July 23 (Bloomberg) -- In a field near Steele, North Dakota, Anthony Mock points out golden tassels forming on corn stalks a foot above his head. While farmers in the heart of the U.S. Corn Belt cope with the worst drought in half a century, he and his neighbors in the Northern Plains are seeing signs of a rich harvest.
“We’re fortunate because we’ve caught some rain,” said Mock, 39. “We should have enough moisture to carry us through pollination and be OK.”
Mock, whose Chevy pickup sports CORN vanity plates, was concerned when he added 500 acres of the grain to his crop mix this year as the federal government forecast record output. Yet his gamble is paying off as the worst U.S. drought in five decades has reduced the nation’s projected harvest and pushed the value of the surviving crop today to a record $8 a bushel.
“It’s a once-in-a-lifetime event,” said Roger Johnson, former North Dakota agriculture commissioner and now president of the Washington-based National Farmers Union, the nation’s second-largest growers organization. “I would be getting crops out of the field and into the grain elevator as fast as possible.”
While the heart of U.S. crop country bakes, the northern edges of the Midwest and Plains states, along with some southern states, are still producing -- and benefiting from higher prices.
The nation’s best-rated corn crop was in two border states, with 61 percent of Minnesota’s crop and 58 percent of North Dakota’s listed in “good” or “excellent” condition as of yesterday, the U.S. Department of Agriculture said. Nationwide, good and excellent ratings applied to 26 percent of the crop, the lowest for this date since 1988. Quality declined for both states and the nation compared with last year.
Almost a third, or about 1,300, of the nation’s counties spread across 29 states have been declared natural-disaster areas by the USDA. The dry weather also pushed soybeans to a record $16.915 a bushel today on the Chicago Board of Trade.
North Dakota, however, recorded rainfall in June closer to normal than all but two of the top 10 U.S. corn-producing states. As of July 17, none of the state was experiencing extreme drought, even as 28 percent of the High Plains and 12 percent of the Midwest were in such conditions, according to the government.
The state’s spring wheat, important for bread products and flour exports, has the highest plant-quality ratings in the nation. Its corn conditions are second only to neighboring Minnesota’s. Early-season oat and barley harvests are under way, before the plants can be harmed by drought.
North Dakota farmers this year sowed 3.2 million acres with corn, triple the acreage of a decade ago. This was due to the development of a local ethanol market and new seed varieties from Monsanto Co. and Dupont Co. that are better able to withstand the state’s harsher climate and shorter growing season. Nationwide, plantings were at their highest since 1937.
The state’s good fortune this year is based partly on disastrous conditions in 2011, when floods prevented many farmers from planting. Near Mohall, about 25 miles south of the Canadian border, Jeff Oberholtzer only seeded 7 percent of his land last year as mud almost swallowed any equipment he tried to put in the field. Yet the floods left moisture deep in the soil, ready to withstand drier days ahead.
“The soybeans and corn are all looking pretty good,” Oberholtzer said. “We’re seeing flowers on the beans and the spring wheat, the corn tassels are just starting to pop through. This is only the third year we’ve been growing corn, but it seems to be a good fit.”
Smaller crops elsewhere mean higher prices for areas where plants have flourished. Robert Tweeten, a Washburn, North Dakota-area farmer who irrigates some of his corn with water from the nearby Missouri River, said he expects a “better-than-average” crop that, with an extra inch of rain in the next 10 days, could improve further.
Fertilizer, seed and other production costs in central North Dakota add up to about $4 a bushel. At prices that may easily double that, a 1,000-acre field with a yield of 120 bushels an acre -- a good year in North Dakota -- would bring almost $500,000 in profit, about $100,000 more than the return using last year’s average price.
That will allow farmers to buy new equipment and pay down debt.
“But it’s happening on the back of another farmer” in another part of the country, Tweeten said. “That’s how it works. The drought down there has made our prices better, so it becomes our good year and their bad year.”
And weather patterns are fickle, said Clark Coleman, who raises corn, barley, sunflowers and other crops about 15 miles north of Bismarck. The drought hasn’t yet hit North Dakota hard, but it’s spreading, and that’s making it more likely he’ll cut back on corn in favor of more drought-resistant sunflowers next year.
For now, Coleman said he’s been blessed with enough moisture to make it through the critical pollination stage that ensures an adequate harvest. The corn is starting to get drier, yet its deep roots in the subsoil should ensure a decent crop, he said. And the condition of his malt barley, used for alcoholic beverages, is excellent.
“The beer should be good,” he said.
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