Corn Crop News Turns DourSubmitted by JMB Financial Managers on August 20th, 2019
The 2019 corn crop looks set to go from bad to worse, which should boost prices of the grain at the grocery store, in addition to pushing the cost of beef, chicken, and pork higher with it. In fact, the combination of a weather-related planting delay, lower-than-forecast crop yields, and the probability of fall frost could conspire to produce a double-digit increase in costs.
The potential harvest already looks problematic, and that doesn’t even consider the weather factors. Planting was delayed by epic rains in key states this year, causing many farmers to miss the planting season, which means the crop will be relatively small. (The U.S. is forecast to produce 352 million metric tons of corn this year, down from 366 million last year, according to estimates from the U.S. Department of Agriculture.)
However, that may overstate the actual harvest. Earlier this year, analysts and traders criticized this year’s crop survey. As a result, the USDA is rerunning the survey and will release a new report on Aug. 12. Critics think that the revised report will show even fewer acres planted with less corn per acre growing on each field.
But that’s only the beginning. The late planting means the crop’s maturity is far behind its usual growing schedule. By now, almost all of the corn has started its silking stage. Yet on Aug. 4, only 78% of the planted crop had reached the silking stage, versus 95% on the same date a year ago, according to USDA data.
Then there’s the weather. After silking, it takes an average of about 60 more days for the crop to reach maturity. It can take longer if the weather is cooler, and immature plants are susceptible to frost damage. Unfortunately, this year is more likely than usual to bring a cold snap in the fall because the number of spots appearing on the sun’s surface is nearing its cycle lows, which tends to coincide with colder weather.
Stay tuned, and be prepared to add to your grocery budget later this year. If you need assistance evaluating how this could impact your budget, set up a quick call with me today!