Corn crop forecast down; bad news for economy

An abundance of rain is plaguing American corn farmers, which is increasing concern over lower than predicted corn production. As of Sunday, June 8, 89 percent of the U.S. corn crop had emerged, which is nine percent less than a year ago and six percent less than the five year average, the Department of Agriculture reported. Corn is in 60 percent good to excellent condition, compared to 63 percent a week ago and 77 percent a year ago. (Graph from The New York Times)

"At a moment when the country’s corn should be flourishing, one plant in 10 has not even emerged from the ground, the Agriculture Department said Monday," David Streitfeld and Keith Bradsher write for the Times. "Because corn planted late is more sensitive to heat damage in high summer, every day’s delay practically guarantees a lower yield at harvest. . . American farmers are planing 324 million acres (of corn) this year, up 4 million acres from 2007. Too much of the best land is waterlogged, however. Indiana and Illinois have been the worst hit, although Iowa, Wisconsin and Minnesota were inundated last weekend."

Jon Perkins writes for Brownfield, "The crop in most of the major U.S. growing states continues to develop at a slower than normal pace due to heavier than average rainfall, flooding and other conditions harmful to development." Katie Allen writes for Brownfield that "potential crop flamage on late-planted corn down to an early or even normal fall freeze is now a concern among farmers, especially in the northern Corn belt. Roger Elmore, extension corn agronomist for Iowa State University, says a normal freeze this fall shouldn't affect the already planted corn, but time is running short for corn that still needs to be planted."

USDA released its monthly World Agriculture Supply and Demand report Tuesday, estimating a harvest of 673 million bushels of corn, down 93 million from last month's forecast and 760 million below the 2007 forecast. If these predictions hold, stocks would plummet to their lowest mark since the 1995-1996 season. Read the full report here. "University of Illinois Extension Economist Darrel Good told Meatingplace.com the latest report seems to support the market consensus that there is no chance of having a big corn crop this year," writes Tom Johnston. "The combination of unplanted or unharvested acres and reduced yield potential indicates a reduction of production expectations, (Good) said."

A lackluster corn crop would affect several facets of the economy. Glen Grimes, agricultural economist emeritus with the University of Missouri at Columbia and a consultant to the National Pork Board, told Peter Shinn of Brownfield, "If U.S. corn production comes in far below expectations this year, less than 10 billion bushels, for example, the resulting corn price spike would shutter most U.S. ethanol plants." Shinn writes, "Grimes pointed out livestock producers must feed their animals regardless of price, while ethanol producers have the option of shutting down when margins are poor. And even if this year's corn production weer to somehow close to last year's record level, Grimes suggested the impact of higher feed costs on food price inflation haven't yet actually worked their way through the food production system to the retail level."