Corn Market Drowning in Bullish News

DTNAg -- As I've driven across three states in the past four days, I've seen a lot of yield threats in corn fields, and now it looks like USDA has taken notice, too. The average yield projection used in Tuesday's World Agriculture Supply and Demand tables was dropped 5 bushels per acre to 148.9 bpa.

That's still more than the average yield in 2005, so one has to wonder how seriously those government economists have taken the severe, widespread flooding throughout the Corn Belt and especially in the biggest corn-producing states. The last time we remember a spring like this was 1993, and even then, the flooding was relatively localized at the rivers, not like the ubiquitous mud and ponds noted across the Corn Belt right now. Recall that average yield in 1993 was 100.7 bpa (after 131.5 bpa in 1992 and just before 138.6 bpa in 1994).

So this may be only the beginning of projected yield drops throughout the summer, not to mention the entire question of how much acreage has been lost to flooding or soybeans. The big question is genetics -- how well will today's superior seed technology protect against yield loss? Keep in mind that most seed is selected for drought-tolerance, not amphibious aptitude. Here is my non-exhaustive list of things that are going wrong with corn production:

- Weeds. I've seen a lot of weedy fields in Iowa, Nebraska, and Kansas. It's tough to even get out in the fields, let alone time applications between storms.

- Disease. Michael Cordonnier points out that "standing water and saturated soil are perfect conditions for root diseases and seedling blights."

- Plant population. Many seeds may have been washed out or simply never germinated.

- Nutrients. Some fields are already starting to look a little less verdant than one would expect so early in the season. As the crop matures and requires even more nitrogen, it's going to be a real problem that so much fertilizer has already leached out of the soil.

- Root systems. This is a longer-term concern that we won't see evidenced for quite some time, but Cordonnier also claims, "The corn crop is going to be very shallow rooted, which could be a big problem for the crop if weather would eventually turn dry."

Anything else you can think of that will limit U.S. corn production to even less than USDA's estimated 11.7 billion bushels?