Cornbelt drought appears to spread

The Iowa-Minnesota situation even has experts mentioning one very scary year from the past â 1988. The Register quotes Iowa Stateâ s Dr. Elwyn Taylor pointing out that the weather conditions this year are nearly identical to those of 1988 when the last significant drought hit Iowa and other major corn producing areas. Taylor does point out they are happening earlier this year so there is more time to get rainfall before critical summer periods arrive.

Even the mention of 1988 makes market watchers cringe, though. Iowa's average corn yield in 1988 was 84 bushels per acre, down from 130 in 1987 and 135 in 1986 and 24% below the average of the prior 10 years. Minnesota's was 74 bushels per acre, down from 127 in â 87 and 122 in â 86. The national yield in 1988 was 84.6 bushels per acre, over 25 bushels lower than the year before and 26% lower than the 1960-2010 trend yield for 1988 of 113.9 bushels per acre.

The U.S. average farm price for corn went from $1.94/bu. in â 87-â 88 all the way to $2.54 in â 88-â 89 but we must remember that carryout stocks in the fall of 1987 were 4.259 billion bushels. This year they are projected to be 846 million, one-fifth as large. Taylor believes the culprit is La Nina, the cooling of Pacific Ocean waters west of South America, that began in 2010. The early stages of La Nina drove wetter-than-normal conditions in â 10 and â 11 but the latter stages usually cause dry conditions in the Midwest. If La Nina remains through the spring, Taylor estimates that there is only a 1 in 20 chance of getting enough spring rainfall in Iowa.

So what does this mean? Maybe nothing. Spring rains could come and allay all of this concern and fear. The Cornbelt, though, has not seen significant drought in January since 2006 when conditions in a swath of southern Iowa and northern Illinois were classified as moderate to severe. We â and the markets â are accustomed to entering planting season with PLENTY of subsoil moisture and thus some ability for the crop to survive short dry spells.

Not so this year for the areas noted here. We also know that today's corn varieties are more drought tolerant and will not likely fall 26% short of trend yields even if 1988 conditions develop. But any degree of crop shortage is scary when one begins year with very tight corn stocks.

As seen on marketwatchonline.com