It took a while for grain traders and investors to realize the extent of the damage from the derecho that passed through the Midwest last week, but it’s clear now that the destruction was massive and widespread.
Still, the full extent won’t be known until farmers try to harvest this crop, market analysts said. The corn, which seems to have suffered the most, was green, so if it can, it will try to straighten up again, the analysts said.
That could, could, make it possible for the grain to mature and be harvested, an analyst said. However, it seems clear that some will not mature or be harvested, although crop insurance companies will make them try.
Wikipedia says a derecho, from the Spanish, means “straight” as in direction. In this case, it is “a widespread, long-lived, straight-line wind storm that is associated with a fast-moving group of severe thunderstorms known as a mesoscale convective system and potentially rivaling hurricane and tornadic forces.”
PICTURES TELL SAD TALE
The internet and social media are replete with pictures of storm damage, often showing flattened fields, destroyed grain bins, as well as downed trees and power lines.
However, just focusing on the pictures often can give a slanted view of the damage from storms. A long-term private crop scout once said that he had finally convinced grain traders in his firm that hail storms more often do more good than harm since the rain that comes with the storm is more widespread and beneficial than the localized hail. Yet the hail gets the press.
But the pictures keep coming, and grain futures traders in Chicago have pushed corn futures prices $0.23 ¾ a bushel since the storm. The New York Times reported that as many as 14 million acres of farmland may have been damaged by the storm.
DAMAGE ASSESSMENTS DIFFER
Even a week after the storm, assessing the damage to the US corn crop is tough. Some feel the damage may be extensive, and for the worst-hit farmers this will be the case.
But the Farm Journal’s Ag Web quoted Jarod Creed of JC Marketing Services saying a damage estimate of 10 million acres may be a little too aggressive. This many acres may have been affected, but about half would have been planted to soybeans, which seemed to weather the storm better than corn.
The end result could be a production reduction in Iowa of around 150 million bushels, but the August USDA report raised its US corn production estimate by 100 million bushels.
The biggest problem may be to the grain storage capacity that was lost. There is no way to count the lost storage capacity yet without going town by town and farm by farm.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains last week at $103 to $106 per cwt on a live basis, up $3 to $4 from the previous week. Dressed-basis trading was done last week at $168 per cwt, up $4 to $5.
The USDA choice cutout Monday was up $3.02 per cwt at $217.26, while select was up $2.65 at $201.94. The choice/select spread widened to $15.32 from $14.95 with 86 loads of fabricated product sold into the spot market.
Six heifer contracts were tendered at zero for delivery Monday against the Aug live cattle futures contract. Six heifer contracts also were retendered at two.
The CME Feeder Cattle Index for the seven days ended Friday was at $142.20 per cwt, down $0.05. This compares with Monday’s Aug contract settled of $142.72 per cwt, down $1.20.