Search Facebook Twitter YouTube

Drought Impact is Widespread – Part One

Bob Streit, owner, Central Iowa Agronomics

Case IH helps you Be Ready by asking experts to share their expertise with our readers. Bob Streit, owner of Central Iowa Agronomics in Boone, Iowa, was a technical services agronomist for 20 years before starting his own full-service agronomy business in 2002. We interviewed him earlier this year as part of our agronomy series and wanted to check back in to find out how the drought is affecting his customers. In this two-part series, Streit tells us what he’s seeing in central Iowa related to the drought. He provides a general overview in Part 1, and in Part 2, he discusses changes in insect and disease occurrences as a result of the drought

The drought continues in Iowa and surrounding states, though parts of Iowa saw scattered relief over the weekend. In the middle of last week, parts of western Iowa got rain that ranged from .25 to 1.7 inches, but 75-plus mph winds blew the corn flat over a wide area. Two inches or rain was ordered to meet the crop needs for the eight-day time period, but that didn’t materialize. Farmers in northeast Iowa and parts of eastern Iowa fared better with their rainfall amounts and are closer to normal accumulation.

Corn that was planted earlier looks better, as it had the chance to reach later development before moisture shortages worsened. A portion of the mid-season-planted corn had pollination problems, depending on when it was trying to shed pollen and push silks out. The later-planted corn ranges from good to poor (if it wasn’t able to send down a deep root system to pull in enough moisture). Compounding this is the fact that we’ve had extremely warm nighttime temperatures, leaving plants unable to be efficient in the night-time resting phase when it deposits photosynthates. Thus, the dry matter gets burned up rather than deposited. Normally, when night temps remain above seventy degrees during grain fill, the net effects are shallower kernel fill and lower yields.

A drought-damaged corn field is pictured near Emery, Iowa July 27, 2012.
Credit: Reuters/Karl Plume

Expect Higher-Priced Food
Have you heard of the Farmer Benner Cycle? Samuel Benner was a prosperous farmer who suffered financial ruin as a result of the 1873 panic. He recorded major droughts, the yearly national yield, the prices of corn and the subsequent effects to the economy by carving that information into the timbers in his barn. In discerning the cause of market fluctuations, he discovered a large degree of cyclicality.

In 1876, Benner published his findings in a book, Benner’s Prophecies of Future Ups and Downs in Prices, in which he made business and commodity price forecasts for 1876 through-1904. Many of these forecasts were fairly accurate.

The Benner Cycle includes:

  • An 11-year cycle in corn and pig prices with peaks alternating every five and six years
  • A cycle in cotton prices with peaks every 11 years
  • A 27-year cycle in pig-iron prices with lows every seven, nine and 11 years,  and peaks every eight, nine and 10 years

It makes intuitive sense that farmers would recognize longer term cycles. The 11-year solar cycle would certainly impact crop yields and revenue, so looking at how the variants of crop yield and prices impact the overall economy and markets makes sense.

The economy slumps when prices go way down. Then, the price comes up and it’s good for agriculture and the nation’s economy because the surplus is gone. This year, we started out with expectations of a large corn crop, but in actuality, recent forecasts question our ability to produce a 12- or even a 10-billion-bushel corn crop. That sounds low, but if Iowa and Illinois production is unable to shoulder the burden of retaining the No. 1 status, the pertinent question is: Where is the needed grain going to come from? Currently, the two best states in corn-crop ratings are Minnesota and Wisconsin, and it is the middle or northern sections within those two states. The irrigated acres in Nebraska look good, but pivots in one watershed were turned off and pivots in others were challenged to keep up. In addition, dryland acres were severely affected. There will be pockets within the normally top status states, but the dry conditions are very widespread while the good areas are not.

Some people have said we’ll just get the grain we need from Argentina or other South American countries, but farmers in Argentina are recovering from last season, when they experienced the worst drought in 50 years. Parts of Parana and Mato Gross were also very dry. During our March visit to that area, we walked fields where the plants were 1 or 2 feet short of being fencepost high, and irrigated corn made less than 15 bushels per acre because irrigation systems couldn’t keep up. The bottom line is that Americans can expect higher food prices.

For more information, you can “like” Bob Streit’s Facebook page or email him at bstreit@signatureblue.com. How would you rate your corn and bean crop? How are moisture levels in your area?

Share |

Leave a comment

By clicking "Submit" i agree to the Terms & Conditions