2016 Weather Outlooks - Tuesday, 08 March 2016

Knowing what spring and summer weather will be would be an amazing asset for producers.  There would be little doubt or speculation about the selling of old crop supplies or the pricing of the new crop.  Sadly though that is not the case, at least not yet.  For several years the European Center for Medium-range Weather forecasting has been highly respected for their accuracy, even more so than the American GFS (Global Forecasting System) for predicting Medium-range weather.  Recently the U.S. invested $44.5 million into the development of an even better forecasting model in order to compete with their European counterpart.  This super-computer which was designed and is owned by the National Oceanic and Atmospheric Administration (NOAA) is already in use and producing impressive results.  The winter storm that hit the east coast a month ago was predicted with amazing accuracy, NOAA officials believe that this is only a glimpse of what this super-computer will be able to offer.  As this computer advances through time with new technologies the accuracy will continue to improve, perhaps this will help eliminate some of the uncertainty in the markets we see today.  Until then we will continue to gather information from many sources and try to make the best possible decisions we can based on that data.

This is a list of some of the outlooks I have gathered for the 2016 growing season, as you will notice there are some similarities but many differences as well.  Hopefully some of this will help you make the best decision for your farming operation, because until we have forecasts that can accurately detail months in advance, gathering data from a number of sources is our best option.

1.  The Bureau of Meteorology in Australia says that indicators for El Nino are now beginning to fluctuate and are at moderate levels.  They predict that El Nino is likely to end during the second quarter of 2016 and according to history and model outlooks, neutral conditions are more probable to occur than a La Nina event for the second half of the year.  Even though the system is weakening they expect that it will continue to influence the Northern hemisphere through spring.

2.  According to NOAA  January sea surface temps in the Pacific Ocean continued to indicate a strong El Nino was still in place.  Signs now show that the system is weakening and will transition to neutral sometime during late spring or early summer this year. In the meantime though El Nino is expected to continue to influence temperature and precipitation pattern across the U.S. (Current forecasts through April call for above average rainfall across the southern tier of the U.S. and below normal precipitation over the northern tier.  Above average temps for the North and West while below normal temps are expected in the southern Plains and Gulf Coast.)  There is strong model support for La Nina following a strong El Nino but much uncertainty remains at this time.

3.  Karen Braun of Reuters sees many U.S. producers and analysts getting "worked up over the somewhat valid predictions that the U.S. corn and soybean crops may face weather hardships this summer.  They should not get too ahead of themselves.  Of course, central to these predictions of summer drought is expected is the expected midyear flip from El Nino into La Nina, which has coincided with weather problems in the past such as in 1988 and 2010.  If this transition takes place, we could see the jet stream fall into a mainly west-east pattern which would make for quite a warm summer, which was observed between 2010 and 2012 (map on the left) with harmful impacts to yields.  However, you need to understand that the U.S., with the exception of California, is about as drought-free as it has been in recent memory.  If wetter weather continues into the summer growing season, we are looking at a situation more like 2013, 2014 and 2015 - plenty of soil moisture, record corn and soybean yields-which you can see in the map on the right.  Despite all of this, remember that even though most of the major corn and soybean states are in a moisture surplus at the moment, there is plenty of time for a drastic change, as history has shown.  While this is a "wait and see" weather outlook, the odds of a summer drought are surely higher going into this year than they were in the past two years so stay tuned." (Source: Reuters)

 

4.  If this looks and sounds familiar it's because it is, this was in a recent newsletter but I thought it would be appropriate to include for comparison with the other predictions. 

Darrel Good, Agricultural economist offers producers more promise for a turn- around in prices than the gloom and doom described in the USDA’s estimates.  “The nature of the 2016 growing season is not predictable but there are two developments that may point to an elevated risk for the U.S. average corn yield to fall below trend value.  First and most widely cited, is the weakening of the current El Niño event.  Historically, El Niño events that existed in January and ended by July, as is expected this year, have been associated with higher-than-average incidence of corn yields below trend value.  Second as reported by private agricultural weather forecasting service T-storm weather, is the historical record for extremely wet conditions in the Midwest during November and December to be followed by a higher-than-average incidence of corn yields below trend value.  Total November and December precipitation the Midwest in 2015 was record high.”  He contends that depending on acres planted, an 8 to 10 bushel drop in yield off trend line could change the balance sheet from having a surplus to one requiring rationing.

5.  In the February 4th newsletter I posted this viewpoint for our upcoming growing season.

On the flipside of all of this negative news, Bill Kirk, a weather statistician and the owner of Weather Trends 360, contends that corn prices could hit the $6.50 to $7.00 range this summer.  At the Top Producer Seminar in Chicago he presented what factors he believes could take corn prices back to much higher levels. 

  • He believes that we will see a wet spring across a majority of the country which could delay planting all thanks to El Niño. 
  • A freeze in late May is likely.
  • He expects the current El Niño to dissipate and a La Niña to form which will bring very dry weather soon after the crop is planted causing drought stress in June and July. 
  • From June 26th until July 9th he expects an extreme heat-wave which could hurt pollination if it falls during this time-frame.
  • The forecast doesn’t improve, he expects a frost in late September and a frigid fall.

Earlier this winter there were several weather guru's that thought we would see an aggressive switch from the current El Nino to a full-blown La Nina pattern  during the heart of the 2016 growing season.  Since then many of them have backed off those predictions, not saying we won't see the La Nina pattern develop at all just probably not making the dramatic and impactful switch from El Nino to La Nina early enough in the season to significantly affect yields.  To quote Kevin Van Trump of the Van Trump Report, "Moral of the story, if we ease into a La Nina pattern later in the season, rather than diving in head first during the early-growing phase, we might not see as many headlines about hot and dry conditions in key corn and soy growing regions of the U.S. during the 2016 growing season??? Make sure you understand, this extreme La Nina horse is still considered a "long-shot"."

 

Crop Insurance season is underway and the deadline for purchasing insurance is Tuesday, March 15th.  Our office is contacting current Crop Insurance customers to go over your insurance coverage needs for 2016.  In order to provide you the most accurate quote we need your production numbers for last year so we can enter them into our system prior to your appointment.  When you are determining what level of Federal Crop Insurance coverage you want, you should first figure what your per acre cost of production is for this year.  The Hail Production plan has several different levels of quoting options this year that you may be interested in.  You may also be interested in APO (Added Price Option), a supplemental insurance available again this year.  This product gives the grower an opportunity to increase his spring price for a small per acre amount in the case of a bushel loss only.

 

Spring price for 2016 IA, MN, SD:

Corn $3.86

Soybeans $8.85

© 2015 Ag Performance | All Rights Reserved.

Home | About Us | Services | Products | News | Contact Us |