Now that many parts of the United States Midwest have received close to a foot of rain since the beginning of June, some analysts are mocking early spring forecasts of widespread drought.
The U.S. Joint Agricultural Weather Facility, operated by the World Agricultural Outlook Board of the U.S. Department of Agriculture and the National Oceanic and Atmospheric Administration, stuck its neck out this spring and issued long-range forecasts.
It said conditions were right for a continuance of the drought that had gripped large parts of Nebraska, Iowa, Illinois, Indiana, the South, Arizona and Texas.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
At first, it appeared the forecasters might be right.
With each rainless day the price of corn edged higher so that by the beginning of May, the December 2000 Chicago futures contract topped $2.70 (U.S.), after hovering around $2.55 most of the year.
That probably would have been a good time to pre-price some of the coming year’s crop, but as usual, many farmers were reluctant to lock in a price when there was potential for drought to cause prices to skyrocket.
It was understand-able that farmers who hadn’t seen a drop of rain for about a year were nervous about getting a crop in 2000.
So they were not quick to sell old-crop corn either. The result is a higher year-end stocks forecast that adds more pressure to already falling prices.
This has prompted some to say that long-range weather forecasts are a waste of time.
That is an unfair analysis.
The forecasters heavily qualified their early outlooks and admitted it was difficult to separate the “signal from the noise.”
It was politicians who appeared at the drought forecast news conferences who pushed the spectre of drought.
But even without the government’s drought forecast, midwestern farmers would have considered the dry evidence in their own fields and would have decided to be cautious sellers.
Weather forecasting agencies should be encouraged to continue studying the global climate phenomena that combine to influence seasonal weather.
The science is still in its infancy, but if ever perfected, it will be a great boon to farmers.
Today’s long-range forecasts should be looked at as one piece of information among many to consider when planning a marketing strategy.
