Market Overview

Wet Spring Reduces Crop, Raises Corn Prices: 'It's Hard To Get Your Head Around Just How Bad It Is'

Wet Spring Reduces Crop, Raises Corn Prices: 'It's Hard To Get Your Head Around Just How Bad It Is'

A deluge of spring rains left many of the Midwest’s corn belt fields unplanted late this year, resulting in the smallest corn crop forecast in four years. The wet weather has raised corn prices, but added to uncertainty for Heartland farmers.

The Department of Agriculture reduced its planting estimate in early June for the $51-billion corn market by more than 3% and lowered the corn yield estimate by nearly 6%.

Wettest Winter In 124 Years

The most recent USDA crop progress report released June 17 showed 92% of corn planted, and 77% of soybeans.

The rain that left millions of acres unplanted late in the season also could threaten the corn that has been planted. Late-planted corn crops usually have much lower yields.

Major corn-producing states, including Illinois, Indiana and Ohio, still were nowhere near completely planted in early June, far behind the usual schedule.

The wet spring plagued much of the middle of the country beyond just those three states. The National Centers for Environmental Information said the U.S. had the wettest winter in 124 years of record keeping.

“I never thought we'd see this widespread of a weather issue — all the way from South Dakota to Ohio," Jerry Gulke, president of the Gulke Group, told Farm Journal’s AgWeb.

“It's hard to get your head around just how bad it is.”

Higher Prices

The forecasts pushed U.S. corn future prices to five-year highs in recent weeks. That's normally good news for farmers.

“It seems like a long time that we’ve been waiting for that $5.50 level that nobody thought we could ever see again. Yet cash corn is trading in some cases over $5 now because of the sense of urgency to get your hands on feed,” Gulke told the publication.

Spot corn prices had risen nearly 20% in early June just since the first of the year as the rains kept falling and the soil kept getting wetter.

Some Midwestern farmers won’t benefit much from the higher prices because of the expected smaller crops. And some will make crop insurance claims instead.

Investors watching corn prices rise have seen the Teucrium Corn Fund (NYSE: CORN) rise since early May.

Soybean prices have also gone higher because of the poor growing conditions.

Ripple Effect

Midwestern farm towns have seen a ripple effect from the slow planting season, with farm-reliant corn belt businesses from seed companies to grain elevators to trucking companies reporting sluggishness.

While higher prices are welcomed by farmers who have seen low crop prices for years, the planting trouble brings more uncertainty, on top of uneasiness already put on farmers by the ongoing U.S.-China trade war.

Related Links:

U.S. Agricultural Exporters Caught In Middle Of Trade War With China

US Department Of Agriculture Lowers Export Estimates For Corn, Wheat


Related Articles (CORN)

View Comments and Join the Discussion!

Posted-In: agriculture AgWeb cornNews Commodities Top Stories Markets ETFs Best of Benzinga