“This is a weather-driven rally,” said Don Roose of US Commodities in West Des Moines. “We’re in a race to the bottom on yields.”
Farmers, end-users and traders had hoped for bumper crops this year to ease tight U.S. supplies for both corn and soybeans. But because of the hot, dry weather in Iowa and Illinois this summer, they may get crops not as large as last year and well below the levels of 2007-09.
Corn rose 20 cents per bushel to $7.52 and soybeans climbed 28 cents per bushel to $14.14 on Friday.
The U.S. Department of Agriculture has warned that corn prices above $7 per bushel most likely will continue through next year, continuing prospects for high meat prices and stress on ethanol producers’ margins.
For Iowa farmers, the higher prices mean a $5 billion increase in cash receipts for corn and soybeans from the $17.5 billion that came from the 2010 crops, a figure that is likely to maintain high farmland prices in Iowa and continued strong demand for farm machinery.
The agricultural publishing firm Professional Farmers of America said Friday, after completing a crop inspection tour, that the U.S. corn yield would be 148 bushels per acre, down from 153 bushels per acre last year and 164 bushels per acre in 2009.
Pro Farmers said Iowa’s yield would be 164 bushels per acre, one bushel per acre less than the 2010 crop and below the 182 bushels per acre Iowa averaged two years ago.
The Pro Farmers estimates were more generous for Iowa’s soybeans, putting the yield at 53 bushels per acre, the same recorded in 2010. The national soybean yield estimate was cut by Pro Farmers from 43 bushels per acre by the USDA to 41.8 bushels per acre.
The USDA two weeks ago projected the national corn yield at 153 bushels per acre and Iowa’s yield at 177 bushels.
But the USDA estimates have been widely discounted by farmers, who have cited the stress to their corn during the July heat wave, which interfered with pollination.
A week ago, Iowa State University climatologist Elwynn Taylor warned that the national corn yield would be no better than 149 bushels per acre.
“This has been bad,” said farmer Paul Bindner of LeMars. “I’ll probably get 140 to 150 bushels per acre on ground that should get up to 220 bushels.”
In eastern Iowa, Amana Society farms manager Joe McGrath said, “The crop looks OK, but it’s not the crop we thought we had before the heat wave.”
McGrath said he expects corn yields of around 160 bushels per acre on ground that would normally yield about 175 bushels. Soybean yields will be off as much as 10 bushels per acre from the normal 55 bushels per acre.
The lower-than-expected yields come as demand for corn continues to be strong.
“It really doesn’t matter now if the national yield is 149, 153 or 156 bushels, the demand is still there and prices will continue to push upward,” said analyst Darin Newsome of DTN in Omaha.
Newsome noted that demand for ethanol remains strong and more cattle will be fed this fall as ranchers in Texas, stressed by drought, have sold their animals early because they lack water and pasture.
State climatologist Harry Hillaker said Iowa has endured five consecutive weeks of below-average rainfall, and this week is no exception.
“The rain we’ve had has been spotty and unfortunately, as was the case in southwest Iowa last week and in northwest Iowa this week, accompanied by some hail,” said Hillaker.
“The forecast doesn’t look very good for rain,” he said. “There’s no immediate relief in sight.”