Drought Doesn't Stop Record Corn Year

Even though the worst drought in decades devastated expectations for an enormous corn harvest, it wasn't enough to result in a record year for the grain, which was valued at approximately $85 billion. That came about from the high price of corn, which lingered above $7 a bushel during the majority of the summer and fall seasons.

While that may suggest to some that corn could have surpassed a value of $100 billion if there hadn't been a drought, that wouldn't have been the case because the price of corn would never had soared to the levels it did with what would have been enormous supply.

According to the final report of the U.S. Department of Agriculture for 2012, there were 10.78 billion bushels of corn harvested for the year, down by over 25 percent from projections in the spring of the year.

Hit particularly hard was Illinois, which normally is the second-largest producer of corn in the United States. It fell to fourth place for 2012, dropping behind perennial leader Iowa, along with Nebraska and Minnesota.

Iowa finished 2012 with 1.87 billion bushels, down 20 percent from 2011. Minnesota was next with 1.37 billion bushels, with Nebraska finishing third with 1.29 billion. Illinois ended with 1.28 billion.

Corn production in Illinois was down 34 percent from 2011, and Nebraska ended the year down 16 percent. Minnesota finished the year with production up 14 percent because it was among the least affected of the states residing in the corn belt.

Average yield across the United States for 2012 was 123.4 bushels an acre.

With weather patterns of the past many times showing droughts coming in twos, the ongoing drought, which has been hidden by the winter, hasn't shown any signs of slowing down, with about 60 percent of the United States still experiencing drought conditions to some degree.

While it's unlikely to be as bad as last year, 2013 could be another tough year as far as production goes, but wildly lucrative for those that bring in a good corn harvest.

Corn Plunges 6 Percent on Bearish Outlook

Things changed quickly for corn futures this week, as concerns over hot, dry weather rapidly moved from high corn prices to plunging ones, as rains and cooler weather increased the outlook for the corn harvest, but not for corn traders.

For the week, corn dropped 6 percent, with September corn falling 5 1/4 cents to $3.71 1/4 a bushel, and December corn decreasing more, 5 3/4 cents, to $3.84 1/2 a bushel.

Some are trying to extend the corn price rally by implying the rain was too much and would have a detrimental effect on corn, but that adds too much confusion and uncertainty, as you can't have it both ways.

That isn't to say there won't be some negative effects, as corn planted in lower areas could be impacted, but overall, the outlook is far better than it was, the reason corn prices will continue to fall, even with attempts to use every different weather pattern as a way to try to push corn prices up.

Wheat Falls Again on Egypts' Russian Deal

Wheat prices fell for the third straight trading day, as Egypt decided to go with Russia to buy their latest wheat. Egypt acquires the most wheat in the world.

In the latest deal Egypt bought 120,000 metric tons from Russian, This surprised some because of news of the ongoing drought in Russia, which many thought would force Russia to cut back on exports to be sure their own people had enough.

Some analysts believe US wheat isn't priced accurately, and it shouldn't have been assumed that because of news of the drought, Russia would be storing their wheat and not engaging the market.

Another factor in wheat prices falling is the realization it won't be needed to feed livestock in the US because of a potential shortfall in the corn harvest, which conditions have changed because of good weather providing lower temperatures and rain to corn fields in the Midwest.

At 10:00 AM EDT, wheat futures for September delivery dropped 8 cents, to $5.7425 a bushel, or 1.4 percent.

Wheat generates $10.6 billion in the U.S., which is the world's largest exporter.

Corn Prices Continue to Fall on Good Weather Conditions

Corn prices continue to fall as cooler and wetter weather continues to hit the Midwest of the United States.

Hot, dry weather had been pushing prices of corn up on concerns there wouldn't be a weather change, but now that it has come, prices will go back to where they should be at in light of the potential harvest.

Wheat and soybeans also continue to fall, with wheat falling on the reality it won't be needed for feed substitute now that corn production looks better.

Corn futures for December delivery dropped 5.5 cents, or 1.4 percent, to $3.885 a bushel at 10:00 AM on the Chicago Board of Trade.

Forecasts for cool and wet weather continue on for the next several days, giving the region what it should need to generate a bountiful corn harvest.

Corn Prices Plunge on Favorable Weather Forecasts

It was make or break for corn in the Midwest, specifically in the western and eastern parts of the region, as the corn was either going to be punished hard by the hot, dry weather, or it needed rain to save it.

The latest forecasts show the weather should be coming to the rescue, and consequently corn prices plunged on the news.

Both elements that were needed to give corn a chance, and wetter and cooler weather is on the way, and it will result in a solid harvest, assuming the forecasts are accurate.

Corn for December delivery dropped 3.3 percent, or 13.25 cents, to settle at $3.94 a bushel. That is corn that is still in the field and expected to be harvest in the fall.

Already harvested corn for September delivery fell the same amount, 13.25 cents, to $3.815 a bushel, or a decline of 3.4 percent.