Elwynn Taylor, ISU climatologist, doesn't expect 2006 corn and soybeans to equal the yields across the
"The risk of severe drought is not extremely high at this time," he says. "But the odds of having weather this summer that will result in yields that are below the trendline are favored for 2006," says Taylor. "The last widespread drought in the
Odds increase for drought
The risk or odds of having a major drought in the
Weather impacting futures prices
Looking at deferred corn contracts in the $3-plus range on the futures market, are market advisors anxious to have farmers lock in some sales at these prices? Or is it too early to be pricing ahead for the 2007 and 2008 crop?
"I think a case can be made for locking in such prices on some of your expected corn production," says ISU economist Bob Wisner. "However, I suggest caution. Elwynn Taylor, ISU Extension climatologist and others have been telling us for some time now that
Also, with extremely rapid growth in ethanol demand, if we run into weather problems next year or the following year, we could see a sharp run-up in corn prices, adds Wisner.
Forward price some 2006 corn now?
The threat for another run-up in crop prices is possible. Distant corn futures have already discounted a substantial amount of that into prices. In fact, there is a bit of a weather premium now in the market, particularly out to 2008, notes Wisner.
The last major widespread drought across
Wisner is cautious about those deferred futures contracts. They look like low-hanging fruit. Other market analysts agree with Wisner. Tom Pfitzenmeier of Summitt Brokerage in