Prime Iowa, Minnesota Corn Country Faces Drought

Prime corn-growing regions of Iowa and Minnesota are facing challenges similar to the last major drought in the region in 1988, causing some growing concern in a year starting with tight corn supply.

Some of the more productive parts of northwest Iowa and southern Minnesota are under pressure, and there's little relief seen to be coming at this time.

While the weather this year is in fact very similar to 1988, the one difference is it is happening earlier than that disastrous year, and so has more time to rebound if wetter weather arrives.

Of course if that doesn't happen, there will be some production and supply problems emerging from the area. If it continues, expectations are parts of eastern Nebraska could be affected as well, and it could spread from there; although that is more the worst case scenario.

In 1988, on average, the drought resulted in about 25 percent less yields for corn.

One major change in corn farming since than has been more drought-resistant corn seed, which should help alleviate some of the effects of dry weather.

That would make it better than 1988, but it would still have a major impact if the weather patterns don't change.

You can see on the map how conditons look at this time.

Weather Driving US Corn Crop Quality Down

The weather continues to be the story for crops across the world, as the U.S. continues to be hit by hot, dry weather for the last couple of weeks, raising questions as to where it'll be at harvest.

Weather patterns aren't expected to change any time soon either, as the outlook is for the same weather conditions to continue.

Quality is the highest concern, as bad weather could lower the level of starch the plants send to the kernal.

Corn futures for December delivery increased 2 cents, or 0.5 percent, to finish at $4.20 a bushel in Chicago, ending the week at a gain of 3.3 percent.

On Thursday corn reached its highest levels since June 15, 2009, going as high as $4.39 on the most-active contract.

The USDA said this week the amount of corn planted this year is lower than projected.

Corn Plunges to Lowest Level in Seven Weeks

Corn plunges as expected, as it was known if wetter and dryer weather was forecast, the price of a bushel would come under pressure, after a period of consistent gains.

Already a number of corn fields, and other crops, have received almost 2 inches of rain, with other expected to get at least 1.25 inches up to 2.5 inches this week.

Over the next week there is no hot weather expected in a sustainable manner, making it almost perfect growing conditions for corn.

“The market is taking out the weather premium after weekend rains boosted crops in areas that had been dry,” said Greg Grow, the director of agribusiness at Archer Financial Services Inc. “Forecasts this week are wetter and a bit cooler than expected.

Corn futures for December delivery plunged 13.25 cents, or 3.3 percent, to $3.94 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since the latter part of May.

Wheat: Argentina Wheat Market Crumbling

Although a number of crops are failing in Argentina, including corn and soy, wheat is also participating in the destructive drought that is crushing the entire agriculture sector of Argentina.

The commodity grain sector hasn't moved with the metals market, as demand for everything is down, even though people still need to eat, as well as their livestock.

This is particularly difficult for Argentina, who is one of the top exporters of grains in the world, and so depend on so much on it for the welfare of the country.

At this time things are so bad that farmers have given up trying to salvage their wheat crop, and instead are focusing on saving their cattle. Even if the cattle are saved, they will be difficult to breed because of the lack of food for them.

According to farmers in Argentina, wheat fields are as dried as they can be, with little hope of salvaging a wheat crop, as there is little to put in storage.

Unfortunately for everyone involved, the wheat planting, wheat yield and wheat harvest around the world has been huge, and so the drought in Argentina is hurting them without benefiting anyone else.

Even though farmers in the U.S. were hoping to get some of the trade usually done by Argentina with Brazil, it looks like it won't have much impact on wheat exports from the U.S., and so Argentines will be the ones to suffer.

So in spite of this, wheat futures aren't moving much because of this, although there was a slight move upward recently based on wheat news from the country. But it's not sustainable.

Weather predictions in the country are, as usual, contradictory, and so some say the drought will end with rain coming, and others say it won't amount to much. Either way, wheat farmers in Argentina, and its people, are in for a long struggle as grain prices continue to fall.

For Argentina, this is the worst year for drought and lack of rain since 1971, and even if there is a major change in the weather patterns, the wheat harvest will be way down, as wheat production grinds to a halt.

Along with the wheat crop, other crops suffering are corn and soy, with silos there to store the crops are in many cases empty or half full.

Even though soy is down, it is still on the positive side, and is projected to increase in production by 7 percent. The corn harvest will fall by about 27 percent, and wheat production will be hit the most from the poor growing season projected to plunge by 44 percent over the 2008-2009 harvesting season.

Grains are so scarce in the country, that the Argentine government is has even lowered the minimum weight requirements to slaughter cattle so the farmers can make some money off them before they are worthless or die.

It'll take some time to recover from this wheat disaster, as Argentina will suffer probably for a couple years or more trying to come back from this natural disaster.

In a normal year this would have boosted wheat prices tremendously, but the wheat harvest has been so plentiful globally, that it will easily absorb the losses without making a difference in wheat prices.

Dry Weather in Argentina Pushed Corn Prices Up Slightly

Dry weather in Argentina gave corn prices a boost today, after falling to their lowest level in a month yesterday. Argentina is only second behind the U.S. in exporting of corn.

Projections are the conditions in Argentina will continue, as expectations are that less than 1 inch of rain will fall in the major agricultural regions of Argentina over the next couple of weeks.

Corn responded by moving up as high as $3.695 a bushel on the Chicago Board of Trade in electronic trade, while closing at $3.66-1/2 a bushel.

Wheat Rises on Forecast for Dry Conditions in U.S. Great Plains

With dry weather expected to continue in the great plains, wheat rose for the second day in a row, as the winter crop is coming out of dormancy.

Both western Kansas and Texas, along with the Oklahoma Panhandle haven't received rain for two weeks, and there isn't any precipitation expected in the next five days either.

Meteorologists say the severe draught, which extends from Texas to the Canadian Prairies threatens the crop this year.

It is also expected that dry weather will expand to the central midwest from April through August, further disrupting wheat yields.

The U.S. Department of Agricultue said in a report on March 11 that global wheat inventories could fall to 110.4 million metric tons by May 31, with U.S. inventories possibly plunging by 6.6 million tons. That's a 47 percent drop from last year.

July delivery for wheat futures increased by 2 cents to reach $9.525 a bushel on the CBOT.