After Skirting Disaster, U.S. Corn Crop Thrives

By David Streitfeld

After a worrisome start to the growing season that fanned fears of food shortages and huge economic losses, corn, the most important crop in the United States, is now on track for a bountiful harvest.

The U.S. Department of Agriculture on Tuesday forecast the second- highest corn yield on record, with production of 12.3 billion bushels, or about 600 million bushels more than it had expected earlier in the summer.

“We dodged a bullet,” said Bill Nelson, a grains analyst at Wachovia.

As cool weather in April and downpours in May gave way to widespread flooding in June, prospects seemed miserable for corn. The crop has long been the most important feed used in U.S. meat production, and in recent years it has increased in importance as ethanol made from corn has become a government-mandated additive in gasoline.

Many farmers had to replant their washed-out fields; some ran out of time to do so. Food industry groups went to battle with ethanol interests, saying there was not enough corn for both food and fuel.

Corn futures prices soared to an unheard-of $8 a bushel, triple the price of a few years ago.

Some analysts worried that $9 or even $10 a bushel was possible.

That price would probably have been ruinous to livestock producers and ethanol plants alike, although corn farmers would have been in clover.

But after the floodwaters receded, nature turned benign. In the U.S. Midwest this summer, the weather has been exactly what the tender young corn stalks needed to thrive. “Not too hot, not too cold, not too wet, not too dry,” Nelson said.

Corn prices, which have been falling for weeks, settled Tuesday at $5.28 a bushel, up 11 cents.

The highest corn yield on record was 160.4 bushels an acre in 2004.

The new 2008 estimate of 155 bushels an acre is up 3.9 bushels from the harvest last year. Total production will be lower than the bumper crop of last year, though, because farmers planted fewer acres of corn.

The soybean crop is slightly more of a question mark, since it was planted even later than corn. The government is forecasting a harvest of 2.97 billion bushels, down about 30 million bushels from its earlier forecasts. But that is much better than many had expected in June.

Palle Pedersen, an agronomist at Iowa State University in Ames, said it was too early to tell how the soybean crop would turn out in the state, which was hit hardest in the flooding. “I think the government yield estimates are too high,” he said. “A lot of disease is coming in, killing the fields.”

Soybean futures have also fallen back, although not as much as corn. At the beginning of July, they exceeded $16 a bushel. On Tuesday, they settled at $12.14.

The jump in commodity prices this year became a major burden on livestock producers and other food industry groups, which began campaigning for relief. But their cause has had two major setbacks in the last month.

The Agriculture Department decided not to let farmers take land out of conservation programs without penalty, a measure that would have increased production in 2009. Then the Environmental Protection Agency denied a request by the governor of Texas to reduce for one year the mandate on ethanol production.

Despite the much-improved prospects for the crops, and thus lower prices for feed, the enthusiasm among livestock producers was muted Tuesday.

“The crop report is certainly a good thing,” a National Chicken Council spokesman, Richard Lobb, said. “But we’re still basically just squeaking through. The federal government seems to be relying on a policy of hoping for good weather, not just this year but in the coming years.”

Farmers, who are inherently cautious, are not banking on any good news until after the harvest is safely in the silos.

The government corn yield estimate of 155 bushels an acre is a dream to some of them. Dan Meinhart, a farmer in Effingham, Illinois, said the conditions in his area did not reflect the government’s optimism.

Meinhart had to replant nearly all his corn and beans after the rains washed them away. He is expecting a corn yield of 130 bushels. The beans do not look great, either.

“Spanish needles are blooming already, and the old-timers say that means it will frost in six weeks,” Meinhart said. “We need at least 8 to 10 weeks to get the crop in.”

Originally published by The New York Times Media Group.

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