimated by the USDA at 1.5 billion bushels by the end of August 2014 if the nation averages 156 bushels per acre with 97 million acres under corn.
Roose said even if the national average falls to 150 bpa, it still leaves a 1.1-billion-bushel carryover.
“And that’s just too much,” he said.
Roose said the expected June 28 USDA grain stocks and acreage reports.
“We expect these to be negative,” Roose said, “The equalizer will be weather.”
That’s especially true, he said, “Ssince 62 percent of the (nation’s) corn crop will be pollinating within a two-week window.”
Until the weather’s effects are seen later in the summer, Roose said, market traders see the U.S. grain crops “as getting bigger and better,” which will lead to more slipping of prices.
Growing degree units
South Dakota’s Todey said that “Iowa is about 100 growing degree units behind, or about four to five days, so far in the crop season.”
Growing degree units is a measure of heat accumulation farmers use to predict plant and pest development rates, such as when a plant will bloom or a crop will mature.
However, he added, “It’ll be hard to gain any ground at this time of year, since average growing degrees accumulate faster in summer months.
“And we don’t want it to be extremely hot in order to catch up because that would stress the crop.”
He said Webster County, for instance, needs 2,850 to 3,000 growing degree units annually to bring a corn crop to full maturity. Being less than 90 days away from the historic first frost date, the county has 28 percent of that heat unit accumulation as of June 21, according to Iowa State University’s mesonet website.
That number dwindles even further as one moves northwest as Osceola County is at 712 and lyon County at 728.
Todey said the Corn Belt is known for variable weather patterns, but said the trend is showing even more variability.
“Since 1895,” he said, “there’s been increasing precipitation trending upward, especially since the 1930s.
“This makes crop management difficult, especially since it’s coming in heavier rainfall events.”
He noted that the U.S. is in its fourth consecutive year of weather-affected crop yields and added the Midwest is the only place on the globe whose crops are currently being threatened by weather.
He predicted that for the next eight to 14 days, the NC and NW Iowa regions can expect slightly drier but cooler days.
Beyond that, the U.S. Drought Monitor website offers no clear direction of how the weather will be through July, offering equal chances for rain and temperature to be above- or below-normal.