CHICAGO, Apr 19: Torrential downpours across a broad swath of the US Midwest this week are easing the worst drought in more than 50 years, flooding streams, snarling river transportation, stalling corn plantings – and changing the outlook for the American farm economy in 2013.
The Army Corps of Engineers is closing locks along a 150-mile stretch of the Mississippi River from roughly Davenport in Iowa to Hannibal, Missouri. Barge traffic was backing up yesterday, as water levels were too high for barges to take on grain.
The Mississippi and other major rivers are expected to begin cresting Sunday – and likely will run over levies in some areas. That is a sharp reversal from as recently as January, when low water levels disrupted the main water thoroughfares that bring grain from the nation’s breadbasket to the world’s markets.
‘These rains are really helping bring most areas out of drought status. And the rain encompasses all of the western Corn Belt that was previously dry,’ said Don Keeney, meteorologist for MDA Weather Services, a widely followed commercial forecasting firm.
If the drought is ending, it would represent a sea change for the farm economy, where expectations for another dry summer had been baked in. Continued rainy weather could further delay spring plantings, cause a sharp fall in the price of farm commodities, and lower the cost of everything from hog feed to cereal ingredients.
Lower feed prices would help livestock and dairy producers, but soft grain prices could cut into farmers’ incomes and perhaps even cause farmland values to retreat from recent record highs.
An end to drought conditions would bring a burst in economic activity across the agriculture industry – from farmers in the fields to those operating grain elevators, processing companies and shippers.
‘If in fact the drought is easing, and if we are migrating to a situation that might afford better yields, to my mind, for the full value chain, it’s a godsend,’ said Bruce Scherr, chief executive of agribusiness analytics firm Informa Economics. ‘Another year like last year would be devastating.’
The 2012 drought brought corn production to only 10.8 billion bushels, a six-year low, with yields reaching a 17-year low of 123.4 bushels per acre. The production losses added to the impact of rising exports to China and domestic demand for ethanol production to drive corn prices on the Chicago Board of Trade to an all-time high last August.
Farmers filed a record $11.8 billion in crop-insurance claims, according to Agriculture Department data. And farm income fell last year by 3 percent from a record set in 2011.
TRANSFORMATION
‘Isn’t it ironic that all winter we’ve been worried about dry soil, and all of that has changed in a period of four or five weeks,’ said Rich Feltes, vice president of research for Chicago commodities brokerage RJ O’Brien.
Drought conditions persist in the southwest corner of the US Plains where hard red winter wheat is a dominant crop. Southeast Colorado, southwest Kansas and the Panhandles of Texas and Oklahoma remain dry, Keeney said. The western states of Kansas and Nebraska would need another 2 to 4 inches of rain to end the drought, he added.
In the western Great Plains, where some areas have experienced three years of dry conditions that have eliminated subsoil moisture, even a flurry of steady showers may not cause the drought to break. ‘We just have very serious drought issues and we will not be able to eliminate them overall,’ said Dennis Todey, state climatologist with South Dakota State University, during a National Weather Service drought update call on yesterday. (AGENCIES)
Follow our WhatsApp channel