Drought Impact Uncertain On Ag Retail

It’s funny how different one year can be from the next. Last year at this time, the ag community was buzzing about how the extremely wet spring was hurting late-planted corn yields. In the end, however, the harvested acreage ended up being in line with early expectations.

In 2012, rain hasn’t been the problem – it’s heat. According to the most recent data, more than half the country (56%) is experiencing drought conditions. And while corn crops in places such as Iowa and Ohio seems to be doing fine, corn in states such as Indiana, Pennsylvania and Illinois is suffering. In fact, according to USDA, only 19% of Indiana’s corn crop is rated good to excellent. Nationwide, the agency predicts that corn yields will be off approximately 10%, which could translate into 9 million lost bushels.

If there is a silver lining to this news, it is that corn prices are staying near historic highs. Many analysts forecast that another bumper crop in 2012 would depress prices going into 2013. However, if only 80 million bushels of corn come in at harvest time instead of 90 million, that won’t happen.

But how this could impact ag retailers remains to be seen. Less corn will likely mean less fall activity for many grower-customers. Furthermore, if some of these switch from corn to other crops for the 2013 growing season, there could be less demand for fertilizer this autumn as well.

Right now, there’s still a chance that some cooler weather and rain will keep the nation’s corn crop from losing much more yield. But as with everything that involves Mother Nature, we will just have to wait and see.

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