U.S. corn and soybean harvests may be smaller than government forecasts after the hottest July since 1955 stunted Midwest crop growth already delayed by late planting, said Roy Huckabay at commodity broker Linn Group.
Evidence of diminished output will nowcome from the weeklong Professional Farmers of America tour of 2,000 fields in seven states that begins today, Huckabay said. The U.S. Department of Agriculture, which cut its production forecasts for both crops on Aug. 11, probably will make further reductions before farmers complete harvests in October and November, he said.
“The crop tour will find more yield problems than the USDA said because of the heat in July and the drought that has spread into the heart of the Midwest in the past six weeks,” Huckabay, an executive vice president, said by telephone from Chicago. “We have a supply problem that is going to add to rising food inflation.”
The condition of both crops has declined in the past two months, government data show. Corn futures as of Aug. 19 were up 69 percent from a year earlier and soybeans gained 35 percent, boosting costs for livestock producers and makers of food and biofuels.
The 19th annual Pro Farmer tour will deploy about 100 analysts, grain traders, buyers and farmers as crop scouts to survey fields in Ohio, Indiana, Illinois, Iowa, Nebraska, South Dakota and Minnesota. Corn-yield estimates and soybean-pod counts will be reported daily and then incorporated into Pro Farmer’s estimate on Aug. 26 for U.S. output.
“The crop tour covers a large swath of the Midwest, and they are meticulous about their data collection, so there will be a great deal of attention put on their findings and observations,” Diana Klemme, a director at Grain Service Corp., a consulting company and brokerage in Atlanta, said last week. “I’ve seen too many photos and reports about the damage from the heat and dryness not to expect a smaller corn crop.”
The USDA, after conducting a survey of farmers, cut its corn-production forecast on Aug. 11 to 12.914 billion bushels from 13.47 billion projected in July. Last year’s crop was 12.447 billion bushels. The yield estimate was cut to 153 bushels an acre from 158.7 bushels in July. In 2010, it was 152.8 bushels.
Soybean production will total 3.056 billion bushels, less than the 3.225 billion predicted in July, the USDA said. In 2010, production was 3.329 billion.
“There are a lot of crops that may look good from the road, but once you get into the field, the yield is very disappointing,” said David Smoldt, a vice president of operations at INTL FCStone Inc. in West Des Moines, Iowa. “Even with a global slowdown, the last thing people will stop buying is food.”
About 60 percent of the corn crop was in good or excellent condition as of Aug. 14, compared with 70 percent on June 26 and 69 percent a year earlier, USDA data show. For soybeans, 61 percent got the top rating, down from 68 percent in June and 66 percent a year earlier.
Worsening conditions in July and August reflect the extreme heat and increasing dryness in the Midwest, the largest growing region, said Kyle Tapley, an agricultural meteorologist for Rockville, Maryland-based MDA Information Systems Inc. Average temperatures in the Midwest were as much as 8 degrees Fahrenheit above normal in July, and farms from south-central Minnesota to Ohio got less than a third of normal rain since July 1, he said.
Severe drought centered in Texas also reduced yields in the southern Great Plains and caused record agriculture losses of $5.2 billion, Texas A&M University said last week. The tab for all U.S. economic losses this year from floods, tornadoes and heat waves has hit a record $35 billion, the National Weather Service said Aug. 17.
The corn-ear size is determined early in the plant’s life cycle, when Midwest flooding and cool temperatures stunted growth, said Tapley, who will be sampling plants on this week’s tour. Heat in July damaged corn reproduction, reducing the number of kernels on each ear. Soybeans need rain in August to develop pods and fill them with beans.
MDA cut its corn-crop forecast to 12.223 billion bushels on Aug. 19 and said soybean production will fall to 2.967 billion, based on weather conditions and satellite imagery, Tapley said.