This post is for our farmer clients. So one thing that sent the markets crashing last week was the weather computer models forecasting 1.5 to 4.0" of rain this weekend in Iowa, 4-8" across all of Kansas, Missouri, Illinois. One model actually showed 6-8" for Iowa and Missouri. This system is now exiting the Western Corn Belt with still some rain for MO and IL but this system HAS WAY UNDERPERFORMED! Models have been doing this all through June and continue their overly wet bias which is largely due to a convective feedback problem in the models that make it look like 9 states will get flooding rain. Reality was much different. Remember...droughts bread more drought and heat. Heat makes more drought so while some have been getting rain this Summer (1 June by meteorologists standards), over 60% has not.
Here are some actual totals for areas that are pretty much done with this weekend rain event.
Chicago, IL 0.00"
Sioux Falls, SD 0.00"
Des Moines, IA 0.02"
Rockford, IL 0.07"
Kirksville, MO 0.07"
Clinton, IA 0.15"
Cape Girardeau, MO 0.19"
Spencer, IA 0.20"
Mason City, IA 0.28"
Dubuque, IA 0.28"
Peoria, IL 0.31"
Waterloo, IA 0.45"
St. Louis, MO 0.53"
Cedar Rapids, IA 0.61"
St. Joseph, MO 0.95"
Omaha, NE 1.23"
Kansas City, MO 4.33"
Flooding rains did occur around Kansas City after the hottest/driest June in decades - not sure that helped the crops much.
And now models are coming into agreement that 5-11 July is going to be the #1 or #2 hottest in 25+ years for much of the Western Corn Belt and to some extent the entire Eastern half of the U.S. with a 5+ day heat wave of low to middle 90s. In the areas that missed the rains in June (SD, E NE, W-S IA, N MO, S IL) with near record hot/dry conditions, this is not exactly favorable for crops entering silking and pollination...we don't need to tell you that. Maybe a brief cool down after the 11th and then another heat-wave setting up around the 15th. I recall just a week ago the US GFS model was indicating much below normal temps through middle July - how quickly things changed in model imagination land.
This is just the start as we still expect July and August to be the 2nd hottest in decades and very likely a top 5 hottest in 121 years. Yes we still expect a couple 100F+ heat waves this Summer. Rainfall will be spotty - some winners, many losers so we are still expecting a major corn rally in late July and August and certainly eclipse last year's high of $4.72 and very likely over $5. But, that will take time as the markets expected sub $3 Corn with record inventories so at this point the only thing that saves the day for farmers is a second, bigger, weather induced rally in the U.S. and continued lower yield results in Brazil. Brazil is 15% off early USDA estimates and we still expect the U.S. to trend 8% to 13% less than the USDA's record estimates.
God Bless America's farmers that feed the world and have a great Independence Day!
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- Capt Kirk out.