Thursday, June 24, 2010

What was that in the cornfield?...

A black swan?  Several individual events recently combined to make me wonder if we could have a real, live production problem this year.  As one (or more) of our USFR market wizards likes to say: we always kill the crop 2-3 times before harvest.  But mix theses datapoints together and see if you don't ponder the possibility.
  1. I drove to Chicago for a meeting yesterday - pretty much straight through central IL on Rte 49 and I-57. I have been discouraged about the recent yellowing in my low spots - even for 4' corn, but I was blown away by how poor the crop looked between here and there.  Once I left I-74, less than 5% of the corn fields looked OK (yeah - I did some actually counting).  There were many fields where I had to look for green spots.  Huge ponds and 27 unplanted bean (?) fields bordering Rte 49.  I had driven this same route about 3 weeks ago and just noted they were 10 days or so behind us here in Edgar County.
  2. Checked the rainfall totals from just yesterday in IA and N IL.  Checked the Crop Comments.  Even after fudging for the only-the-bad-news bias in CC, the rainfall numbers are staggering.  One big diff from 2009: NE has been clobbered.  Last year it was the garden.
  3. Accuweather meteorologist Joe Bastardi issued his summer forecast update.*
  4. Darrel Good quietly points out how even a big crop will get used up at the rate we're going.
  5. Jerry Gulke (I met in his office yesterday) suspects China could have their own production problems and with the new, heftier yuan could gobble several million bushels more of corn to feed their growing protein industry.
The idea of a short crop simply won't fit in most of our heads.  Fool me once, yadda, yadda...  But the idea that the vast majority of the Corn Belt can't have a simultaneous yield problems strikes me as the same assumption the housing industry made about house prices: they couldn't drop everywhere at once. Only they did.

I am pretty much useless offering marketing advice, but I think I see more glimpses of a black swan event in 2010 than last year.  Now imagine what would happen to our livestock, ethanol, and foreign customers if we show up with a sub-12B bu. crop.

*Summer has officially begun and Chief Long-Range Meteorologist Joe Bastardi is calling for more scorching temperatures to occur over much of the nation through August.
Average summer temperatures will rival some of the hottest summers ever recorded across the eastern half of the nation.
"It's possible for record-breaking warmth in the first half of July for much of the nation," said Bastardi.
Between I-80 and I-20 from the Rockies eastward, temperatures will hold between the mid-80s and low 90s F through mid-July.
Humidity and uncomfortable heat will also cover the Great Lakes and much of the Northeast, and south from I-20 to the Gulf Coast through the same period. Temperatures will be slightly above normal, lingering around the low 80s in the Northeast and in the 90s across the south.  [More]
Meanwhile, the bean fields look like excrement, essentially.

I'm just sayin'


Jim said...

Crops look awesome in McHenry county Illinois and surrounding areas. Some problems to the north of us in Wisconsin, but most of the state line area is in good shape. Yield will be trimmed if the faucet shuts off for grainfill, and the lazy, shallow roots we've developed aren't deep enough to find water, but we'll still have something decent. We'd be happy to get $4+ for cash corn this fall if other areas are short... :)

Anonymous said...

John we always have 75% of srw and 50% of new crop soys priced by now and this year it is 0 .....our crops look average to better than most years but it is hard TOO PULL THE TRIGGER...talked to BTO yesterday and he is in same boat...regards - kevin

Anonymous said...

I am beginning to wonder about the crop too