Drought '99 Ohio State University Extension August Brings Uncertainty for U.S. Crop Size, Prices, July 29, 1999 By Steve Zolvinski COLUMBUS, Ohio -- Although some Ohio farmers may be financially hurt due to drought-damaged crops, the final arbitrator of national crop size and prices will be the Corn Belt's weather conditions in August, said Carl Zulauf, agricultural economist at Ohio State University. So far, other Midwestern growing areas are on their way to very good corn and soybean yields, which would keep prices depressed for a second straight year, Zulauf said. But there's still uncertainty as the growing season moves to August, which is notorious for dry, hot weather that can lower yields. Zulauf said a national 5 percent reduction in production could bring some price recovery due to the current reasonable carryout levels of corn stocks. The United States is projected to have 70 days of corn supplies by harvest, compared to a 202-day surplus in 1987 during a period of historically high crop surpluses. "If you have a drop in yield by 5 percent, which is a minor drop, you would take 450-500 million bushels off the corn crop, and that would change the carryout situation enough for prices to strengthen," Zulauf said. Any potential dry weather in August could also affect soybean prices, although the impact would be lessened by a projected soybean carryout that is large by historical standards, Zulauf said. Nationally, the U.S. Department of Agriculture's crop conditions report going in to the last week of July rated 65 percent of soybeans and 70 percent of corn as good to excellent. Those ratings were almost the same for one year ago, which turned out to be an outstanding crop year with the second-highest national corn yield ever. "It doesn't appear we're off the trend line compared to last year's production," Zulauf said. "Obviously that could be affected by what happens in August. "In contrast, Ohio crops are definitely affected (by drought), but the losses are not widespread throughout the state." At the higher end of the scale, the USDA rated 56 percent of Ohio soybeans and 48 percent of corn as good to excellent. On the lower end, the USDA rated 12 percent of corn and 18 percent of soybeans as poor to very poor. In comparison, during mid-September of 1988 and 1991 -- the last major drought years in Ohio -- 51 percent and 36 percent of Ohio's corn crop was rated poor and very poor, respectively, Zulauf said. The 1988 corn yields were about 30 percent below trend line, while 1991 yields were about 20 percent below trend line, he said. Zulauf said the fact that the nation as a whole has not been affected by drought increases the income stress for those farmers who have experienced losses. "There will only be a small increase in price to compensate for the loss in yield," he said. Zulauf said that demand is reasonably good, especially for corn. However demand is not much of a factor in setting prices during the summer. "It's very unusual that demand would be a major factor in pricing right now." Meanwhile, the USDA's Aug. 12 crop production report should give a better idea of the extent of yield damage in Ohio as well as the size of the national crops, Zulauf said. The August report should be more accurate than usual because the early planting and hot weather has the corn and soybean crops ahead of normal development, Zulauf said. The early crop development also reduces the possibility of damage from frost. -30- All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status. Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension. TDD No. 800-589-8292 (Ohio only) or 614-292-1868   | C.O.R.N. | Newsletter | Ohioline | Publications |