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home : local news : local news May 24, 2016

11/15/2012 2:03:00 PM
Farmers assess impact of 2012 drought as harvest draws to a close
As the 2012 farm season wraps up, agriculture experts are looking at yields and pondering the future.

Corn and Soybean production estimates for Illinois and the nation are down, thanks to the devastating drought that began in late summer 2011 and lasted throughout the growing season this year.

At one point, Crawford and its neighboring counties were among the hardest-hit places in the country. That changed when a total of 7.01 inches of rain fell here in September. Another 3.68 inches was reported in October and 1.39 inches have been reported so far this month.

The U.S. Drought Monitor now lists Crawford, Jasper and Clark counties and the northern half of Lawrence County as "abnormally dry," while Lawrence's southern half and Wabash counties are no longer suffering from drought.

Most of the state experienced warmer and dryer weather than normal last week.

Rainfall late in the week delayed the final fieldwork for some portions of the state, with an average five days suitable for fieldwork. Temperatures averaged 46.6 degrees statewide, 3 degrees above normal. Rainfall averaged 0.25 degrees, 0.47 inches below average.

Topsoil moisture levels have largely recovered from the effects of the drought, with 4 percent rated as surplus, 78 percent adequate, 15 percent short and only 3 percent very short.

But the damage is done. As of Nov. 1, the USDA estimated Illinois' corn for grain yield at 101 bushels per acre, up 3 bushels from the Oct. 1 forecast. At this level, total production for the state would reach 1.25 billion bushels, 64 percent of the 2011 production.

As of Nov. 1, the estimated yield for the soybean crop in Illinois was 43 bushels per acre, up 4 bushels from the Oct. forecast. Production was expected to reach 378 million bushels, about 11 percent below 2011 production.

Nationally, corn production is forecast at 10.7 billion bushels, up slightly from the October forecast but down 13 percent from 2011. This represents the lowest production in the United States since 2006. Based on conditions as of Nov. 1, yields are expected to average 122.3 bushels per acre, up 0.3 bushel from the October forecast but 24.9 bushels below the 2011 average. If realized, this will be the lowest average yield since 1995. Area harvested for grain is forecast at 87.7 million acres, unchanged from the October forecast and up 4 percent from 2011.

Soybean production is forecast at 2.97 billion bushels, up 4 percent from October but down 4 percent from last year. Yields are expected to average 39.3 bushels per acre, up 1.5 bushels from last month but down 2.6 bushels from last year. Compared with last month, yield forecasts are higher or unchanged across all states except for Oklahoma and Texas. Area for harvest in the U.S. is forecast at 75.7 million acres, unchanged from October and up 3 percent from last year.

There are only a few stands of corn or soybeans left to be harvested as 99 percent of the corn crop and 98 percent of the bean crop have been harvested. Eighty-one percent of the winter wheat has emerged, compared to 84 percent last year; the five year average is also 81 percent.

With harvesting activities virtually complete most farmers have turned their attention to tillage, fertilizer applications, preparing equipment for harvest and planning for next year. Meanwhile, agri-business experts are looking at market prices.

"So far, prices seem to be following the classic pattern associated with small crops ­- peaking early in the marketing year and then declining as the year progresses," said University of Illinois agricultural economist Darrel Good.

According to Good, the futures market reflects expectations that prices will continue to decline, especially into the 2013-14 marketing year. "The expected rebound in South American soybean production, Argentine corn production, and U.S. corn and soybean production in 2013 all contribute to the expectation of lower prices," he said. "If those crops are as large as generally expected, prices will be even lower than currently reflected in the futures market."

Good said that the USDA is forecasting record South American production of both crops. "If planted acreage of corn in the United States in 2013 is at the same level as in 2012 and the U.S. average yield is near a trend value of 162.5 bushels, the crop would total 14.6 billion bushels, about 1.5 billion larger than the record crop and record consumption of the 2009-10 marketing year, he added.

Similarly, he reported, if soybean acreage is maintained at the 2012 level and the average yield is near the trend value of 43.8 bushels, the 2013 crop would reach 3.34 billion bushels, near the record levels of 2009 and 2010. A combination of record, or near-record South American and U.S. crops in 2013 would likely push prices down to or below the long-term averages of about $4.75 for corn and $11.00 for soybeans.

"While the expectation for lower corn and soybean prices in 2013 is reasonable based on historical patterns and prospects for large crops, the timing and speed of the return to more 'normal' prices will be influenced by a large number of factors," Good said. "The final estimate of the size of the 2012 crops to be released on Jan. 11, 2013, is one of those factors. For soybeans, the pattern of 2012 yield forecasts to date, lower in September and high er in October and again in November, was experienced six other times in the previous 30 years. The yield estimate released in January following harvest in those six years was above the November forecast three times and below the forecast three times. The deviation ranged from 0.1 to 0.8 bushels," Good said.

History does not provide much guidance for forming expectations this year, Good said. "For corn, the pattern of yield forecasts this year, lower in September and October and higher in November was experienced only two other times," he said. "The January yield estimate equaled the November forecast in one of those years and exceeded the November forecast by 0.7 bushels in the other. Again, history provides little guidance for forming January yield expectations this year," he said.

Good said that the bigger issue for corn production may be the January estimate of acreage harvested for grain. There is a general expectation that the USDA's large December survey may reveal fewer acres than currently forecast.

"On the supply side, the progress of the South American crops will be most important for the next three months," Good said. "Weather conditions are currently improving somewhat from early wet conditions in Argentina and dry conditions in central and western Brazil. Some on-going dryness is noted in southern Brazil and Paraguay. Some argue that corn production potential has already been reduced in Argentina. For the near term, markets will likely continue to reflect expectations of very large crops," he said.

Good commented that prices will also be influenced by the ongoing rate of consumption of the 2012 U.S. crops. For corn, there is some anticipation that the pace of export activity, which has been extremely slow to date, may accelerate as South American supplies dwindle and Asian customers return to the U.S. market.

"The larger issue, however, surrounds the pace of domestic feed and residual consumption," Good said. "The USDA's estimate of Dec. 1, 2012, stocks to be released on Jan. 11 will provide some much needed clarity to the rate of consumption in the last quarter of the 2011-12 marketing year and the first quarter of the 2012-13 marketing year. For soybeans, the National Oilseed Processors Association estimate of the size of the October crush is expected to be released later this week. That estimate will provide insight into the pace of crush relative to the projected rate. The pace of new export sales will also be important, with some concern about cancellations of earlier purchases by some customers.

"Prospects for further price declines for corn and soybean into 2013 favor pricing more of the old and new crop sooner rather than later. However, the transition to lower prices will be erratic so that timing of sales will still be important. Recent price declines, particularly for soybeans, seem to be a little excessive given the amount of production uncertainty," Good said.

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