12-27-2012 10:15 AM
Article on the Drought in Iowa. Last year we went into the growing season with ok subsoil moisture levels and that is why our corn yields were much better than many of us thought they would be in 2012. In northern Iowa we probably only lost 50bu/acre or so, but there were many areas that suffered much worse than a 50bu yield drop. Unless we get way above moisture levels before planting in 2013, we will be in a sorry state of affairs for pretty much the entire state. If we have another 2012 Drought situation in Iowa, again in 2013, we will suffer extremely large yield drops. Makes trying to hedge new crop corn for the 2013 crop year.a little difficult. I usually try to hedge or foreward contract 25% of my corn crop before the mid-July time period. If I do that and we do suffer another drought, well, that would probably be the wrong thing to do for the 2013 Marketing year. Yes, it will be a jolly good time trying to make decisions on new crop. Suppose we can forward contract physical corn and then buy Call Options to protect our upside if the drought does appear again. Guess you could say the Call Options ould be a Drought Insurance Policy. Oh well, every marketing year is different. Article is below:
Iowa blizzard helps ease drought status slightly
The pre-Christmas rain, snow and ice storm that struck Iowa last week improved the state’s drought situation slightly, although 90 percent of the state still remains under “severe” or “extreme” drought according to the latest U.S. Drought Monitor.
The “severe drought’ category which covered 69.1 percent of Iowa last week has been lowered to 58.4 percent through Christmas Day. The “extreme drought” status which covered 41.8 percent of Iowa a week ago now covers 32.1 percent.
Northwest Iowa remains the hardest hit area while parts of eastern Iowa have returned to a mere “abnormally dry” status.
Corn Belt states east of Iowa have seen some relief from the drought
Climatologists and agronomists say that precipitation after Dec. 1 usually has little value because the ground is frozen. But Iowa’s relatively warm December – until this week – had left soil temperatures slightly above freezing going into the storm that began a week ago.
While Iowa faces the rest of the winter partially locked in severe or extreme drought status, much of its fellow Corn Belt states of Ohio, Indiana and Illinois have received substantial relief due to heavier fall precipitation.
The Drought Monitor is a joint project of the U.S. Department of Agriculture, the National Weather Service and the University of Nebraska-Lincoln.