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Despite Heat, Record Kansas Corn Crop likely - 8.17.2010

TURON, Kan.  - For some Kansas farmers, this year's fall harvest will be either feast or famine.

Sure, Kansas is looking to become a corn state, with farmers expected to harvest the biggest corn crop ever with 692.2 million bushels, according to the Kansas Agricultural Statistics Service. Moreover, some of the state's elevators could bin more corn than the state's staple crop of wheat this year.

At Haw Ranch Feedlot near Turon, employees began cutting the feedlot's corn for silage the middle of last week - about two weeks earlier than usual, said manager Mike Holley. The silage was drier than he would have liked - running at 62 percent moisture - about 10 percent lower than he would like.

"The heat has advanced everything," he said.

That also includes harvest of high-moisture corn and dryland corn. A few combines circled Reno County fields Thursday and Friday last week. Holley, however, said his feedlot wasn't taking wet corn until today.

A Rice County producer cut 150 acres of dryland corn Saturday that averaged 15.4 percent moisture. Meanwhile, rains across south-central Kansas Sunday will halt harvest for a few days and give some reprieve to crops still maturing.

The Kansas Agricultural Statistics Service also reported last week that fall crop conditions continue to decline because of the heat and lack of moisture. The corn crop, 15 percent ahead of the five-year average, is rated as 9 percent poor, 28 percent fair and 63 percent good to excellent by the KASS. About 60 percent of the soybeans and milo are estimated at good to excellent.

"There are some areas where the corn is burning up and the grain sorghum is showing signs of intense heat stress," said Kent Martin, a southwest Kansas agronomist with Kansas State University Research and Extension. "What hurt us the worst with a lot of these crops, when we were pollinating a lot of these crops it was in the 100-degree weather."

The heat stress could mean lower test weights, he said.

While some corn and grain sorghum crops are hanging on, Martin noted soybeans are suffering.

Tom Giessel, who farms in Pawnee County, said the last decent rain came Fourth of July weekend when his fields received 1.40 inch. A sporadic rain left about a half inch on some fields mid-July.

"But we're going a month now without rain combined with 100-degree temperatures and scalding winds," he said.

Other areas are "looking good," Martin said. That includes areas of northwest Kansas that received rainfall throughout the summer.

Reports from farmers in northwest and areas of west-central Kansas are that yields could reach upward of 130 bushels an acre for dryland corn.

"It's looking like a good fall harvest, thanks to the rain," said Duane Schneider, who farms in Greeley County. "The heat in July didn't help, but it seemed like we had enough rain that we kept it going."

Some areas of Greeley County received 3 inches of rain the first week of August while most of the state remained dry, KASS reported.

Giessel said he planted his corn crop earlier, which should help him harvest a decent corn crop. And Joe Schauf, general manager of the Nickerson-based Farmer's Coop, said most of his territory's crop also was planted early enough that, despite the excessive heat, yields should still be higher.

In fact, he said, there is a good chance the cooperative will take in more corn than wheat.

The 2010 Kansas wheat crop is pegged at 369 million bushels. Farmers are expected to reap a record 692.2 million bushels of corn, which would surpass last year's record crop of 598.3 million bushels, according to KASS.

With an extended fall harvest from an usually wet fall, and too wet of conditions to plant wheat, Kansas farmers planted 4.7 million acres in corn this spring, the highest planted acreage for corn in the state since 1936, the agency reports.

Fears of a global shortage for grains like wheat are a boon for Kansas farmers, who could reap the benefits of a nearly $3 jump in prices since the middle of harvest.

In fact, at Garden City Co-op's elevator branches across southwest Kansas, farmers already have sold 75 percent of their wheat crop -- an unusually high amount, said Ken Jameson, vice president of the cooperative's grain division.

"Normally, we wouldn't be at this percentage bought up," he said. "It would be March before we'd have this percentage of the wheat crop sold."

Wheat prices at Garden City were $6.35 at the close of market Thursday. Prices at many of the state's elevators in June reached a low of nearly $3.50. In Hutchinson, prices at local elevators were hovering around $6.70.

Prices soared to the highest in two years after Russia announced it would ban grain exports for the rest of the year after drought and wildfires destroyed 20 percent of its wheat crop. Top that with dry weather in Europe, as well as an influx of money coming in from speculators, said Jerald Kemmerer, general manager of Dodge City Coop.

He noted customers of his cooperative chain have sold 75 to 80 percent of their crop, as well, in the past 40 days.

"The tip in the market has brought the sellers out, which has been a good deal for co-ops if we can get transportation to move out (wheat) for fall harvest," he said, adding that there is a demand for railcars.

His elevator took in about 9 million bushels of wheat in June.

Hey, we'll plant more

The steep spikes in the wheat market are changing farmer attitudes, said Dave Studebaker, general manager of the Delphos Co-op Association.

"Three weeks ago, we had farmers telling us they're going to cut back on wheat," he said. "Today, we've got farmers telling us they're going to plant more."

Thursday's market closed up 54 cents a bushel for wheat, which pushed Delphos Co-op's cash price to $6.32 a bushel. At harvest in June and early July, the low price dipped to $3.44 a bushel.

At the Cargill Ag Horizons grain terminal just west of Salina, the price jumped Thursday to $6.50 Thursday, up 431/2 cents a bushel.

While the soaring price has created "a lot of interest" among farmers in the Delphos area, Studebaker said not many can take advantage.

"Most of the wheat is sold. That's the sad news," he said. Many sold their wheat from $3.90 to $4.10 a bushel.

"A lot of wheat got bought at harvest time at lower prices," Studebaker said.

Looking to cash in

What's good about these market changes is an expectation that a better export market will develop this fall, he said, and a number of grain speculators are looking to cash in.

"They're taking money out of Wall Street ... and putting it into better investments," Studebaker said.

Looking ahead for farmers, he said there are forward-contracting opportunities.

"They can lock in some higher prices next year, on a least a portion of what they're gonna raise," Studebaker said.

He predicts the market could influence another 10 to 15 percent increase in wheat acres planted this fall, especially on fields currently planted to soybeans. If they're harvested in time, they could be double-cropped to wheat.

"We didn't see that happen a year ago because the beans all got caught to late," Studebaker said. "This year, we're having more normal (hot) temperatures."

They're nervous in Russia

Among the world's largest exporters of grain, Russia said the ban would run from Aug. 15 through Dec. 31 and could even be extended into next year if necessary.

Prime Minister Vladimir Putin announced the ban, which in addition to wheat and wheat flour covers barley, rye and corn, at a Cabinet meeting Thursday, saying it was necessary even though Russia has sufficient reserves.

"We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for next year," he said during the televised meeting. "As the saying goes, reserves don't make your pocket heavy."

Most of the damage to Russia's wheat crop has been caused by the drought, one of the worst in decades as much of the country suffers through the hottest summer since record keeping began 130 years ago. But wildfires raging through western Russia have spread into farmland and there are fears that more fields will be lost.

Other grains rally, too

The rally in wheat Thursday is also helping drive up prices for corn, oats and soybeans. All in all, that's good news for Kansas farmers, who, coming off the heals of a bountiful wheat harvest, will help make up some of the shortfall in exports from Russia and other countries with damaged crops such as Ukraine, Kazakhstan and Canada.

Experts, including Kansas State University Agriculture Economist Dan O'Brien, say the United States, Argentina and Australia will gain the most from the spike in wheat prices because Canada and the European Union are not expected to have abundant harvests this year.

In June, prices were lower amid swelling world stocks at an all-time high, due in part to a bountiful production by key wheat-producing countries and new production by countries that historically have not grown wheat.

In June, O'Brien reported wheat carryover in the nation's elevators went from 13 percent in 2007 to about 47 percent this year.

The last time wheat prices were above $6 a bushel was in June 2009. Wheat hit record highs in early 2008, with prices in Hutchinson recorded at $12 to $13 a bushel that March. Prices stayed above $8 and $9 a bushel for much of the June 2008 wheat harvest, thanks to short world supplies.

Prices, however, continued to fall through much of 2010, until recently.

Not all were able to reap higher prices, however, Kemmerer said.

"Some of they guys, they're frustrated," he said. "They sold earlier."

The heat's hurting here

While Russia is hurting, so is some of Kansas' fall crops, said Jameson, noting that even irrigated corn, amid the searing heat, isn't keeping up with water requirements.

Meanwhile, Jameson said, Windriver Grain of Garden City, a company the cooperative is a part owner, is busy shipping train cars full of wheat to the Gulf.

"This does have us scratching our heads," Jameson said of the whirlwind of activity in July and early August. "It's been a very busy summer."