Low Yields Best Insurance as U.S. Farmers Plant Corn

Ohio farmer Jeff Hoak was excited and anxious at the same time. His wedding was coming up, and many of his corn fields had yet to be planted.

The grain gods smiled on him. The weather broke and he finished planting his corn a day before he got married and ahead of a deadline that would have forced him to decide on whether to plant the crop or claim insurance.

“We went from virtually nothing in the ground to everything planted in a couple of days,” Hoak, 35, said as he prepared for his honeymoon next week.

Louis Kuster who farms 2,000 acres with wheat in North Dakota, was not so lucky.

At least three-quarters of his fields will lay fallow this year, drowned out by the wettest spring in generations.

The contrasting outcomes typify the feast-or-famine nature of the U.S. grain cycle this year as excessive rains delayed seeding from the northern U.S. Plains to the eastern Corn Belt.

The U.S. Agriculture Department, in a rare move on Thursday, slashed 1.5 million acres from expected corn seeding while acreage of other crops did not increase, indicating the land may be abandoned for this crop year.

Every bushel of corn and wheat produced this year in the United States, the top exporter of both grains, will go a long way in helping calm global food prices that are hovering near record-high levels due to tight supplies.

Any shortfall, though, could help to push up grain prices that already are high, adding to the burdens of U.S. consumers who are forking out about $4 for a gallon of gas.

Insurance Kicks In

Kuster, who farms in northwest North Dakota, will not be able to take advantage of spring wheat prices that are near three-year highs and will instead take preventive plant insurance on much of his crop.

“This is by far the wettest I’ve ever seen it. Even older guys I know say the same thing. They say rain makes grain, but sometimes rain doesn’t let you get the grain seeded,” he said.

There will be many farmers in North Dakota like Kuster who will be claiming insurance because it was too late to seed without lost yields.

Analysts expect as many as 2 million acres to go unseeded in North Dakota, the state that for the past two years has led the country in insurance claims from farmers who cannot plant.

So-called preventive plant policies can provide farmers with roughly half of the revenue they would make had they raised a successful crop. But it is frowned upon.

“No farmer in his right mind wants to do that. Any time you have preventive plant, you have lost money. Preventive plant is survival mechanics; it’s not a cash flow enhancer,” said Terry Weckerly, who farms hard red spring wheat, corn and soybeans in Hurdsfield, North Dakota.

Weckerly said he will be able to plant all but about 10 percent of his 14,000 acres, but he only recently finished sowing his wheat crop and it is a month late.

Total wheat plantings in North Dakota, the top spring wheat state, were 69 percent complete as of Sunday, well below the normal pace of 97 percent by that date.

The planting delays and expected loss of production helped spur a rally in spring wheat futures this week. Prices hit their highest levels since 2008 when they set a record high.

The insurance deadline to plant in the state was May 31. Farmers still plant but their insurance coverage decreases incrementally each day past the deadline.

A one-man operation, Kuster said he will work any dry spots in his fields late into the night this week in an effort to plant as much as possible.

“For me, when it gets around the 10th of June, that’s kind of the end,” he said. “The problem is that there are so many spots that are wet that aren’t going to get seeded at all.”

A Rush to Plant Corn in Ohio

In Ohio, farmers were slightly more fortunate. Incessant rains this spring flooded the Ohio River and farmers had planted less than a fifth of intended corn acres two weeks ago.

The planting delays and a record-high guaranteed floor price of $6.01 per bushel under insurance were expected to result in as much as half of Ohio’s estimated 3.7 million acres going unplanted.

The deadline to plant corn in the state was Sunday. However, the weather turned mostly hot and dry, and harvest-time corn futures rose to a contract high late last week at the Chicago Board of Trade before topping that price on Thursday.

“Those were two strong incentives to get the corn in the ground,” said Mike Zuzolo, analyst at Global Commodity Analytics in West Lafayette, Indiana.

Farmers who sought to exercise their planting insurance on corn and then plant soybeans would have to wait until July 1 to plant soy. That helped sway some to stick with corn, he said.

Other farmers had already sprayed corn fields with weed killer that would kill soybeans, said insurance agent Barb Fish, who runs her own agency in southern Ohio.

“I don’t look for a lot of preventive planting. Less than a third will take it,” Fish said.

She said some low-lying areas are still too saturated to run heavy farm machinery through, but she had received no preventive planting claims yet, and had not processed any such claims since 2008.

USDA slashed corn acreage for the first time in 15 years in its monthly supply and demand report on Thursday. The government typically makes such adjustments in its acreage report that is based on farmer surveys and released at the end of June.

The government did not reduce acres for the spring wheat that grows in the High Plains but hinted at that possibility, stating its wheat projections were “highly tentative.”

Risks Of Late-Planted Crop

Storms were forecast to move through Ohio during the next few days, likely bringing any late planting to a halt. Working muddy fields is also a risk some farmers are unwilling to take.

“If you put the corn in the ground wet, it never recovers — it compacts the soil and the roots can’t grow,” Hoak said.

Corn stalks with small roots are more easily blown over by winds, said Peter Thomison, extension agronomist at Ohio State University.

“(Late) corn is developing at the end of July, early August. Typically it’s going to be hotter and we’re more prone to dry periods,” Thomison said, adding that yield loss can be as high as 50 percent for corn planted in June.

Spring wheat and corn planted in the northern U.S. Plains are also more vulnerable to frost.

Kuster, in North Dakota, was considering planting sunflower, which is more tolerant to frost. Other farmers were switching to flax, which has a faster growing period.

“You’re faced with natural disasters all the time,” he said. “(Late planting) is better than getting the crop in the ground and having a hail storm wipe out all of it. You always have to be optimistic as a farmer.”

(Reporting by Michael Hirtzer; editing by Jim Marshall)

Topics USA Ohio Agribusiness