Like a firecracker on the 4th of July, corn and soybean prices are set to explode. Continued hot, dry weather across a widening area of the Corn Belt is fueling the fire. The July 2012 corn futures contract traded at $7.01 on Tuesday July 3 and July soybean futures traded at $15.48 per bushel.
Knee-high by the 4th of July is an old adage from decades ago that used to describe how far along the corn crop had to be by Independence Day to make a good yield. This summer on July 4th corn was well-beyond that stage, as many fields in the Corn Belt were already tasseling and silking. The problem is they are running out of water and dying in areas south of Iowa. The severe drought area includes most of Missouri, and it stretches from central Illinois down through southern Illinois, the southern half of Indiana, and into Kentucky and Tennessee and part of Ohio.
So far, Iowa crops are in better shape than neighboring states to the south and east. In Iowa, however, farmers in the south central, southeast, central and east central regions have crops that are thirsty and there's little or no reserve moisture in the subsoil. Farmers are comparing this summer's dry conditions and 90 to 100 degree temperatures to the summer of 1988, the last time severe drought ended up blistering a large part of the state.
Chance of getting a big U.S. crop in 2012 is withering away
Iowa State University Extension climatologist Elwynn Taylor released results of his new analysis of the drought situation on July 3. He conducted a special study of conditions in key crop reporting districts in major crop producing states across the Corn Belt. His analysis indicates a very real possibility of a U.S. corn yield average this year that, based on current conditions, looks like it could be significantly below the trend line.
Taylor notes that water stress begins at 86 degrees Fahrenheit, according to 10-year-old research on corn in the Midwest. He says this is better stated as: "At temperatures above 86 degrees F, corn plants reach the early stages of moisture stress more than 50% of the time. This does not apply to irrigated crops. Specifically, it applies to non-irrigated corn in the Midwest."