Markets, Illinois weather are formidable foes facing farmers in 2022

The expression “when it rains, it pours” certainly sums up the weather pattern much of this growing season in Illinois.

Those who received steady rounds of rain absorbed massive downpours that caused extensive flooding, particularly in parts of northern, southwest and southeast Illinois in recent weeks.

Meanwhile, there are farmers in portions of Illinois, and more so in states west of the Mississippi River, who probably still feel like they can’t buy a rain this season.

So, what’s with the extreme disparity in rainfall events? Convective thunderstorms typically generate a wide range of rainfall within a small geographical area, and that’s just what the jet stream is funneling right through the state as the subtropical flow from the south and northern polar jet merge.

“We’re in a region where we’re seeing the two jet streams come together,” meteorologist Jim Rasor said at the Illinois Wheat Association’s summer forum in Okawville (Washington County). “The jet streams are like the train tracks and the storms are the trains.”

And some of the storms that barreled into Illinois on this track dropped close to a foot of rain or more in some areas in recent weeks. Some of the heavy downpours were fed by nearly unbearable humidity, at times.

“We’re already wetter than normal down here (in southern Illinois) for the month because of one rain event,” Rasor said on Aug. 9.

The stretch of extreme rainfall events improved topsoil moisture ratings in the state to 18% surplus, 58% adequate and 24% short or very short as of Aug. 8. Nearly one-third of topsoil moisture ranked short or very short back on July 11.

But there are still areas of the state quite short on moisture. Portions of Champaign County and the southern tips of Alexander and Pulaski were in severe drought as of Aug. 11, according to the U.S. Drought Monitor. Moderate drought also remains an issue in all or parts of DeWitt, Douglas, Edgar, Piatt and Vermilion counties in east central Illinois and in Hancock, Henderson, McDonough and Warren counties to the west.

The weather outlook favors hotter and drier conditions to the north and warm, muggy and wet conditions to the south the next 45 days, with a fairly mild and dry forecast for harvest, according to Rasor.

Long term, the rise in rainfall disparity and extreme precipitation events could persist.

“Climate change is real,” Rasor said. “A warmer atmosphere will hold more humidity and more humidity will make more rain. But we’re also getting extended dry periods in the summer (in between storms).”

Since 1981, the frequency of daily 2-plus-inch rain events has doubled, Eric Snodgrass, principal atmospheric scientist at Nutrien Ag Solutions, previously told FarmWeek.

“The frequency of 500-year flood events is increasing,” he said.

But that’s not the case everywhere, as evidenced by the multi-year drought in the southwest and western U.S.

“For us, we’re getting the rain,” Rasor said. “But other places are getting less.”

In fact, changing precipitation patterns are causing a shift in the Corn Belt, according to Elwynn Taylor, Iowa State University climatologist.

“We’ve been getting increasing moisture in the Corn Belt, including almost all of Illinois. It’s pushing the Corn Belt to the north and west,” Taylor previously told FarmWeek.

The geographical center of the Corn Belt was located over Springfield in 1950, but has since moved to Peoria by 1964, the Quad Cities in the next decade and currently sits close to Des Moines, Iowa, Taylor noted.

“Minnesota was barely part of the Corn Belt (in the mid-1900s) and now is a major part of it (along with the Dakotas),” he said. “The reason is precipitation.”

This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.

Commodity swings give farmers fits

Those who yearn for the “good old days” when daily commodity price shifts were measured in pennies and nickels rather than quarters and even dollars of today should probably just put those memories out to pasture.

Farmers have witnessed more wild swings and gyrations in the markets in recent years than attendees of an Elvis Presley concert back in the day. And that market trend will likely remain in place and could possibly leave some “All Shook Up” in the future if they don’t plan accordingly.

“Volatility is not going anywhere, especially with everything going on geopolitically,” Taylor Pope, commodity analyst with Pope Commodities, told farmers at the Illinois summer wheat forum in Okawville. “We’ve had $1 (daily) moves in soybeans the last several days (leading up to USDA’s August crop report Aug. 12).”

So, what should farmers do about crop marketing in the midst of such turbulent times?

“Be ready to take advantage of market highs and use available tools out there (to manage risk),” said Pope, who noted farmers should focus on protecting profitability and not necessarily swing for the fences on every market move.

“The crazy pullback we’ve had (in commodity markets much of the summer) is not just in the grain markets, it’s kind of a macro-level sell-off.

“When (fund managers) liquidate long contracts, we can see bigger pullbacks than we even thought was possible,” said Pope, who noted fund positions cut off close to 100,000 soybean contracts in recent months.

A big fear in the markets and risk for farmers on the cost side remains staggering inflation levels.

Before the pandemic, inflation was just shy of 2% but recently jumped to a 40-year high of 9.1% in June. Meanwhile, food prices increased 10.4% while gasoline prices gushed 59% higher the past 12 months. The inflation rate recently eased slightly to 8.5% in July, which spurred the S&P 500 to climb to its highest level in three months.

“Inflation – it’s nothing new and it’s really escalated the last several years,” Pope said. “The inflation story has peeled off (in light of the July slowdown), but it’s hardly going away.”

On the plus side, inflationary pressure and strong demand should keep some support under commodity markets. But uncertainty of both supply and demand remains tremendous prior to harvest.

“Demand may be the biggest variable out there,” Pope said. “And, obviously, there’s still some supply issues lingering.”

Global supplies are tightest of the three main crops in Illinois for soybeans and wheat. A tight stocks-to- use ratio for soybeans could give that market a chance to rally back to $15 heading into harvest.

Meanwhile, ending stocks of wheat have dipped to the lowest level since 2013 and could leave the door open for prices to get back to the $9-$9.50 range.

“We still think there’s some bullish fundamentals out there,” Pope said. “There’s factors out there that could take (wheat) stocks out of the world market, which would keep things competitive.”

Despite the recent news of some grain shipments embarking from war-torn Ukraine, the pace of Ukrainian grain exports fell from 6 million tons before the Russian invasion to about 1 million tons since. And one recent shipment was rejected for quality issues after sitting in storage for months.

“The fact is, they’ve been able to get some (grain) shipments out,” Pope said. “But, to think Ukraine will suddenly be a major player in the world export market is far-fetched.”

However, with total corn production on the rise globally, Pope believes that market is the least bullish of the three top Illinois crops heading into harvest. He foresees possibilities in which corn could rally to $6.60 or $6.70 or where it could tumble to near the $5 mark during harvest.

Either way, farmers should plan to manage volatility and price risk ahead.

This story was distributed through a cooperative project between Illinois Farm Bureau and the Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.

This article originally appeared on Star Courier: Markets, Illinois weather are formidable foes facing farmers in 2022