Dry Weather, Storage Lift Corn Prices

Dry Weather, Storage Lift Corn Prices

Iowa farmers put a lot of this fall's newly harvested corn crop in the bin, choosing to store the grain and wait for higher prices. That action boosted prices by more than 60 cents per bushel during October, analysts say.

Iowa farmers have decided to put a lot more corn in storage bins and wait for higher prices rather than sell their grain this fall. The decision to hold tight helped lift prices more than 60 cents per bushel during October.

Future upward moves for corn prices could come from continuing dry conditions, as farmers and grain traders look toward 2012 crop prospects. Drought is becoming entrenched in the western Corn Belt. "Low reserves of subsoil moisture are this fall are bringing an increased drought risk to the western Corn Belt for 2012," says Elwynn Taylor, Iowa State University Extension climatologist.

Taylor and other climatologists are warning of the risk to Iowa and the Midwest Corn Belt if rains don't come this fall or next spring to replenish the reserve soil moisture supply. The latest U.S. Drought Monitor maps by the National Weather Service now show all but the eastern quarter of Iowa as being in dry to severe drought. To follow the drought monitor, go to www.droughtmonitor.unl.edu/.

Iowa needs rains this fall and next spring to recharge subsoil moisture

"If we don't get good rains this fall and next spring, we'll be planting in dry soil," says Maurice Mitchell, who farms in south central Iowa. He is holding on to much of his corn that wasn't forward contracted, as he expects higher prices next year. The reluctance of farmers to sell newly harvested corn is given by market analysts as the reason behind the recent revival of prices. Corn had dipped below $6 a bushel for the first time this year in early October after USDA issued unexpectedly high numbers for U.S. corn stocks. USDA says Iowa farmers have more than 2 billion bushels of storage capacity on their own farms, which mean they could store the majority of the expected 2.4 billion bushel crop this year.

Roger Fray, head of grain merchandising for West Central Co-op in Ralston says farmer sales at harvest this year are below normal. "Last year we had one half to two thirds of the crop already priced or sold by now," he says. "This year probably no more than 40% is sold."

Last two months have been driest September-October in Iowa since 1953

Iowa hasn't had this little precipitation in September and October since 1953, says Harry Hillaker, state climatologist at the Iowa Department of Agriculture. He says statewide average precipitation in 2011 for September-October was 2.4 inches. Normal for those two months for Iowa is 4.98 inches. This year we had the fifth driest September-October period on record, he says. The last time it was drier was in 1953 when weather observers recorded a statewide average of 1.42 inches of precipitation.

Iowa's statewide average for precipitation in October is 2.61 inches. This October the statewide average was 0.76 of an inch. That's the ninth lowest for October in 139 years of record keeping. Rainfall did develop on November 2 over most of the state. It rained from a half inch to a little over an inch in areas of central Iowa. That certainly wasn't enough to break the drought, but it did settle the dust and makes things look a little better. However, the very dry conditions are still with us and we need more rain, he notes.

Dry weather allows 2011 corn and soybean harvest to near-completion

"With the dry weather, farmers have been able to nearly finish the 2011 soybean harvest and a finish for corn harvest is not far behind," says Iowa Secretary of Agriculture Bill Northey. "The lack of moisture remains a concern as many livestock farmers have been forced to start feeding hay earlier than normal due to poor pasture conditions."

The weekly weather and crop report for Iowa, issued October 31 by the Iowa Office of USDA's National Ag Statistics Service, shows another predominately dry week allowed many farmers to complete harvest and concentrate on fall tillage and fertilizer application. Soil conservation work and tiling installation and repairs have been aided by the dry weather. Many farmers are concerned with the hard, dry soils as cooler weather approaches.

There were 6.8 days suitable for fieldwork statewide during the past week. Over three-quarters of the state is rated short to very short when it comes to topsoil moisture. Subsoil also continues to dry out with just over one-quarter of Iowa reporting adequate subsoil moisture as of the end of October. Grain movement slowed a bit, with 47% of the state seeing moderate to heavy grain movement from farm to elevator. As the harvest season winds down, 92% of the state reports adequate or surplus off-farm storage capacity and 84% of the state reports adequate or surplus on-farm storage capacity.

Iowa corn crop 87% harvested as of Oct. 30, and 98% of the soybeans

Eighty-seven percent of the corn crop has been harvested for grain or seed, 5 days behind 2010 but 19 days ahead of the five-year average. Soybean harvest advanced to 98% complete, slightly behind last year's 99% but 2 weeks ahead of the average pace.

Pasture and range condition rated 25% very poor, 23% poor, 33% fair, 17% good, and 2% excellent. Hay supplies are considered short across 24% of Iowa but over half the hay supply available is considered in good condition. Conditions have been favorable for livestock gleaning fields and saving hay supplies for future use but many operators have already been forced to begin feeding hay.

The complete weekly Iowa Crop & Weather conditions report is available on the Iowa Department of Ag & Land Stewardship's site www.IowaAgriculture.gov and on USDA's site www.nass.usda.gov/ia
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