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.

Only two months ago, Americans imagined bumper corn and soybean crops in 2008 would ease the pain of rising food costs and provide a plentiful, if controversial source, of ethanol to dilute record gasoline prices. Those ideas are now washed away …

Today, millions of acres of prime U.S. farmland are under water only weeks after being planted. So far 19 levees have failed on the swollen Mississippi (see a government map of the flood area here,) as a hump of floodwater moved downriver. Most were agricultural levees protecting corn and soy fields. The Army Corp of Engineers, which operates river locks and dams, said seven more levees may overtop in the coming days. Among the most fertile farms in Iowa and Illinois, the two biggest corn producers, have land that lies in the Mississippi River’s expansive floodplain.

On June 30, the U.S. Department of Agriculture will release its annual acreage report, which will give an accurate picture of the crop damage.  In March USDA said farmers intended to plant 86 million acres of corn this year, down from a 92 million acres in 2007. They expanded soy plantings to 75 million acres from 64 million. It does not look good for farmers, some of whom replanted during a let up in the rain, then lost fields a second time. Up to 5 million acres across the Midwest may have been ruined and will not produce a crop this year. Farm losses could top $2 billion. The result: record high prices this week for corn, cattle and ethanol. If you thought your food and fuel budget was tight, just wait …

It is hard to believe how many storms have moved through the Midwest in the past week, spawning tornadoes, flooding farm fields from Nebraska to southwestern Ohio.
    Iowa, the top crop state, seems the hardest hit with the Cedar River at Cedar Rapids at record levels.
    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 this weekend and swamped the city. It is the worst flooding the city has seen in 15 years.
    Much of the state got a break from the torrential rains on Saturday but more storms from Nebraska were headed eastward on Sunday.
    Along the Mississippi River in Quincy, Illinois, Democratic presidential candidate Barack Obama over the weekend joined volunteers and filled sandbags to hold back the river, the main artery used to ship grain to Gulf export terminals.
    However, officials have closed 300 miles of the upper-Mississippi River to barge traffic due to rising water levels. It is expected to remain shutdown for weeks.
    Everyone is trying to figure out how many acres have been damaged, a factor that spurred Chicago Board of Trade corn futures to set record highs every day last week.
    An Iowa State University state agronomist Palle Pedersen estimated on Friday about one-quarter of Iowa’s soybean acres and at least 8 percent of the state’s corn either have not been seeded or will need replanting due to flooding.
    But the saturated conditions will make it tough for farmers to move equipment through fields even if it stops raining. Late planted crops can yield 50 percent less than those planted before early July and all the rains have washed out previously applied nitrogen fertilizer, a much-needed input for corn to reach good yields.
    Many hope that the U.S. Agriculture Department weekly crop progress report released Monday afternoon will give some insight into the country’s crop damage and planting status.
    Last week USDA reported that only 77 percent of the soybean crop was planted, compared to 89 percent for the seasonal average.
    USDA rated 60 percent of the corn crop as good to excellent, down from 77 percent a year ago.
    That was before last week’s powerful storms that dumped several inches of rain on crops across the entire Corn Belt.
    Forecasters on Sunday were calling for drier, cooler weather this week for the Midwest.

This spring is definitely a classic case of Rain Doesn’t Always Make Grain.
    Powerful storms pummeled the U.S. heartland over the weekend — an area that’s already soaked after a week of heavy rains — increasing the likelihood that this year’s corn and soybeans will not reach their maximum yield potential.
    “There are Noah’s Ark-like conditions in the Midwest through next week,” said Vic Lespinasse, analyst for grainanalyst.com.
    All week the western belt was the hardest hit. Day after day there were reports that areas received a couple inches of rain. Young corn and soybean seedlings were standing in flooded fields, not only limiting the development of their root systems but actually suffocating plants.
    Then this weekend violent storms ripped through the Midwest again, spawning tornadoes in Iowa, Wisconsin, Illinois and Indiana on Friday and Saturday.
    In Indiana, for instance, travelers saw miles and miles of corn fields with plants 4-5 inches of growth standing in water that resembled Vietnam rice paddies NOT Midwestern row-crops.
    This is especially worrisome this year as farmers hoped for ideal growing conditions given the huge world demand for grains and oilseeds for food and feedstocks to produce biofuels.
    All the rain means many corn and soybean fields will need to be replanted and heightens the possibility of fungal diseases in the maturing Midwest soft red winter wheat crop.
    Already, many U.S. grain analysts are expecting the U.S. Agriculture Department, in a rare move, to shave its production estimates in Tuesday’s monthly crop report. Typically, USDA does not make any adjustments to yields or acreage this early in the season, but many analysts feel there’s reason to do it this spring.
    The closest comparison to this season’s weather is 1993, meteorologist Mike Palmerino with DTN Meteorlogix said this week.
    That summer U.S. crops suffered from weeks and weeks of rain which eventually caused the Mississippi River to flood — washing out surrounding corn and soybean fields in the heart of the crop belt.
    “What’s different this year is the rain has started earlier than in ‘93,” Palmerino said.
    So, a combination of record high crude oil prices and the current unfriendly weather for crops does not spell a return to cheap food any time soon, analysts say.

Photo: Washed out corn field near Goodland, Indiana, about 100 miles southeast of Chicago, following torrential storms and high winds that hit the area on June 7.  Photo taken by Julia Bohan on June 8.

 ”Rain makes grain” is the old saying on LaSalle Street. But rains are the last thing struggling farmers need right now as they try to get their corn and soybean acreage planted in the U.S. Corn Belt from Nebraska through Ohio, Minnesota through Missouri. Tornadoes, thunderstorms, hail and flash floods continued to rake the region over the 3-day Memorial Day weekend. So weather and planting progress will remain front of mind in the coming week.
    Temperatures have also been well below normal this spring, hampering emergence of corn. At this rate, it will take a long warm dry spell to get the Midwestern corn crop “knee high by the Fourth of July” in many parts of the belt. That will have implications for yields especially if weather during pollination in July and August turns hot and dry.
    The wet spring has generally kept corn and soybean planting one to two weeks behind normal. But over the past week the attention of traders seemed to turn more toward the cool temperatures that have slowed emergence.  
     A turn to warmer weather in the Midwest last week was viewed as bearish, traders said, since it promoted better emergence. Weekend temperatures in the Midwest also warmed up.
    USDA will issue its next weekly crop progress on Tuesday afternoon, the day after the U.S. Memorial Day market closure on Monday.
    On Friday, traders said they expect the government to report U.S. corn planting at 85 to 90 percent complete, compared to the five-year average near 95 percent. Soybean planting should be about half way done, versus the seasonal average near 77 percent.
    Aside from Corn Belt weather, the usual outside market drivers for speculators — crude oil prices and the dollar — can be expected to factor into fund buying or profit-taking in grains this week. The conflict between Argentine farmers and the government there will also continue to spur some buying and selling.
    The Argentine situation is keeping the soy markets nervous. One day it appears the two groups will resolve their differences over a soy export tax; the next day they are at odds. Argentina is a top soybean exporter in the height of its shipping season; it is also the world’s largest exporter of soymeal.
    CBOT pit traders said the ups and downs of the Argentine negotiations has raised the volatility in the CBOT July/November soybean spread. That old crop/new crop spread moved from an inversion to a normal carry on Wednesday as the outlook for an Argentine agreement appeared close, then back to a slight inverse on Thursday that jumped back up to a 14-1/2 cent inverse by Friday as the Argentine export outlook stayed uncertain.
     But when the spread turned to carry on Wednesday, traders said, many grain merchandisers took the opportunity to roll their spot basis bids to the CBOT November contract from the more volatile old-crop July. 
     A final trading situation to spotlight: traders noted some concerns about June $6 corn options being exercised over the weekend after July futures settled at $5.99-3/4 a bushel on Friday, which was the last trading day for June options. Since traders basically “pinned” the strike, firms could decide to exercise June $6 options into July futures.  
    That could add a little extra volatility to prices on Monday night or Tuesday morning. But the first session after the markets open after a long holiday weekend is usually a little more active anyway. 

“Weather trumps everything else this time of year,” said grain analyst Vic Lespinasse after the Chicago Board of Trade markets closed Friday afternoon.
    Especially this spring. Planting is behind. Corn and soybean emergence is behind. Winter wheat is slow to head which will mean a late harvest — all because of an unseasonably cool, wet spring in the heart of the U.S. crop belt.
    The good news this week was the western Midwest was able to shake out of the pattern. Surely farmers took advantage of the break, spending long hours behind the wheel of a tractor.
    But farmers east of the Mississippi River were not as lucky. The eastern Midwest picked up more rains and it was cool.
    USDA will tell the world Monday afternoon farmers’ planting progress.
    The general consensus among Chicago grain traders late Friday was for USDA to report corn planting near 75 percent done vs. the seasonal average of 90 percent and soybean seeding 25 percent complete, below the usual pace of 54 percent.
    It’s especially important this spring and summer that the weather cooperates so U.S. farmers produce a bin-busting crop given the global demand for food and spiraling inflation.
    “The focus of the trade is turning from the rain to the temperatures as the coolness is impacting emergence,” one CBOT floor broker said.
    There’s also some concern that if the slow pace of wheat development continues due to cool temperatures, it will limit the number of double-cropped soybean acres planted after the southern Midwest wheat harvest.
    The soft red winter wheat crop is coming along strong but in the top SRW states of Ohio, Indiana, Illinois and Missouri only 16 percent of the crop had headed as of last week, below 43 percent a year ago.

Photo: Soft red winter wheat field near Hopkinsville, Kentucky, taken the second week of May.

Is it fair to scapegoat ethanol and biodiesel for record grain prices and the knock-on surge in food prices? It’s a key question for policy makers as the pressure builds to wriggle out of U.S. rules to blend 36 billion gallons of renewable fuels into the nation’s gasoline supply by 2022.

There are a slew of reasons for high food prices. China requires more calories and Chinese are eating more meat. The weak dollar, weather disruptions, government intervention and speculation in commodities have been a perfect storm for food inflation. (Food price spikes are tracked in Food and Argiculture Organization graphic on the left).

Last week a top official at the International Monetary Fund, John Lipsky, said that increased demand for biofuels accounts for 70 percent of the increase in corn prices and 40 percent of the increase in soybean prices. Still he noted that oil prices would have been higher in the absence of biofuels. Francisco Blanch a commodities researcher at Merrill Lynch told Business Week that oil prices could be at least 15 percent higher without ethanol.

U.S. farmers planted the largest corn crop since WWII last year. The 25 percent of the U.S. corn crop that goes into ethanol production is not available for food products like cooking oil, corn sweetener and tortillas. Almost half of the corn crop goes to feed livestock. But making ethanol from corn also yields a byproduct called distillers dried grain, which is used as concentrated animal feed.

A blacklash against the ethanol blacklash is building. The Renewable Fuels Association is battling negative perceptions with data it says shows rising energy costs have twice the impact of increased corn costs on food inflation. Brazil is also alarmed at the criticism since it produces almost as much ethanol as the United States from its abundant sugar cane and is eager to increase its exports. Ethanol is a crucial part of the energy mix in Brazil and is distilled and distributed to pumping stations far more efficiently and with a much greener footprint than in the United States. Brazil can vastly expand cane production without competing with food acres.

One has to wonder whether it makes sense for the United States to reduce or eliminate the U.S. 54 cent per gallon ethanol import tariff to help it meet renewable fuel targets with less impact on food and animal feed prices. Of course that would be a tough sell to American corn farmers.

For the first time this spring I saw farmers doing field work in northern Illinois, not far from the Wisconsin border as I was coming home from work Friday night. They are easily two to three weeks behind normal as the Midwest just can’t seem to shake this cold, wet weather pattern. Saturday was cool but clear. Rains returned on Sunday. Forecasters are calling for more rain this week but the amounts look to be lighter than previously thought. 

Northern Illinois farmers are not the only ones behind due extremely wet field conditions. Crop scouts traveling May 8-10 through central and southern Illinois as well eastern and central Iowa — the top two U.S. corn and soy states — saw standing pools of water in fields that would normally be planted to corn by now.
    
The initial concern is a yield drag of roughly 1.5 bushels per acre per day everyday a corn field is planted after May 15. But one has to wonder now if a lot of those fields will be switched to soybeans.

So far, U.S. corn planting is off to its slowest start since 1999. Worries about a smaller 2008 crop than currently forecast at 12.1 billion bushels is helping to fuel Chicago Board of Trade grain prices. Last week, CBOT corn hit a record high of $6.79 per bushel, notched in the July 2009 contract — two to three times the typical price for corn.
    
The U.S. Department of Agriculture will issue its weekly crop progress report on Monday afternoon. Chicago traders are estimating that only about half the crop is seeded, compared to the seasonal average of 77 percent by mid-May. Farmers are taking advantage of every break in the rain to plant.
    
    Photo taken May 10 near Salem, Illinois, about 260 miles south of Chicago.

For farmer Dennis Shields, the fate of his new wheat crop is largely out of his control. In this first week of May - some 45-60 days from harvest - whether or not Shields makes a tidy profit or suffers a painful loss this summer is all up to the weather.

“It all depends on June,” said the 67-year-old Shields, who has been farming near Lindsborg, Kansas, more than 40 years.

If hot and dry weather settles into the U.S. Heartland as the newly emerging hard red winter wheat crop moves into the crucial grain filling period of development, kernels will likely shrivel and yield potential could shrink. But if mild conditions continue, the new crop could be a bin buster.

The crop is maturing later than normal this year with a more shallow root system due to late planting and a cooler-than-normal, wet spring, factors that have left the wheat crop more vulnerable than typical to the whims of weather.
“You get some 100-degree days … you’ll lose bushels and test weight will probably go down,” said Bob Bennett, Kansas State University grain quality specialist.

Efforts to determine the production potential for the new U.S. winter wheat crop, in particular the crop in top U.S. producer Kansas, is a near-obsession this season with an assortment of food industry players, from farmers to bakers, and export merchandisers to Mexican millers. Record wheat prices and short stocks around the world have generated high interest in this year’s wheat crop.

A group of more than 60 such industry representatives were taking part this week in a survey of hundreds of Kansas wheat fields as part of a Wheat Quality Council crop tour.

The tour will culminate on Thursday when participants come up with an estimated average yield and production tally for this year’s Kansas winter wheat crop.

A year ago at this time, the crop was looking very healthy, aside from some pockets of freeze-damaged fields. But high hopes were dashed when late-season heavy rains washed out many fields. So this year, even though the crop appears mostly healthy, with the potential for good production, few are willing to start counting on the bushels yet.

“We are a long way from getting this crop into the bin,” said ADM wheat quality specialist Dave Green.

The U.S. government will issue its first winter wheat production estimate on Friday.

Corn is really caught in a conundrum these days — evident by the price moves on the Chicago Board of Trade futures market the past week. One day corn is the darling of the trade, rising to a high of $6.41-1/4 per bushel for delivery in December, the first contract representing the 2008 harvest.
     The next day it struggles amid the bashing of corn-based ethanol production that seems to be gaining hold in Washington. Several senators including Kay Bailey Hutchison (R-Texas) said this week it’s time to take a serious look at the U.S. corn ethanol mandate calling for 15 billion gallons by 2015 and 36 billion gallons by 2022. The federal mandate for this year is 9 billion gallons.
    “It seems like all the politicians are ganging up on ethanol,” said Vic Lespinasse, with grainanalyst.com in Chicago.
    Even the USDA’s chief economist Joseph Glauber in his testimony to Congress on May 1 included ethanol among the reasons for the rising price of food:
    “In 2007, the Consumer Price Index for food in the U.S. increased by 4 percent. This was the largest annual increase in retail food prices since 1990. In 2008, the Department of Agriculture’s Economic Research Service projects retail food prices will increase by 4 to 5 percent.
    “Several key factors are shaping the current situation, including domestic and global economic growth; global weather; rising input costs for energy; international export restrictions; and new product markets, particularly biofuels.”
    But so far nothing has changed officially on the demand side for corn. Ethanol producers are projected to use 3.1 billion bushels of corn this year, or 24 percent of the 2007 crop.
    So a policy change slowing ethanol demand would spark waves of spec profit-taking — and a tidal wave of grain hedge selling to lock in $5-6 corn on the board.
    On the other side of equation you have a wet, cold spring that’s raising concerns about how much corn farmers will be able to plant before May 15 — farmer’s target to plant corn so the crop reaches its maximum yield potential.
    Soil temperatures need to be roughly 50 degrees to plant corn and fields are saturated with standing pools of water in many.
    Traditionally, the last week of April and the first week of May are the biggest corn planting weeks in the Midwest. Not this year. Planters have been scarce and basic prep like discing or fertilizer application also are weeks behind.
    So far, U.S. farmers are off to their slowest start since 1999. The U.S. Department of Agriculture will issue its next crop progress on Monday afternoon. One would have to guess that depending on how much corn is planted –  it will drive CBOT prices Monday night and Tuesday. Preliminary guesses is for USDA to report 25-30 percent of the crop seeded, versus the seasonal average of 63 percent.
    Granted U.S. farmers can plant corn quickly given today’s 24-row planters. But it’s got to stop raining and warm up.
    “There is no sign of a major change in the pattern which means no wide window for planting for the next week to 10 days,” said Mike Palmerino, forecaster with DTN Meteorlogix.
    “There will be occasional planting when there’s a break in the rains … the stronger sun will work to their advantage.”
    It rained again on LaSalle Street on Saturday though the sun finally came out again on Sunday with temps in the 60s F.