Drought, Weather and Contracts

A couple of issues have started being talked about related to the drought which I want to mention. First is crop prices, particularly corn. While prices have rallied a bit over the past few days, the problem is that in this week's crop progress report, Iowa's corn crop is still rated 68% good to excellent, Minnesota's is 83% good to excellent and Nebraska's is 60% good to excellent. While Indiana and Illinois are reporting much worse conditions, you can see that across a good chunk of the corn belt things still look pretty good. I was going to wait until after Friday's grain stocks report to say anything because that could have a substantial impact but based purely on the crop conditions report a radical price increase in corn looks unlikely in the short term.

And those three states I mentioned have been getting rain. Below is a screenshot of today's (June 27, 2012) 7-day precipitation analysis from the National Weather service. You can see where the greens and yellows are.

Another issue that is starting to be talked about is filling contracts if there's a radical yield reduction, which is looking more likely every day. I am not a marketing guru so I'll refer you to this 2010 publication from the University of Maryland. An article on grain contracts starts on page 11.

Link to 2010 University of Maryland Drought Handbook for Grain/Crop Producers

I don't have a lot to add to this publication. Chris Hurt from Purdue is working on developing some articles on this and other drought-related issues and I'll get that information out once it's available. There are two things I want to emphasize from this publication. First is that the most important thing is to talk your buyer about what options are available. Second, the stronger your position, the less expensive it will probably be for you to make changes or buy out of your contract. The article illustrates this fairly well with the tables on pages 12 and 13. While it may be a bit early to start changing contracts, I don't think it's too early to start thinking about your options if this becomes necessary.

Thoughts on the 2011-12 Unwinter

I've wanted to post on the strange weather we saw this winter but haven't had a lot to add to what everyone else has been saying. In particular there's been a lot of discussion on possible insect impacts.

My personal feeling is that it will be hard to predict if we'll see increased insect pressure this year. Most of the overwintering insects have adapted to survive here so the sheer numbers may not be too different (and they may encounter disease and predation which they aren't adapted to) though emergence date will obviously change. I haven't heard of any insects which don't usually overwinter here surviving however there may be some early arrivals. What I think is more likely is that there may be additional generations and that the standard timing for insect impacts will be very different from usual. Again, nothing revolutionary or which you can't find in a lot of other places from people who know more than I. I think the key will be that this year will place an additional premium on keeping informed and up to date on what's going on. Purdue's Pest and Crop Newsletter is one good resource. Another is Bob Nielsen's site where he summarizes crop information from various sources - including for crops other than corn.

There isn't a lot of this grown in Clinton County but one thing I've been struck by is how quickly alfalfa is coming along. Growing Degree Day(GDD) accumulation is one way of determining when to make your first cutting and we're already close to 300 in Central Indiana. Craig Thomas from Michigan State University recently posted an article discussing the use of GDD's to determine when to harvest. There's a good chance this will be a four-cutting year if we get rain, as long as you make your first cutting in a timely manner.

In order to track Growing Degree Day accumulation a good resource is the GDD Tracker.

Weather Impacts on Corn

Everybody who grows corn knows that the recent hot, dry weather during pollination isn't ideal. The question then becomes how to assess what the impact has been.

The most accurate way is to simply go out and do yield checks by counting ears and kernels. Rather than spell this out here, I'll refer people to Bob Nielsen's article from last October, Estimating Corn Grain Yield Prior to Harvest. In talking to people who've done this already, the general response I'm getting is, "It's not as bad as I was afraid it might be." I know that's not terribly specific but it appears that the corn has been weathering this surprisingly well.

From "drive-by windshielding" there has been remarkably little visible signs of stress in corn, in particular leaf rolling. This has recently started to change a bit in areas of the county which have not received much rain. If you're wondering how leaf rolling equates to yield loss, I'll refer you to an article from July 15 by Roger Elmore and Elwynn Taylor from Iowa State, Corn and “a Big Long Heat Wave on the Way”. In particular, these passages in the final section are interesting:

"By rule-of-thumb, the yield is diminished by 1 percent for every 12 hours of leaf rolling - except during the week of silking when the yield is cut 1 percent per 4 hours of leaf rolling."

and

"The second impact is less obvious initially. When soil moisture is sufficient, as it is for the most part this July, the crop does not have a measurable yield response to one day of temperatures between 93F to 98 F. However, the fourth consecutive day with a maximum temperature of 93 F or above results in a 1 percent yield loss in addition to that computed from the leaf rolling. The fifth day there is an additional 2 percent loss; the sixth day an additional 4 percent loss. Data are not sufficient to make generalizations for a heat wave of more than six days, however firing of leaves then becomes likely and very large yield losses are incurred."

Unfortunately, just in the past few days there has been some lower-leaf firing in corn. As a caution, this goes back to my "drive-by windshielding" sampling method which tends to include quite a bit of end-rows which are generally more compacted and will show more of this.