The impact of Hurricane Gustav will be the key to Chicago Board of Trade grain markets when they reopen on Monday night for screen trading following the three-day Labor Day holiday weekend, with traders keying off crude oil prices for direction. 
    “We’re watching Gustav. The energies will be trading on Monday and could influence the overnight Chicago markets if the energies are doing anything wild. We’re going to see if it pushes any rain into the Midwest or not,” one Chicago grains analyst said. 
    By midday on Monday, the New York crude oil market was down more than $4 a barrel to around $111 — and falling — after Hurricane Gustav was downgraded to a Category 2 before its landfall on U.S. Gulf Coast 70 miles west of New Orleans on Monday. Energy traders were heaving a sigh of relief on optimism that the storm will not be making a Katrina-like slam on Gulf of Mexico energy operations. 
    With New Orleans levees holding — for now — grain traders will also be more optimistic that the storm will not swamp the grain export terminals there. New Orleans, Mobile and Texas ports handle more than 70 percent of U.S. grain exports, the world’s largest.
    So for Monday night’s CBOT opening, grains are likely to follow the sharp pullback in oil. 
    But despite what looks like a near-miss with Gustav, grain traders note that as of Monday weather forecasters still point to five storms brewing over the Atlantic that have the chance to develop into tropical systems. No doubt Mother Nature will keep traders on their toes this week. 
    One benefit of the storm could be more rains moving north this week into dry areas of the Midwest where maturing corn and soybeans could really use a drink. That would be bearish.
    On the other hand, heavy rains in Louisiana or Arkansas will put the rice harvest, already delayed, at further risk. 
    The rain and wind from Gustav and possible damage to Gulf export terminals could also stall grain and soybean shipments out the U.S., another bearish factor. Broken levees would cause wake restrictions and other limits of river vessels, slow or close lock operations, and so on.
    Traders are expecting the U.S. government to cut its ratings of corn and soybeans 1-2 percentage points in this week’s crop report that will be issued on Tuesday after the CBOT market closes. The focus will be on the eastern belt — Ohio, Indiana and Illinois — which has been hotter and drier than the western Corn Belt, traders said.
    Analysts also will be updating their forecasts of the 2008 U.S. corn and soybean crops this week, ahead of USDA’s September 12 report. Brokerage FC Stone will be the first, scheduled for release on Tuesday afternoon. Memphis-based Informa Economics will be out later. 
    Last but not least, the direction of the dollar has had a big impact on Chicago grain markets. That trend is expected to continue. 
    As the dollar on Friday ended its best month in over a decade, corn, wheat and soybean prices deflated — along with speculative open interest. The rally in commodities over the past 18 months or so has largely been linked to the weakness in the dollar, which makes U.S. commodities cheaper for overseas buyers. 
    “If the bottom is in for the dollar, it’s going to hard for commodities to gain,” one Chicago floor broker said. 

The government came through with good news for world grain users, food aid buyers and food inflation watchers on Tuesday, forecasting bumper crops of wheat, corn and soybeans and easing the fears of many who thought a cold rainy spring and worst U.S. Corn Belt floods in 15 years during June would spell heavy crop losses.
    There was only one problem: the markets don’t believe it. After a day and a half, Chicago Board of Trade corn prices are up 8 percent, soybeans up 7 percent and wheat up 5 percent.
    The bounce in the markets, which has come despite a stronger dollar (bearish for export demand), has been a reflection of doubts among long-time crop watchers about USDA’s assumptions for yields and weather.
    Analysts had been forecasting a rise in corn production from USDA’s July report for weeks given the greenhouse-like conditions ideal for Midwest corn since early July.
    What they did not expect was the magnitude of the USDA’s optimism. USDA boosted its corn yield forecast to 155 bushels per acre, up a whooping 6.6 bushels from its July forecast.
    And that was after a special USDA phone re-survey of thousands of flooded out areas hit in Iowa, Illinois, Missouri, Minnesota and other corn states in June.
    The aggressiveness of USDA’s yield boost stunned even the most veteran CBOT grain traders given the immaturity of the crop and unpredictability of Mother Nature.
    Both corn and soybeans are more vulnerable to an early frost since their development is running one to three weeks behind normal after a wet spring followed by flooding in June. The biggest threat is a freeze in September, weeks before many crops mature and a normal October frost in the upper Midwest.
    And given the tendency toward cool Midwest weather this summer an early freeze of plants - and yields - is seen more likely than other recent years. 
    The National Weather Service will issue its September forecast for temperatures on Aug. 21.
    Even U.S. Secretary of Agriculture Ed Schafer told Reuters in an exclusive interview on Tuesday following the report: “We look at the crop reports today and they’re good. But you also note that they are good assumed on normal weather patterns. If we start getting some early winter, early frost — things could change.”
    But so far so good. Corn conditions have improved for the past several weeks, benefiting from the cool, moist summer.
    Soybeans have a different story as USDA cut its forecast of that crop 27 million bushels to 2.973 million — reflecting a 2.6 percent drop in expected yields to 40.5 bushels per acre.
    However, all CBOT traders and analysts know that the bean crop is “made” in August, not July, so it is premature to get too excited about that number, analysts warned.
    “There’s the potential for the crop to come up substantially from the USDA number. But that’s going to be a function of weather over the next couple months,” said Mario Balletto, Citigroup grain analyst.
    Bottom line: the world is counting on the United States to produce a bountiful crop this year. World inflation is rising, driven by historically high energy and food prices.
    The weeks ahead promise more price volatility but many economists believe we’re in a new era of higher food and energy prices. Even with the pullback in prices before USDA’s report, corn and soybean futures are well above double their historical price ranges.
    USDA’s Tuesday increases in the outlook for corn demand for ethanol and soyoil demand for biodiesel did nothing to ease concerns that biofuels will remain an unwelcome competitor for food processors and livestock feeders in the years ahead, putting a floor under prices on pullbacks.

PHOTO: Corn fields pollinating 20 miles south of Toledo, Ohio, on August 9. Taken by Peter Bohan.

    The biggest crop report of the summer will be released on Tuesday morning at 7:30 a.m. (1230 GMT). Undoubtedly it will be the main driver of Chicago Board of Trade grain and soybean prices that day and for the remainder of the week. 
    USDA’s August crop report is always a biggie. It’s the government’s first U.S. corn and soybean crop forecasts of the year based on actual field surveys, rather than historical average yield estimates. But this year offers some special twists. 
    Crop development for both is running one to three weeks behind normal in the heart of the Corn Belt. (Iowa and Illinois alone usually produce a third of both corn and soybeans.) Planting was delayed across the Midwest this year due to a wet, cold spring, followed in June by the worst flooding the region has seen in 15 years. So analysts are wondering if the government’s yield estimates will be a true reflection of the crop size.
    In a normal year, corn yield projections are more accurate than soybeans as corn goes through pollination during July. But as of last week almost a third of the U.S. corn crop had not yet pollinated. Still, crop scouts have an easier time predicting corn yields compared to soybeans, a crop which usually sees its key growth stage — flowering and pod-setting — in August, not July. So yield estimates for beans are always tough this early in the summer. 
    Then you have the issues tied to the great Midwest flood. 
    Since the deluge and weeks of levee breaks in June, grain analysts, traders and crop specialists have been second-guessing the USDA on how many acres of corn and soybeans were planted and how many were lost. The flooding occurred so late in the season that replanting corn or even beans looked like a losing proposition. Usually, corn planted after May 15 in the central Midwest loses about a bushel a day of yield due to fewer growing days.
    USDA promised that during July it would resurvey some 9,000 farmers in the heart of the Corn Belt that were hardest hit by the Midwest floods. In June, corn prices soared to a record above $8 a bushel on talk that as much as 5 million acres of corn were lost or would need replanting. Traders did back-of-the-envelope calculations using average yields of, say, 145 bu an acre and, presto, came up with a potential loss of 700 million bushels. That would have wiped out the projected end-stocks in September, 2009, already seen at 13-year lows before the flood.
    “We are so delayed on development that I don’t know if anybody is really going to be that confident on what USDA gives on yield. There’s just not enough to measure,” said Randy Mittelstaedt, analyst with Chicago-trade house R.J. O’Brien.  
    “What I’m hoping is we get a better soybean and corn acreage reflection. At least that will give us a starting point as we move forward the next three or four weeks and determine crop size and have a better handle on yield.” 
    Another detail traders will be looking at more closely will be the USDA’s assessment of this season’s carry-over soybean supplies. 
    Last month, USDA revealed a stunner buried away in its monthly domestic supply-demand report. USDA reported a ”-35 million bushel” supply of soybeans in its residual category for the 2007/08 crop year ending August 31. The first supply deficit for USDA’s catch-all category that most analysts could recall. USDA said the negative residual was based on demand through end-May and on USDA’s June 1 soybean stocks report.
    While it pointed to tighter supplies this season than even bulls expected, it could be an indication that the 2007 crop was understated — an adjustment that will not be made until September 30 when USDA issues its quarterly stocks report.
    Bottom line: stay close to news reports on Tuesday. No change in acreage, or an increase or decrease - all will have market implications for price. 
    Two well respected analysts, Rich Feltes of MF Global Research and Dan Basse of AgResource, will be commenting on the report from the CBOT floor after the USDA data on Tuesday and ahead of the 9:30 a.m. (1430 GMT) futures market opening. 
    Rest assured that after the opening, while the debate over USDA’s estimates will continue, the market will also focus closely on weather as pollination and pod-setting continue.  

Commodity prices in general deflated during July as investors ran to the sidelines, taking profits. The Reuters-Jefferies CRB <.CRB> index of 19 commodity futures lost 10 percent — its steepest monthly drop in 28 years.

While declining crude oil prices led the drop in CRB and other commodity indexes, Chicago Board of Trade grain prices were not immune.  Weather worries usually keep corn and soybean prices on the boil in the hot days of July, as traders worry about heat stress and adequate moisture during pollination for corn plants, the key period determining yields. But not this year: corn weather in the Midwest has been ideal.

Corn, the most actively traded grain contract, fell 18 percent or more than $1 a bushel in July. Alongside that was a steady decline in open interest — down 7 percent during the month. Those two facts added up to big speculators cutting their bullish bets.

Factors beyond supply/demand pressured many commodities lower in July, including jitters among speculators about potential government moves to curb their participation in commodity markets given the clamor from consumers about rising food and fuel costs. But for both corn and  beans, the midsummer greenhouse-like conditions that have blanketed the U.S. Midwest Corn Belt have been the key bearish driver. Worries about flood losses from the June deluge in the heart of the Midwest seem a distant memory, although the market will get a solid reminder of the losses in the biggest USDA crop report of the year on August 12.

Meanwhile, optimism about solid corn pollination has grown. Analysts expect USDA on Monday afternoon to keep crop ratings near unchanged in its weekly crop updates. But crop watchers will next worry about the potential for an early frost that could damage corn and soybeans as the plants “finish” growth into September, filling out corn kernels and soybean pods. Both crops continue to run about 2 weeks behind  normal development due to late planting in the cool, raining spring planting period.

“The threat to this crop is it’s a late crop and there is the potential for cool air to become more established in Canada during the month of August and an early freeze in September for the U.S.”, said forecaster Mike Palmerino with DTN Meteorlogix.

Nationally, 59 percent of the corn crop was silking as of a week ago, meaning that the plants were pollinating. That compared to 81 percent for the average growth pace over the last 5 years. Looked at another way, more than 40 percent of the U.S. corn crop had not yet entered into the key yield stage.

Agronomists say another problem is that late-planted corn takes more time from silking to maturity than normal. This is because the accumulation of growing degree days (GDD, a common benchmark of heat and yield potential) per day decreases dramatically toward late summer and  into the early fall.

“These results do not bode well for late-planted corn that silks during the first or second week of August, because they suggest that physiological maturity of such late-silking corn may not occur until mid- to late-October where the risks of a killing fall freeze increase,”  said Bob Nielsen, extension agronomist at Purdue University in Indiana.

The heart of the Corn Belt typically sees its first killing freeze any time from late September in the north to mid to late October in the south.

States report growing degree days in their weekly crop updates alongside the seasonal average every Monday afternoon. This indicator will become closely watched during August to gauge maturity and the crop’s risk to freeze.

PHOTO: Corn fields pollinating near Plainfield, Illinois, on Sunday, August 3, thirty miles west of Chicago. Taken by Peter Bohan.

Chicago Board of Trade corn, wheat and soybean markets fell to their lowest levels in months last week as 2008 U.S. crop prospects keep improving.

Corn was the hardest hit, falling to a four-month low, as greenhouse like conditions across the U.S. Midwest during July are raising ideas that crop yields are improving from earlier expectations. July is the most critical month for determining corn yields as it pollinates this month. Basically the crop is in the midst of pollination with little to no stress.

“When it rains in July it means bigger crops,” said Roy Huckabay, analyst with The Linn Group in Chicago. “Corn acts tired.”

Other analysts and traders said they too are hearing more talk of bigger corn yields, up from USDA’s current forecast of 148.4 bushels per acre, compared to last year’s national average of 151.1 bushels an acre.

USDA’s August 12 crop report will be the first of the season to project corn yields based on actual field surveys. It will also include data from a special survey of Midwest crop fields hardest hit during the June floods to get a more accurate read on total U.S. corn and soybean acreage.

Given the mild weather over the past week, traders expect the government to report in its weekly crop progress update late Monday that U.S. corn and soybean ratings improved the past week — up from 65 percent good to excellent for corn and 61 percent for soybeans.

The weekly data should also show that the U.S. winter wheat harvest is nearly complete, with the northern region the last to finish.

Soft red winter wheat basis levels continue to sink as big supplies flow into Midwest terminals. The spot basis at the Gulf was $1.60 under September futures late Friday, traders said, as grain dealers are discouraging more deliveries  wanting to keep enough storage open for corn and soybeans to be harvest this fall.

The week ahead for CBOT markets promises to provide lots of volatility. Key factors traders will be watching include:

• Weather forecasts. Any switch from the current benign weather pattern could help corn and soybeans to recover, bringing wheat along. August corn failed to end the week about $6 a bushel, despite the rally on Friday when corn benefited from spillover buying in wheat.
• CFTC meeting. The Commodity Futures Trading Commission is meeting on July 29 in Washington with representatives from the U.S. grain industry and the CME Group, parent of the Chicago Board of Trade, to discuss the contract performance of CBOT contracts. CME met with Chicago traders and grain officials last week in Chicago to come up with suggestions that will be among the ideas presented at Tuesday’s meeting.

Photo: Pollinating Illinois corn of variable growths due to late planting or flooded soils early in the season. Photo taken near Bolingbrook, located 30 miles west of Chicago, on July 27 by Peter Bohan.

Chicago Board of Trade corn, wheat and soybean markets fell to their lowest levels in months last week as 2008 U.S. crop prospects keep improving. 
    Corn was the hardest hit, falling to a four-month low, as greenhouse like conditions across the U.S. Midwest during July are raising ideas that crop yields are improving from earlier expectations. July is the most critical month for determining corn yields as it pollinates this month. Basically the crop is in the midst of pollination with little to no stress.
    “When it rains in July it means bigger crops,” said Roy Huckabay, analyst with The Linn Group in Chicago. “Corn acts tired.”
    Other analysts and traders said they too are hearing more talk of bigger corn yields, up from USDA’s current forecast of 148.4 bushels per acre, compared to last year’s national average of 151.1 bushels an acre.
    USDA’s August 12 crop report will be the first of the season to project corn yields based on actual field surveys. It will also include data from a special survey of Midwest crop fields hardest hit during the June floods to get a more accurate read on total U.S. corn and soybean acreage.
    Given the mild weather over the past week, traders expect the government to report in its weekly crop progress update late Monday that U.S. corn and soybean ratings improved the past week. Last week USDA rated 65 percent of the corn crop and 61 percent of the soybeans good to excellent.
    The weekly data should also show that the U.S. winter wheat harvest is nearly complete, with the northern region the last to finish up.
    Soft red winter wheat basis levels continue to sink as big supplies flow into Midwest terminals. The spot basis at the Gulf was $1.60 under September futures late Friday, traders said, as grain dealers are discouraging more deliveries  wanting to keep enough storage open for corn and soybeans to be harvest this fall.
    The week ahead for CBOT markets promises to provide lots of volatility. Key factors traders will be watching include:
. Weather forecasts. Any switch from the current benign weather pattern could help corn and soybeans to recover, bringing wheat along. August corn failed to end the week about $6 a bushel, despite the rally on Friday when corn benefited from spillover buying in wheat.
. CFTC meeting. The Commodity Futures Trading Commission is meeting on July 29 in Washington with representatives from U.S. grain industry and the CME Group, parent of the CBOT, to discuss the contract performance of CBOT contracts. CME met with Chicago traders and grain officials last week in Chicago to come up with suggestions that will be among the ideas presented at Tuesday’s meeting. 

Photo: Pollinating Illinois corn of variable growths due to late planting or flooded soils early in the season. Photo taken near Bolingbrook, located 30 miles west of Chicago, on July 27 by Peter Bohan. 

  There is nothing like nice weather during July to take some risk premium out of Chicago Board of Trade grain markets. The weather in July for corn pollination, the critical yield-determining period for U.S. corn, has been just what the doctor ordered. Corn likes hot days and cool nights, and the Midwest crop has had both this month. With some timely rains mixed in to reduce plant stress, the late-planted Corn Belt crop is coming back nicely — making good pollination now look like a “cinch” this summer, as one CBOT grain trader said this week. 
     As a result, corn prices have deflated nearly 20 percent since making their record top above $8 a bushel in June amid flood worries. 
    Soybeans have followed along with corn’s slide, with growth also benefiting from the prime conditions in the Midwest. But soy prices have retained more of a risk premium, down 12 percent after notching all-time highs above $16 a bushel two weeks ago. 
    Traders remain more concerned about soybeans, which may have been harder hit by the June flooding — soybeans don’t like their feet wet and are always later-planted than corn anyway, causing their root development to lag corn. The critical flowering and pod-filling stages for beans also trails corn, so continuation of July’s excellent crop weather through August will be key for this year’s yields.
    The very tight end-stocks outlook for both corn and soybeans also provide a daily reminder to traders of the razor’s edge that grain supply-demand will be on in the coming year. Even before the June floods, U.S. corn stocks a year from now were already projected at 13-year lows. Soybean stocks are even tighter. Grain traders and analysts were stunned by the July supply-demand report from the U.S. Agriculture Department which showed a revision to the 2007-08 soybean balance sheet putting “residuals” at a -35 million bushel deficit.
    “That’s never happened before,” said Mike Woolverton, agricultural economist at Kansas State University. “We simply have to have a good harvest this year or we’ll be in trouble.”
    News that Argentina repealed its controversial soy export tax hike on Thursday was really the big pressure point for beans, soymeal  and soyoil as well. Argentine farm protests about the tax over the past four months in effect paralyzed  exports from the world’s third largest soy exporter and  its top meal and oil supplier. 
    U.S. farmers benefited from the situation as world buyers extended their buying out of the United States. There was talk on the CBOT grain trading floor by Friday that Argentina was  back open for business and buyers were booking supplies. 
    Besides the weather  and export factors, traders are also eyeing another wild card for futures — rising concerns that U.S. politicians, due to consumer pain over soaring food and fuel prices, will impose greater oversight of domestic commodity markets. The brokerage industry argues such moves will send business offshore. The talk seemed to be shaking some longs out of many commodities  last week. 
    “There is this sentiment that Big Brother is watching. It just feels like funds are paring back on positions,” one veteran trader said.
    The most heavily traded grain contract, corn, has seen open interest fall nearly 10,000 contracts in the past two weeks. 
    There was a big sell-off in crude oil as well. Crude saw its biggest one day drop since 1991, falling below $130 a barrel this week, the lowest level in five weeks. 
     The threat that Big Brother could be watching may also help grain traders get more traction from CBOT and CFTC on the thorny issue of convergence  — or lack thereof — between cash grain prices and CBOT prices.  
     The Commodity Futures Trading Commission has called a second public hearing on the issue for July 29 (the first was April 22), when the grain industry will air their arguments that CBOT’s hedging process is broken. Record weakness in the cash basis for soft red wheat after this summer’s harvest is driving the latest protests to regulators. Fears that corn and soybeans will face another such debacle with this Fall’s harvest, especially if weather turns damaging and futures spike higher, are also red flags grain users are waving.
     The grain industry blames Wall Street hot money inflating futures prices above real supply-demand and CBOT recalcitrance is reining in such hot money, especially “long-only” index funds. The  July 29 meeting is open to the public and could provide more fireworks. 
    For next week the same factors will influence CBOT markets: weather, politicians bantering about oversight of commodities, value of the dollar,  and the direction of crude oil. 
    USDA will issue its weekly crop progress report on Monday. The weather has been ideal so look for conditions to be steady or possibly improve a little, especially soybeans.

The next several weeks promise to keep traders nervous and prices volatile as the corn crop goes through its most critical yield-determining development stage, pollination. 
    Any changes in the weather outlook will send shivers through the market. Monday was a case in point. A forecast for scattered, beneficial showers across 80 percent of the U.S. Corn Belt sent Chicago Board of Trade corn prices sliding the 30-cent trading limit.
    This year corn will pollinate about two weeks behind its usual pace, agronomists say, due to cool spring weather and growth-retarding heavy June rains in many areas.
    That means most corn plants will pollinate in late July — typically the hottest and driest period of the summer. A deep, mature root structure to tap groundwater is the key to good pollination and a question mark over lots of corn this year.
    “Then on the backside of the season it tends to push maturity a little closer to a killing fall frost,” said Bob Nielsen, extension agronomist at Purdue University in Indiana.
    The U.S. Agriculture Department reported late Monday that only 6 percent of the corn crop was silking, behind its typical pace of 19 percent by early July. Silks, the female part of the plant, extend from each ear of corn and catch the pollen from the male part, the tassel, to produce each kernel of corn.
    Traders will also increasingly focus on growing degree days, or GDD, a measure of heat accumulation and a barometer of yield potential. Corn likes hot days and cool nights. But heat makes corn, as long as the roots provide enough moisture. 
    Given the cool start to the season, the crop is running well behind in growing degree days. State crop reports will typically will list growing degree days updated each week and compared to seasonal averages. 
    “Many corn hybrids require 2,600-2,700 growing degree days from planting until the crop is mature,” Nielsen said.  
    So corn traders are fastening their seat belts. With USDA already projecting September 2009 US corn stocks to fall to a 13-year low, any heat-related losses in the maturing U.S. crop — even with the question of flood-related losses still up in the air — will no doubt drive expectations for sharper cuts in the market’s thin cushion of supplies. Market prices will tend to rise as those expectations fall. 
     
   
“Knee-high by the Fourth of July” 
    Photo of a corn field in northern Illinois taken over the July 4th weekend. An old benchmark used for years to gauge corn development. Typically, corn planted mid to late May will easily be knee-high by July 4th. But corn seeded in late April should be chest to head high by now. June-planted corn will be below the knee. Corn planting ran easily one to two weeks behind normal this year.

Of the many years I have reported on Chicago Board of Trade corn prices, 2008 seems like a dream: when was the last time corn was front-page news in U.S. and foreign newspapers, Wall Street cable channels like CNBC, or at the Fed? 
    But we’re not dreaming. If oil is the fuel of the world economy, corn is the fuel of the food economy — the basic feed for meat animals, the basis of the starch and sweetener industries, a food and cooking oil. Add in the hundreds of industrial uses that start with corn, from ethanol to bioplastics to paints, adhesives and other products. Add in the rising middle classes of booming Asia who are demanding meatier diets  — and U.S. corn for their herds. 
    So the historic highs in corn prices — unthinkably high prices, like $140 crude oil, before this year — are perhaps no surprise after all. Corn prices soared above $8 to all-time highs a week ago — more than double the 40-year average price range of $2-4 a bushel. The question is: how high can prices go? 
    Demand seems more of a domestic question mark than a foreign one. If the Democrats win in November, will they roll back the 2007 energy bill’s mandate for ethanol production to soar?
    But more immediately, the market’s focus is on supply, not demand. The US corn crop — responsible for 50 percent of world exports — is now in its key month of growth, its key period for determining yields.
    Corn users have plenty to be edgy about after the worst flooding in 15 years in the U.S. Midwest — the heart of corn production for not just the U.S. but the world. Estimates that as many as 5 million acres of U.S. corn and soybeans may have been lost or needed replanting sent both corn and soybean prices to records last month.
    But last week, USDA calmed some fears when it forecast that farmers planted more corn than most analysts had expected. If the government is right, American farmers will harvest 78.9 million corn acres, the second highest since 1944, just behind last year. The unexpectedly high corn plantings reflected a 1.3 million acre increase from USDA’s March planting intentions report. What of the flooding losses? USDA said it calculated harvested acreage using 90.4 percent of planted acres versus the typical 92.4 percent to reflect the effects of the flooding. 
     There remains much skepticism in the trade about the numbers. USDA said it only had time to do a quick phone survey of some 1,200 Midwest farmers during June 23-25 — ahead of the June 30 acreage report — to a get a handle on farmers’ harvest intentions due to the flooding that occurred during the entire month of June. 
     But an Illinois-based data analysis firm, Lanworth, which uses satellite imagery to project corn and soybean acreage, was not surprised by the government’s latest projections. Lanworth studied satellite pictures from the area between the major rivers in Iowa, the state hardest hit by the floods, to assess how fast fields were drying out and when farmers started to replant, said Nick Kouchoukos, director of information services for Lanworth. 
    The company is currently estimating up to 2.7 million acres, corn and soybeans combined, were lost by flooding, versus the 3.0 million reflected in a USDA state reports compiled by its National Agricultural Statistics Service.
    “We were and still are slightly more optimistic about the extent of the damage than NASS,” Kouchoukos said. 
    USDA plans a second survey of 9,000 farmers later this month to further fine-tune its acreage numbers, which will be first reflected in its Aug. 12 crop report.

    Agronomists, government officials, insurance adjusters, grain analysts, traders … the list goes on and on … are asking: How do we get a handle on how many crop acres are underwater in the U.S. Midwest after the extensive flooding.
    The truth is nobody knows and no one is going to know the extent of the damage for a long time.
    “The key word is uncertainty. We’re getting close to the end of time to replant crops but that leaves a lot of unknowns — how severe is the crop damage in those areas that survived, how stunted are they going to be, what’s the true effect going to be on yield and that depends on the rest of the summer,” said Bob Nielsen, extension agronomist with Purdue University in Lafayette, Indiana. 
    “It’s a very confusing mess.”
    Iowa, the No. 1 row crop state, was the hardest hit as many rivers swelled beyond their banks. Cedar River at Cedar Rapids rose to record levels over the weekend. In the state’s capital city of Des Moines, which is surrounded by corn and soybean fields, a levee holding back rising flood waters broke and swamped the city. It is the worst flooding the city has seen in 15 years.
    Now all the attention is on the Mississippi River, the main shipping artery for grains to Gulf export terminals, waiting to see how many levees break and the resulting damage.
    The swollen Mississippi River has flowed over 23 levees in Missouri, Iowa and Illinois with more at risk with another 25 at risk — an area protecting hundreds of thousands of crop acres, the U.S. Army Corps of Engineers said.
    USDA’s Iowa state crop report issued late Monday gave the world a hint on the damage so far — reporting that 9 percent of Iowa’s corn acres were flooded and 8 percent of the soybean crop was flooded.
    That equates to 1.19 million corn acres and 784,000 soybean acres based on USDA’s March planting intentions report.
    That’s just for Iowa. Illinois, Minnesota and Indiana, three other top five corn states, have also had floods, along with Wisconsin, Michigan, Missouri and Kansas.
    Many hope that the June 30 planted acreage report will give a better clue of the damage. But the bottom line: those farmer surveys were conducted during the first two weeks of June before much of the flooding and levee breaks this week.
    The director for USDA’s Illinois Agricultural Statistics Service (NASS) office told Reuters this week that said the government is planning a special acreage survey taking into account of the flooding, with results likely published in July.
    The details of the survey are sketchy right now but more details are expected this week.