Iowa Corn conditions continue decline

Source: Dan Piller, Des Moines Register • Posted: Wednesday, August 22, 2012

The condition of Iowa’s corn crop worsened last week, with the percentage of poor to very poor corn rising two percentage points to 53 percent.

Soybeans are in better shape, benefiting from recent rains and cooler weather as their pods set. Thirty-seven percent of the crop is rated poor to very poor, identical to last week’s rating, while 25 percent is good to excellent.

The poor conditions persisted despite the coolest week in Iowa since early June, 6.1 degrees below normal, state climatologist Harry Hillaker said.

A year ago Iowa’s corn was rated 67 percent good to excellent and 8 percent poor to very poor.

Soybeans were rated 70 percent good to excellent on this date and 8 percent poor to very poor.

Nationally 51 percent of the corn crop and 38 percent of the soybean crop was rated poor to very poor last week.

Ninety-one percent of Iowa’s topsoil and subsoil is rated subpar for moisture. “The entire state remains dry and in need of more rain, especially as the bean crop continues to set and fill pods,” Iowa Secretary of Agriculture Bill Northey said.

While Iowa experienced a dry fall in 2011 and a dry winter this year, the lack of rainfall has been most pronounced since June 1. The National Weather Service reports precipitation shortfalls of 8.82 inches in Mason City, 8.17 inches in Waterloo, 6.96 inches in Des Moines, 6.01 inches in Ottumwa, 9.39 inches in Marshalltown, 6.90 inches in Lamoni and 7.99 inches in Estherville.

On the Chicago Board of Trade Monday, corn futures closed up 17 cents per bushel for the December contract to $8.15. Soybeans were up 33 cents per bushel to $17.03.

Traders have waited for signs of weaknesses in the export, processing and ethanol markets as record corn prices erode demand.

But Des Moines commodity broker Tomm Pfitzenmaier noted that ethanol production numbers have remained constant the last three weeks. He said it still is economical to blend ethanol with gasoline because of the rising prices of crude oil and wholesale gasoline.

Ethanol prices have risen by 40 cents per gallon to $2.61 per gallon Monday on the Chicago Board of Trade. Yet the biofuel is still cheaper than the $3.03 per gallon wholesale gasoline price, which has been stimulated by a $15 per barrel increase in the price of crude oil to $96 since early July.

“The weekly production numbers for ethanol have been strong the last three weeks and it really looks like the demand for corn from that industry is going to be hard to limit,” Pfitzenmaier said.

Ethanol consumes about 40 percent of the nation’s corn crop.

Analyst Arlan Suderman of Farm Futures magazine said even higher prices may come to reduce demand among livestock feeders, grain processors and ethanol producers.

“I still believe that December corn will eventually move to new highs above $8.50 per bushel, with a move above $9 likely needed to adequately ration demand in the ethanol and livestock industries,” Suderman said after the close of the market Monday.

Traders said the market was affected Monday by first results from the Pro Farmer tour that began in Ohio and South Dakota, where yields as low as 98 bushels per acre were reported in Ohio and 50 bushels per acre in South Dakota.

The drop in yields was foretold by the cut in USDA corn yield predictions from 146 bushels per acre in July to 123 bushels per acre earlier this month. The Iowa yield was forecast at 141 bushels per acre, 31 bushels per acre below the 2011 yield.