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The good news for farmers: Corn prices are on the rise, up nearly 70 cents in the past three weeks to their highest level in nearly three years.

The bad news: That spike is largely because of heavy rain and flooding this spring that have hampered planting across the corn belt and stoked fears about a drop in production.

Planting is well behind schedule across the corn-planting states, estimated at 58% complete this week, compared with a five-year average of 90%.

Reuters reported that the 116 million combined acres of corn and soybeans that still needed to be planted as of May 19 were the most ever that late in the season.

Nebraska is in better shape than other corn-growing states, however.

According to U.S. Department of Agriculture data released this week, 81% of the state's corn crop is in the ground. That compares with a 94% average over the past five years.

Among other corn-growing states, Iowa has 76% of its crop planted, Kansas is at 70% and Minnesota is at 66%. However, other top-producing states have yet to plant even half their crop.

Illinois, the country's second-largest producer, has only 35% of its crop planted. Indiana, South Dakota and Ohio, the fifth-, sixth- and eighth-largest producers, are at 22%, 25% and 22%, respectively.

That has led commodities traders to buy futures in corn and other crops, including wheat. In addition, "speculators continue to unwind their short positions," said Ernie Goss, a Creighton University economics professor.

National corn prices hit $3.52 a bushel on May 10, their second-lowest level of the year. By Tuesday, they were at $4.20 a bushel, the highest since they were at $4.21 a bushel on June 20, 2016.

"It's definitely a weather-driven market," said Brad Lubben, an agricultural economist at the University of Nebraska-Lincoln.

Lubben said commodities traders are worried both about the size of this year's corn crop as well as the quality.

Heavy rain and flooding have meant some farmers won't plant at all this year, especially those along the Missouri River.

"In the Missouri River valley, we can't get rid of (the water), and that flooding will remain for weeks or months," Lubben said.

In other areas, many farmers are planting late because of wet fields, which is likely to reduce the yield per acre.

It also means they could be faced with reduced crop insurance coverage if they're planting after the May 25 deadline for corn.

Corn growers with flooded fields "are dealing with less-than-optimal choices at this point," Lubben said.

They can plant late and take their chances, choose not to plant at all and take an insurance payout, or plant a different crop.

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That typically would be soybeans, but because of a trade war with China, soybean prices have been depressed.

Before rising about 70 cents in the past week because of weather concerns, soybean prices had hit their lowest level in more than 10 years.

So, "beans look less and less attractive," Lubben said.

For those farmers lucky enough to get their crop in the ground in a timely manner and avoid damage from high water, gusty winds or hail, the boost in prices could be a good thing, he said, as they can lock in higher prices.

However, higher prices could also be a negative, because they will drive up feed prices for livestock producers.

"So there's always a trade-off," Lubben said.

The good news for livestock producers and consumers is that Lubben doesn't see any sustained rise in prices. That's because the primary reason commodity prices have been so low in the first place is that there is plenty of supply.

Even though some grain in storage has been destroyed by flooding, both corn and soybean stocks are at all-time highs, according to the USDA.

When drought gripped the U.S. in 2012 and led to big crop losses, prices skyrocketed, with corn prices briefly rising above $8 a bushel.

Lubben said the price increases then were driven in large part by there being much less corn in storage.

Even though the 2012 price increase was driven in part by weather conditions, it was not a true "weather rally," he said.

The recent price increases are a weather rally, Lubben said, and "weather rallies don't tend to last very long."

Of course, the strength and length of the weather rally depend on the weather, and it's anybody's guess when things will improve. 

Many areas of the state are running several inches of rain above normal, and the National Weather Service's one- and three-month outlooks call for above-average rain chances for Nebraska and much of the middle of the country.

While the right amount of rain is great for crops, too much is a problem, and flooding of already planted fields can be devastating.

That risk was illustrated this week in Gage County, which saw as much as 5 inches of rain in some areas over three days this week.

“There’s quite a bit of corn under water," Gage County Emergency Management director Lisa Wiegand told the Beatrice Daily Sun, noting that about 85% of the county's crop was already planted.

"There’s always concern when corn’s under water for more than 48 hours," Wiegand said. "There’s the potential for some loss or damage."

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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