In Iowa, the nation's leading corn-producing state, this spring is eerily similar to that of 2008, when farmers endured record rainfall and flooding along the Mississippi River.
According to the Iowa Farm Bureau, damages that year to crops and livestock amounted to $3.5 billion.
The Farm Bureau points out that this year the threat to America's farmland is different because it’s cumulative across two major river basins and four key farming states.
And, noting the impact of flooding in the Missouri and Mississippi River Valleys, the Agriculture Department released its latest estimates this week on domestic and global supply and demand.
Adverse weather conditions, reductions in acreage and tighter ending stocks were highlights of the report.
According to USDA, total U.S. corn acreage will fall by more than 1.5 percent to 90.7 million acres. The number reflects the corn acres lost to flooding in the Ohio and Mississippi River valleys.
Officials left the average yield unchanged at 158.7 bushels per acre. If realized, that would result in record corn production of 13.2 billion bushels. Already tight old crop numbers remained unchanged while new crop ending stocks fell by more than 20 percent to 695 million bushels. USDA’s projection for the average price was $6.50 per bushel.
Guesstimates for planted soybean acreage were unchanged with the harvest projected at 3.3 billion bushels. That would be the second highest soybean crop on record but, unlike corn, the bumper crop is offset by an increase in ending stocks due to decreased Chinese demand. According to USDA, soybean ending stocks increased nearly 20 percent to 190 million bushels. And analysts peg the average soybean price at $14.
U.S. wheat production is expected to be reduced by nearly 7 percent to slightly over 2 billion bushels as fewer acres were planted and projected yields declined. While old crop exports are expected to decrease by 2 percent to 680 million bushels, ending stocks are projected to be 15 percent lower. The average price is estimated at $7.70, which would be a record.
The report was considered by analysts as bullish for corn, bearish for soybeans and neutral to bearish for wheat. The market reacted accordingly on the news on Thursday with corn closing up, soybeans falling back and wheat holding steady.
But the big story in this week’s report remains reduced acreage and very tight corn supplies. In its latest estimates, USDA predicted a corn stocks-to-use ratio of just 5 percent. And with the U.S. crop in its infancy, weather concerns and investor positioning is expected to influence the market in the days ahead.