Despite flooding, high winds and then a drought, Iowa farmers are harvesting a pretty good corn crop this year. USDA's November Crop Report, released November 9 and based on conditions around the first of the month, estimates that the state's corn yield will rise from 165 bushels per acre last year to 171 bushels per acre for the 2011 harvest.
That 171 bushel average is below the 182 bushels per acre record for the state which was set in 2009, but it beats all other major Corn Belt states from Kansas to Ohio, all of which South Dakota saw their per acre yields fall in 2011. South Dakota's 135 bushel per acre this year matches its yield of last year.
The rest of the United States struggled in 2011. USDA says the U.S. corn crop this year will average 146 bushels per acre, down five bushels per acre from 2010 and down 18 bushels per acre from 2009. The estimated 12.3 billion bushel U.S. crop for 2011 will be the lowest total production since 2004.
The 2011 growing season was a difficult one for Iowa, and nationwide
The 2011 growing season was difficult in Iowa and across the nation. With flooding on both the Mississippi River and the Missouri River as well as flooding in North Dakota and Minnesota, and planting conditions that were too wet in Indiana and Ohio and delayed planting there, and drought in Kansas and the southwestern U.S., corn yields suffered.
Kansas 2011 average corn yield is estimated at 100 bushels per acre, down from 125 bushels per acre in 2010. Minnesota had a 17 bushel per acre decline to 160 bushels per acre this year, partially due to flooding along the Red River in spring.
Iowa had several hundred thousand acres under water when the Missouri River flooded in July. The state also was struck by several severe windstorms in various areas, and then had nine consecutive weeks of below average rainfall. It was so dry that a number of fields caught on fire during harvest.
Even so, Iowa will widen its national lead in corn production over second-place Illinois, whose yield this year dropped one bushel per acre to a 156 bushel average. Agronomists attribute Iowa's good 2011 yield to its abundance of highly productive soil that has good moisture holding capacity. Except for parts of southern Minnesota and central Illinois, no place else can match Iowa's soil.
Drop in overall U.S. soybean production reflects drought in the South
What about soybeans? USDA's November 10 Crop Report estimates U.S. soybean production at 3.046 billion bushels for 2011. That's down 14 million bushels from the October estimate of 3.06 billion bushels and down from 3.329 billion bushels harvested in the U.S. in 2010. The average soybean yield for the U.S. is now estimated at 41.3 bushels per acre for 2011, down .2 bushel from last month and down 2.2 bushels from 2010 average of 43.5 bushels per acre.
For Iowa, this year's production is estimated at 467.6 million bushels, with an average yield of 50.5 bushels per acre. That is unchanged from the October USDA estimate and is a half a bushel per acre lower than 2010's average Iowa soybean yield of 51 bushel per acre.
Regarding yields, Iowa Soybean Association president Dean Coleman, a farmer from Humboldt in north central Iowa, says "The drop in overall U.S. soybean production in 2011 reflects the drought in the South. In much of Iowa, we saw pretty good soybean yields, especially considering that we lost some volume to low moisture content of beans at harvest time. I harvested soybeans this fall that were drier than I've ever seen before."
Will soybeans be able to maintain acres in 2012, competing with corn?
Coleman adds, "Now that we are getting a firmer number on production, we will be looking at usage and exports, watching to see if China and our other export customers will step back into this market and buy more soybeans."
ISA director of market development Grant Kimberley agrees that exports are fluid and the world situation will be important to watch. "Though Europe is not a demand driver for soybeans, the current financial mess in Europe may affect the value of the dollar. Though soybean supplies are projected to be higher, if prices drop, we expect China will most likely step in and buy beans," Kimberley says. Both Coleman and Kimberley say the ratio in corn and soybean prices will be important to watch this winter, if soybeans are to maintain acres in 2012.
Corn prices will likely stay high as world supplies remain tight
Grain prices have stayed in the $6 to $7 per bushel range for corn and the $11 to $13 per bushel range for soybeans during the last 12 months, notes Tomm Pfitzenmaier of Summit Commodities, a Des Moines-based market analyst.
USDA's Supply/Demand Report, also issued November 9, gave little indication that the corn supply situation will loosen soon. USDA lowered projections of U.S. use by 23 million bushels to 843 million bushels, a 24-day supply. That figure is down from 1.8 billion bushels in early 2010 and a 3 to 4 billion bushels average through most of the 1980s and 1990s and the early part of the last decade.
Worldwide, global corn stocks are down to 121.57 million metric tons, or a 51.2 day supply, down 4.6 days from the previous year and the lowest in 38 years. USDA says demand for corn for ethanol in the U.S. will stay unchanged at 5 billion bushels out of a total U.S. corn production of 12.3 billion bushels.
Iowa farmers are holding onto corn, waiting for possibly higher prices
Many Iowa farmers have been slow to sell their corn out of the field this fall, preferring to store it and wait for higher prices, notes Pfitzenmaier. Iowa's 2011 corn and soybean crops will total a cash value of about $21 billion, or $4 billion more than last year and double the cash value as recently as 2006. That cash flow will go to loan repayments, purchases of new farm equipment and to buy land and make improvements to land such as adding drainage tile.
The high prices and strong income have some people calling this the "new normal." But other economists are skeptical that profit margins will be maintained at today's levels. Prices for fertilizer, fuel and land and cash rents are high. Crop prices could soften and the cost-price squeeze could return rather quickly.