The U.S.D.A. corn production forecast out today calls for a 13% drop from 2011 with a projection of 10.8 billion bushels due to drought conditions across the country. Members of the Iowa Corn Growers Association spoke with reporters about the estimate today.
Iowa Corn Growers Association president, Kevin Ross, says the U.S.D.A. report is not a surprise. “We’ve been paying attention to the other large economic estimating companies out there… and we take a lot of those into consideration. I would say that these numbers are not a major shock from anybody who has been watching that stuff.”
Dick Gallagher is from southeast Iowa and says the wide variety of crop conditions make it tough to nail down an estimate at this point in the growing season.
“It’s hard to absolutely determine right now for the simple reason, it depends on what the weather is the rest of the season,” according the Gallagher. “And I think the one real variable factor that will be making a difference in this is what the kernel size is and what the test weight of the corn is. And that’s to be determined yet.”
The drought and the drop in the corn production estimate has some calling for suspension of the mandated amount of ethanol mixed into gasoline. Ross says corn producers support the ethanol industry, and he says there is a one year lag in the corn that’s being used, so crop being used for ethanol right now is from last year.
“From a farmer standpoint, from an organizational standpoint, we don’t want to see a long term impact to the demand that we’ve built from a short-term situation. We certainly believe that this is a one-year problem, we certainly hope so, I can’t control the weather, just like anybody else,” Ross says. Ross also raises cattle and he says one thing people overlook is the importance of the byproduct from ethanol production that’s used to feed cattle.
“You get around a third of the bushels back in extremely high quality feed, and that feed has also built a large demand base, and that’s where we need to keep an eye on that too,” Ross explains. “Because people in the markets and feed industry really, really like dried distillers grain — as much as you might not hear about that — that’s a big deal.”
ICGA vice president, Bruce Rohwer of northwest Iowa says the crop forecast is just an estimate and ethanol production shouldn’t be changed until there are more concrete facts. “There is a process in the (renewable fuel) standard by which things are able to flex and respond to crop needs, and at this point we are still working off of last year’s crop, which is ample,” Rohwer says.
“We need to get this crop harvest to see what is really is going to be the case out there as far as what the final number is.” Gallagher does not believe there will be an immediate impact on food prices from the drought.
“Short term I don’t think that should happen, as we start getting into next year, that’s a possibility because of the markets,” Gallagher says. “The demand is doing what it’s expected to do…there’s cutting back in ethanol, there’s cutting back in exports, there’s cutting back in meat production, livestock production. And so I would say, that if you see any significant part, it ought to be next year. If you see some this year there could be some other cause there that I do not want to address today.”
The U.S.D.A. report said Iowa’s corn yield will drop to 141-bushels-an-acre which would be the lowest state average since the 138 bushels-and-acre in 1997. The harvest averaged 172 bushels-an-acre in 2011.