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2012 Drought Being Compared to 1988

Written by: Kent Thiesse

Ask most current farmers over 40 years old in the Upper Midwest about the worst drought that they remember, and 1988 would be a common response. However, that could potentially change after this year, as the drought in many areas of the Midwest in 2012 is setting up to be quite severe. Large portions of Illinois, Indiana, Iowa, Ohio, Missouri and other States are indicating potential for major crop losses, while growing areas of Nebraska, Minnesota, and South Dakota are facing serious extended dryness that could lower crop yields.


As of July 9, only 40 percent of the U.S. corn crop was rated good-to-excellent, which was a drop of 16 percent in the past two weeks, while 30 percent of the corn was rated poor-to very poor. A year ago in early July, 69 percent of the U.S. corn crop was rated in good-to-excellent condition. In the July 9 crop condition report only 40 percent of the U.S. soybean crop was rated in good-to-excellent condition, which compares to 66 percent at the same time a year ago. In 1988, the good-to-excellent crop rating dropped below 20 percent for both corn and soybeans in early July. 


In Illinois, only 19 percent of the corn was rated good-to-excellent, and 48 percent was rated poor-to-very poor in the crop conditions report released on July 9. In Indiana, only 12 percent of the corn was rated good-to-excellent, which was the lowest corn rating since 1988, and 61 percent is rated poor-to-very poor. In Nebraska, which has a large amount of irrigated corn acres, only 47 percent of the corn was rated good-to excellent, which is well below the 5-year average of 80 percent good-to-excellent in early July. Iowa’s overall corn condition has also been dropping rapidly; with only 46 percent was still rated as good-to-excellent on July 9, which was a drop of 16 percent in just one week.


Minnesota has been the only major corn producing State that has maintained a strong rating for corn conditions since the start of the growing season. As of July 9, 77 percent of the corn crop in Minnesota was rated as good-to excellent; however, that high rating level dropped 5 percent from a week earlier, following an extended period of hot, dry weather in many areas of the State. 72 percent of Minnesota’s soybean crop was rated good-to-excellent as of July 9.


The week of July 2-8 featured very high temperatures in most of Minnesota until late in the week, with several record temperatures being set across the State. Much of the State remained very dry, with only minimal rainfall; however, there was some significant rainfall on July 5 in southern portions of Southwestern Minnesota, as well as some isolated rainfall in a few other locations. Crops on lighter soils, which received little or no rainfall during the week, began to show significant crop stress by week’s end. Crops on heavier soils in very dry areas continued to survive and look quite well, drawing on the ample sub soil moisture that resulted from above normal rainfall earlier in the growing season. However, the stored soil moisture is being rapidly depleted, and much of the soil moisture is below the two foot level in the soil profile.


Most of the Minnesota corn crop is currently at a very critical stage, with much of the corn tasseling and pollinating during the first ten days of July. Heat and moisture stress during that phase of development can affect pollination and kernel development, which can ultimately lower corn yields. It is too early to assess how much damage has already been done to the corn crop by the very hot, dry weather in most areas during this important phase of corn growth. However, corn yield potential in many areas of Minnesota is likely to start dropping, if we do not get significant rainfall soon.


Earlier this year, USDA estimated a record U.S. corn crop in 2012 of 14.79 billion bushels, based on 95.9 million planted corn acres and a national average corn yield of 166 bushels per acre. Many experts have already lowered they estimated U.S. national corn yield to 150-155 bushels per acre, with some estimates even lower. A 150 bushel per acre national average corn yield would produce about 13.27 billion bushels of corn this year, which is very near the expected corn usage for the year.


The corn and soybean market prices have responded to the U.S. drought with dramatic market increases. Chicago Board of Trade (CBOT) corn futures prices rose to near $7.75 per bushel for the nearby July contract on July 9, and to $7.30 per bushel for the 2012 new crop December futures contract. The December CBOT futures price was $5.06 per bushel as recently as June 15. Similarly, the new crop November soybean futures reached to near $15.50 per bushel on July 9, which is an increase of nearly $3.00 per bushel since mid-May.


Local cash corn prices in Southern Minnesota were near $7.30 per bushel on July 9, and cash soybean prices were above $15.60 per bushel; however, there is very little 2011 corn or soybeans left to be priced. Most of the grain now being delivered was forward priced earlier. New crop harvest-time cash prices for corn and soybeans are near $6.90 per bushel for corn and approaching $15.00 per bushel for soybeans. Of course, grain producers in areas severely impacted by the drought need to be very cautious when forward contracting new crop corn and soybeans, with final corn and soybean production levels very much in doubt. Producers with Revenue Protection (RP) crop insurance do have some protection when forward contracting up to the insurance guarantee.



Note --- For additional information contact Kent Thiesse, Farm Management Analyst and

              Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960) ; 

              E-mail ---  Web Site ---