Unusual weather patterns put feedgrain prices at risk

La Nina year? Market analysts warn corn and soybean yields may fall short with poor weather, driving up prices for livestock feeders

DES MOINES, Iowa — Normal growing conditions would give livestock feeders bigger corn and soybean crops this year, along with lower feedgrain prices and less worry about supply.

However, counting on “normal” or “average” weather is a risky proposition, a leading weather expert and a respected market analyst told farmers at the World Pork Expo June 5.

“It definitely brings an early frost into play (as a risk factor),” hog market analyst Steve Meyer said about the lateness of North American crops.

Iowa State University weather analyst Elwynn Taylor said U.S. Department of Agriculture projections of a 158 bushel per acre U.S. corn crop are based on average weather for the rest of the season. He, Meyer and the futures market see that as unlikely.

Taylor expects to see an average U.S. corn yield in the mid-high 140s, while the futures market appears to be predicting 147 to 149 bu. per acre.

Taylor said there is a 70 percent chance that corn yields will be below the trend line this year, and a number of risks could reduce them even further.

La Nina is possible again, with recent weather data suggesting the risk is growing. La Nina tends to create poor Midwest yields such as those of the past couple of years.

Taylor said this year’s corn crop is also threatened by saturated soil, which has put it behind schedule and predisposed it to heat shock in mid to late summer.

“Many of our worst years in the corn belt for crop yield have started off waterlogged, so that we had poor root systems, and then should the season become stressful come July or August, the plants are at the mercy of the stress,” said Taylor.

He said the most similar year to this in crop history was 1947, which saw bad yields when a cold and wet spring led to a late crop that was hammered by summer heat and dryness.

“It makes us very vulnerable to hot, dry weather.”

Corn plants stop developing their roots once tasseling begins, he added.

Taylor expects the corn crop to be better than last year’s drought disaster but still below average. He also thinks it will be more vulnerable to future weather problems than in most years.

Meyer said he expects better feedgrain supplies than what was available last year once the new crop is harvested.

However, he also had a short-term warning for livestock feeders because U.S. corn and soybean old crop stocks are so tight that prices could shoot higher at any time.

“The end of this marketing year could see some real fireworks, both in corn and soybean markets in some areas,” said Meyer.

It could lead to severe basis swings in areas with big demand and disappearing supplies.

“We will not run out of corn. We will not run out of soybeans. That doesn’t mean some areas won’t run out of corn and soybeans,” said Meyer.

“It could be pretty volatile as we go through the rest of the summer.”

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