Flooding could cut yields in half in some areas
Flooded farm fields in central Illinois and across the Midwest helped drive corn prices to a record high for the fourth day in a row Tuesday, and analysts warned it could mean higher prices at the supermarket later this year.
A flurry of reports said a cool, wet spring, followed by the past week’s floods, could cut corn and soybean yields by as much as 50 percent in some areas, putting additional pressure on already record-high corn prices.
“I wouldn’t look for a big pullback in these prices,” said University of Illinois Extension economist Darrell Good.
Corn for July delivery resumed its march on $7 a bushel at the Chicago Board of Trade on Tuesday in anticipation of reduced yields this summer, closing at a record $6.73 per bushel. The previous record high of $6.72 was reached Monday. A variety of commodity analysts also warned the prospect of a smaller crop across the Corn Belt this summer would only add to food prices already on the rise as a result of energy costs, a weak dollar and export demand.
But water, lots of water, is the immediate problem for farmers such as Allen Entwistle.
“We’re levied, but it probably went four or five feet over our levy,” said Entwistle, who farms along the North Fork of the Sangamon River near Mechanicsburg, about 15 miles east of Springfield.
Entwistle said the levee served well to protect his crops until the city of Decatur released billions of gallons of water from Lake Decatur last week, water that eventually found its way into the Sangamon River.
“We were down probably about four feet at 8:15 a.m., and at 9:30 a.m., it started over the levy. We knew it was coming, but there was nothing we could do about it. They basically just flooded us out,” he said.
Entwistle said sections of the levee remained under water Tuesday, but the river level was falling.
Rural Rochester farmer Jimmy Ayers estimated he has only about 200 acres remaining of the 1,150 acres of corn he planned to plant, and about 60 acres has been taken by flooding from the South Fork of the Sangamon River.
“It’s not often a farmer gets to see whitecaps on his fields,” said Ayers, adding that he expects higher prices to offset crop losses, but even he has been surprised by the record run for a bushel of corn.
“The prices keep going up. It’s worth $6 or $7 a bushel, and it’s unheard of in my lifetime,” said Ayers, who has been farming since the early 1970s.
Sangamon County Farm Bureau manager Jim Birge said area farmers have a window of a week, maybe two, to decide whether to replant corn crops, switch to soybeans or file for crop-insurance losses.
Some fields, especially in bottomlands along the Sangamon River, probably have been lost for the year.
“There’s some corn under 10 feet of water, and you’re not going to see that crop,” said Birge.
A U.S. Department of Agriculture update released Tuesday showed farmers across the Midwest have fallen behind on corn and soybean planting, and the crops that have been planted have been slow to emerge.
Conditions are poorest in Illinois and Indiana, according to the report.
As recently as last week, a University of Illinois forecast suggested grain prices could fall the second half of 2008 in anticipation of a larger worldwide wheat crop, falling worldwide demand for biofuels, a stronger dollar and lower crude oil prices.
Good said this week’s surge in corn prices shows just how quickly forecasts can change in commodity markets.
“It’s always difficult to assess how much damage there is from flooding because nobody knows until it’s all over,” he said.
Ayers, for his part, compared corn and soybean futures to the crude-oil market.
“People speculate. The commodity markets are all the same,” he said.
Tim Landis can be reached at (217) 788-1536 or firstname.lastname@example.org.
Illinois crop update (as of Sunday):
-Planted: 95 percent; five-year average, 99 percent.
-Emerged: 88 percent; five-year average, 98 percent.
-Height: 7 inches; five-year average, 17 inches.
-Planted: 66 percent; five-year average, 92 percent.
-Emerged: 45 percent; five-year average, 82 percent.
Corn-crop conditions: 4 percent very poor; 10 percent poor; 38 percent fair; 44 percent good; 4 percent excellent.
Source: U.S. Department of Agriculture