$10 Corn and $20 Soybeans to Pit Food Against Fuel
The average corn yield in the United States this year could drop to as low as 115 bu./acre and the soybean yield could drop below 37 bu./acre unless it starts raining soon and continues to rain hard every week across a wide swath of the central Corn Belt. If yield damage is as extensive or worse then analysts think, corn prices could break through $10/bushel and soybean prices could pierce $20/bushel.
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In two previous droughts, yield losses were greater than 10%. Corn yield dropped 30% below trend yield in 1988 and 20% below trend in 1983. A 20% yield decline would put the U.S. average yield between 130 and 132 bu./acre.
"That is a catastrophe," says Basse. On top of the yield loss, Basse expects 2 million to 3 million acres of corn to be abandoned. "We are finding fields in Indiana and Illinois that will yield nothing," he says.
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The dramatic drop in corn and soybean yields will soon turn into a global food issue. "The markets will not top until we see potential for good rains that can save the soybean crop from a becoming a total disaster and stabilize the corn crop," Roggensack says. Potential average yields between 114 and 140 bu./acre for corn are reasonable using historical studies, he says.
Falling corn and soybean yields will force more feeding of wheat, which could tighten world food supplies further, particularly if a developing El Nino strengthens, causing drought in the Southern Hemisphere’s wheat-growing regions.
http://www.agweb.com/article/10_corn_and_20_soybeans_to_pit_food_against_fuel/
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