2015 wet weather could push crop futures higher

Luke Muhlenkamp is among the many Indiana farmers who have been dealing with the rain. With a 250-head cattle operation, including 75 dairy cows a few miles north of Portland, he farms about 180 acres of corn, soybeans and alfalfa, mostly to grow feed for the livestock.

Weather was so good for planting that he and most of his neighbors in Jay, Adams, Wells and Blackford counties had their corn and soybeans in well before the end of May. But, the run of great weather ended shortly after that.

“We got well over a foot of water in June,” Muhlenkamp said. “I’m lucky I didn’t have but two or three acres flooded out. The hardest thing has been getting hay made.

“You need three or four days (straight) of real nice weather to make hay while it’s all dry. That’s running a month behind for a lot of guys.”

Muhlenkamp mingled with a large group of farmers from northeast and east-central Indiana on June 24 at the Nidlinger Farms north of Decatur for an agricultural outlook session and to learn about the farm’s innovative approach to crop management, grain merchandising and integrating crop and financial records.

They heard that within northeast Indiana, counties bordering Michigan received up to 6 inches of rain within the last 30 days, and the amount of rainfall received increased the farther south farms were in the region, with those in Adams and Wells getting up to 16 inches.

If the average for the region ends up between 8.5 inches and 9 inches for June, Chris Hurt, an agricultural economist for Purdue University, said 120 years of weather data shows only two years where the entire region saw a comparable amount of rain — 1981 and 2000.

In 1981, northeast Indiana corn yields fell 3.6 percent below trend, and beans were down 10 percent.

The region did not get quite as much rain in 2000, but with an average of 7 inches that year, Hurt said “corn yields were up a couple of percentage points above what we would have expected, trend, and bean yields were down a little bit.”

“So, generally what we’re going to see in that data is beans don’t like the wet weather in June; corn, it tends to be kind of variable,” he said. “A lot of June moisture can be very beneficial to higher yields.”

Field drainage infrastructure and the amount of rain that hits the region during the rest of June and first half of July could make a very big difference in the corn yields seen this fall from farm to farm, he said.

The U.S. Department of Agriculture was projecting season average prices for 2015 crops of $3.50 per bushel for corn and $9 per bushel for soybeans. Hurt said expectations of crop damage from excess rain in much of the corn belt could increase that to the $3.75-$3.85 range for corn and the $9.30-$9:40 range for soybeans. Reaching $3.85 would set the market up to test demand for $4 corn.

Wet weather prevented farmers across the country from planting an estimated 10 percent of the acreage they had planned to put into soybeans, he said.

By the end of June, that can qualify as “prevented planting” acreage for crop insurance purposes, which entitles farmers with the insurance to 60 percent of what they would have received on the fields had they been able to plant them.

A report with an improved USDA estimate on corn and soybean planting was expected to drive early July trading.

“But the market’s going to very quickly say, ‘But we don’t know how many acres, particularly on beans, did not get planted.’ That begins to come in through Farm Service Agency offices as you report your actual planted acreage,” Hurt said.

Those reports must be summarized and sent to their individual states before they are published nationally, often in September and October, he said.

“So I think what we’re dealing with still hanging over this market all summer is going to be: ‘How many acres of beans never got planted,’” he said. “I think that’s another friendly factor to prices as we go through this summer.”

The resulting yield loss probably would reduce corn and soybean production by $475 million, Hurt said in a June 26 news conference where Purdue specialists reported on the agricultural impact throughout the state of torrential rains and flooding.

Indiana’s corn yield potential in the USDA’s June 8 Crop Progress report was 178 bushels per acre, 6 bushels higher than a “normal weather” yield of 172, he said.

A deterioration in crop conditions during the following three weeks dropped that model-determined yield to about 163 bushels per acre, a decline of 15 per acre and about 9 below a “normal weather” yield. That represents close to 85 million bushels of corn worth $300 million, Hurt said.

The soybean yield model estimates have dropped from nearly 53 bushels per acre in early June to 49.4 bushels by the end of the month, for a potential decline of about 20 million bushels worth an estimated $175 million.

A region must show at least a 30 percent production loss to qualify for federal disaster assistance. Indiana had not yet applied for the assistance and officials were collecting data to assess damage in the hardest hit areas, Julia Wickard, state executive director of the Farm Service Agency, said during the news conference.