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Soybean, corn markets take hit; new crops in need of rain

Published: Thursday, Aug. 1, 2013 10:48 a.m. CDT • Updated: Friday, Aug. 2, 2013 11:46 a.m. CDT
Late planting and cool weather have this year's crop behind schedule. About 74 percent of the corn has tasseled, which is short of the five-year average.

After climbing to more than $15.78 a bushel on July 22, the price for soybeans plunged to $12.95 a bushel on July 25 before making a slight recovery.

The basis — price difference between the board of trade and local cash prices — lost more than $1 on July 22.

Gavilon manager Dean Michaelson said he had never seen the price drop so quickly.

“There is still going to be some gyration in the price, but the basis helps control that,” Michaelson said.

Michaelson said the spread of information using technology plays a big role in how quickly market prices are impacted. What use to take two or three days can be done in 30 minutes.

As the market gets ready to transition from old crop to new, prices fluctuate according to who holds out from buying to wait on new corn and soybeans.

“You want to play it really tight because in two months the price will be much lower,” Michaelson said.

The corn market reacted to the sudden drop in soybeans and some ethanol plants dropping their bids.

On July 22, corn was more than $7.06 a bushel before dropping to $5.66.

“There has been some bounce back, but it’s not much when you drop like that,” Michaelson said.

New crop

It has been a growing season of extremes for local farmers.

What started as a record-setting wet spring has turned into a dry July, leaving local crops in need of moisture.

Iowa received 17.66 inches of precipitation in March, April and May across the state. The previous record was 15.36 inches in 1892.

State Climatologist Harry Hillaker said the Creston area has received 1.51 inches of rain in July. The average amount for the area is 4.39 inches.

“The rain showers that we got were really spotty,” said Natural Resources Conservation Service District Conservationist Wayde Ross . “There are some places that are green and look good, east of us looks really good.”

The month has been described as a flash drought, which Hillaker said is a “very rapidly developing drought situation.”

“Most of Iowa is quite a bit drier than normal,” Hillaker said. “Fortunately, it hasn’t been that hot, there is much less evaporation with the lower temperatures.”

Behind schedule

Tracy Cameron, agronomist for Gavilon Grain, said the crops do not lose as much energy in the cooler temperatures, but it also slows the maturity.

“We are not dangerously behind, but we don’t want to extend it into August and September,” Cameron said.

According to the National Agricultural Statistics Service at the Iowa field office, 74 percent of the corn has tasseled, short of the five-year average of 88 percent in Sunday’s report.

Only half of the corn had started to silk, well behind the normal average of 77 percent.

“The cool weather has been a savior,” Ross said. “Corn is a warm season grass, but you need to have the moisture to go with it.”

Soybeans are also off to a slow start. NASS reported 63 percent of the crop was blooming, down from the five-year average of 83 percent.

Pods were beginning to set on 14 percent of the soybean crop.

“We’ve got a lot of time left still,” Cameron said. “August is bean month.”

Cameron said he agrees with recent reports that the yield outlook for crops is at or just below the trend line.

The trend line is generally considered an average yield.

“It is not a bad crop, just not the bumper crop you hope for,” Cameron said.

The late planting, flooding, replanting and now a dry spell have made predicting the yield difficult.

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