CattleNeetwork.com, KS
10-31-06
FOCUS: Harvest Delays Could Cut Into US Corn Crop
CENTRAL CITY, Neb. (Dow Jones)--Protracted harvest delays in some sections
of the U.S. corn belt this autumn could foreshadow an additional drop in the size
of the 2006 corn crop, as government economists factor in production losses
resulting from greater field losses, and an increase in abandoned acreage.
"It looks as if there will be some unharvested crops this year," one northwestern
Michigan farmer warned the Michigan Agricultural Statistics Service Monday.
"Harvest operations have been significantly delayed due to frequent rains."
The U.S. Department of Agriculture Monday reported delays in corn and/or
soybean harvest across nearly a dozen major producing states, including
Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Nebraska, North
Carolina, Ohio, and Wisconsin.
Picking is approximately seven to 10 days behind schedule in some states, with
the worst setbacks - lagging behind the previous five-year average harvest pace
by 18 to 19 percentage points for corn and 15 to 23 points for soybeans centered on Ohio, Indiana and Michigan, states where six to 10 inches of rain fell
during October.
"By my calculations, farmers in Indiana/Michigan/Ohio had about 950 million
bushels of corn and 185 million bushels of soybeans to harvest as of this past
Sunday," said Freese-Notis Weather of Des Moines, Iowa. "As it stands right
now, I think that the ground will have to freeze up before some of the corn and
soybeans in the eastern Corn Belt ever see a combine this fall."
Harvest delays expose standing corn to to increased wildlife damage, lodging
and spoilage, especially if/when downed plants come in contact with wet soils.
"This has been a terrible harvest to be in the fields...rain, rain, rain," one northcentral Indiana farmer told the Pro Farmer agricultural newsletter. "Yield will take
a hit from this and the wind that has come with it."
The Clinton County producer cited one example, where a 45 acre field corn crop
shelled in halves yielded 215 bushels an acre early in the season, but only 200
bushels late, due to lodging and ear drop.
"That is huge and is only getting worse by the day," he exclaimed. "We are very
concerned."
A three-year study conducted by Ohio State University extension agronomists
Peter Thomison, Allen Geyer and Rich Minyo found "nearly 90% of the yield loss
associated with delayed corn harvest occurred when delays extended beyond
mid-November."
The agronomic trio noted due to greater environmental stress, the threat of field
losses is likely much greater in 2006 than it was in 2003-2004, when near-perfect
autumn weather greatly limited lodging and stalk breakage.
"In some severely stressed fields, corn died prematurely in August and
September, and significant stalk deterioration has already occurred," they said.
"Given the poor quality of corn stalks in many corn fields, it's likely that we could
expect greater stalk lodging with shorter harvest delays than the research above
would indicate."
That fact has not been lost on market analysts, who are also concerned about
the corn market from a macroeconomic standpoint.
"Eastern Corn Belt weather is wet, delaying harvest and causing concern about
stalk damage and crop loss," said Country Hedging analyst Christopher
Steinhoff. "We need every bushel we have out there."
USDA projections presently show demand for US corn exceeding production by
more than one billion bushels during the 2006-07 marketing year, a simple fact
which pushed cash corn prices to a 28-month high late last week.
"Rain and wet fields are making corn harvest difficult in the Ohio Valley and
perhaps will reduce final yields in some of those states," said Kansas State
University economist Mike Wolverton. "USDA lowered estimated national corn
yield in its October report (from 154.7 to 153.5 bushels an acre) and may lower it
again in its November report. At least, that is the buzz in the trade."
The magnitude of that prospective decline has become the subject of some lively
debate, increasing with the approach of USDA's Nov. 9 crop report.
"I have to believe with slow harvest and the very poor standing ability of the crop,
these yields will decline," said analyst Bob Utterback.
U.S. Commodities President Don Roose said, "the trade has dialed in an
additional decline of a half to a bushel per acre," from the October crop report.
But, Iowa State University extension economist Robert Wisner said an
analysis of USDA crop reports, dating back to 1965, shows history argues for a
much larger decrease.
He noted during the past 40 years, USDA only decreased its estimate of national
corn yield 14 times between September to October, but pointed out the agency
made further downward adjustments between October and January, 71% of the
time.
"The average 2.8% decrease, if it occurred this year, would lower the U.S. corn
crop by another 310 million bushels," he said. "That would bring Aug. 31, 2007,
U.S. corn carryover stocks down to about a 3.2-week supply. In 1995-96, the
year when central Iowa cash corn prices were above $5 per bushel for six
months, U.S. corn carryover stocks were a 2.6-week supply."
By contrast, federal economists may be poised to increase their estimate of
domestic soybean production in that upcoming supply/demand report.
Wisner points out that the market adage of 'big crops getting bigger' may well
apply to the 2006 soybean crop, at least if USDA holds true to an established
modus operandi, which has seen the agency make additional increases in
forecast production 79% of the time, following hikes in estimated soy yield
between September to October.
The average increase in soybean yield seen in such seasons, again dating back
to 1965, has averaged 2.6%.
"This percentage increase, if it occurs in the 2006 crop, would increase U.S.
production by another 80 million bushels," he said. "That, in turn, would
somewhat temper the upside potential in soybean futures prices into the winter
and early spring. However, the soybean basis is very weak, and cash prices may
strengthen more than futures into mid-winter."
USDA Monday placed national harvest completion rates at 68% for corn and
83% for soybeans, rates which are each two to three percentage points behind
normal for late October, and lag 2005 levels by as much as 10 points.
Source: Gary Wulf; Dow Jones Newswires; Gary.Wulf@dowjones.com