Corn conditions pose concerns for ethanol industry

Source: By Robert Pore, Grand Island Independent • Posted: Wednesday, July 11, 2012

After a break from the hot weather, temperatures will climb back into the 90s starting Thursday and going through the weekend, with only a slight chance of showers and thunderstorms on Friday. The temperature could near 100 degrees by Sunday or Monday, according to the National Weather Service in Hastings.

While temperatures have returned to seasonal norms after a blistering hot start for July, the warm, dry weather has boosted crop growth across the state, causing crops to develop faster than normal, but also threatening their quality because of the dry weather.

In Grand Island, July started out on the dry side at nearly an inch below normal based on the 30-year average, according to the National Weather Service in Hastings. For the year, Grand Island has received 7.10 inches of precipitation, which is 8.19 inches below normal for the year.

According to the USDA’s National Agricultural Statistics Service, Nebraska Field Office, the state’s topsoil moisture level declined to 14 percent adequate or surplus and has not been this low since 2002. The vital subsoil moisture level was rated 16 percent adequate and surplus.

This year’s dry conditions are especially impacting dryland corn production as the USDA, as of the week ending July 8, reported that the dryland corn was rated 22 percent good or excellent. Last year, of the 9.85 million acres of corn planted in Nebraska, 4.085 million was planted to dryland, which yielded 528 million bushels of corn of the state’s total corn production of 1.536 billion bushels.

And the dry conditions are starting to impact irrigated corn acres in Nebraska, for which the condition declined this week to 65 percent good or excellent.

Using 2002 as a base line, state farmers harvested 7.75 million acres, compared to 8.1 million acres planted. Dryland corn was hit hard, with 3.55 million acres planted and 2.695 million acres harvested with an average yield of 62 bushels per acre and a total production of 167 million bushels out of the state’s 940.8 million bushels.

A drastic reduction of dryland corn would make corn availability tight and raise corn prices to more than $7 per bushel. That would hurt ethanol operating margins and possibly shutdown more plants, such as the two plants that last month temporarily closed in Nebraska because of low operating margins.

According to the Nebraska Ethanol Board, there are currently 24 active ethanol production plants in Nebraska, with a combined production capacity of more than 2 billion gallons of ethanol each year, that require more than 700 million bushels of grain to make that much ethanol. Nebraska ranks second nationally in ethanol production. While some ethanol plants can convert sorghum into ethanol, the industry is mainly geared to use only corn for ethanol production.

Iowa is the nation’s leading ethanol producer, with nearly 3.7 billion gallons, but like Nebraska, the USDA rated corn condition only 46 percent good or excellent. Nationwide, for the 18 major corn-producing states, the USDA said the corn condition was rated 40 percent good or excellent, compared to the previous week of 48 percent. Last year, at the same time, the corn condition was rated 69 percent good or excellent.

The USDA reported that the corn condition was rated 47 percent good or excellent, compared to the five-year average of 81 percent. More than 50 percent of the state’s corn has silked during these dry, hot conditions, compared to 6 percent last year and the five-year average of 14 percent.

Soybean development is also well ahead of schedule, according to the USDA, with 37 percent of the crop blooming, ahead of 16 percent last year and the five-year average of 23 percent. Soybean condition was rated 41 percent good or excellent, well below last year’s 81 percent good to excellent and the five-year average of 79 percent.

This year, state farmers planted the second largest soybean crop on record at 5.1 million acres. Last year, state farmers harvested 4.83 million acres, of which 2.59 million acres were nonirrigated, yielding 122.7 million bushels of the 258 million total bushels harvested.

The USDA also reported that wheat harvest was 93 percent complete, which was 23 days ahead of the five year average of 19 percent.

Grassland conditions were also rated in bad shape because of the drought at 13 percent good or excellent, and 59 percent poor or very poor. The bad grass conditions are forcing cattle producers to supplement feed or cull herds as there is not enough grass to support current stocking rates.