U.S. corn farmers nervous over dry forecast

Some farmers in the eastern U.S. Corn Belt have been buying back contracts of corn sold to their local elevators for post-harvest delivery as a deepening drought raised concern that there may be no grain to deliver.

Volumes of buybacks have been minimal thus far, but grain merchants expect there will be more as weather forecasts for southern Illinois and Indiana call for very little rain over the next two weeks.

“At this point it’s not anything more than normal. You always get people pushing the panic button early. Indiana is drought-central right now so it’s not unusual to see farmers buying back contracts,” said Jim Gerlach, president of A/C Trading in Fowler, Indiana.

The condition of the corn crop has been eroding in recent weeks amid hot, dry weather, particularly in southern Illinois, southern and western Indiana and western Kentucky. Soybeans have also been stressed, but that crop can bounce back with timely rains better than corn.

“The buybacks are not a spec move because they think prices are going higher. It’s because they don’t think they’ll have a crop,” said a grain merchant at another southern Indiana location, estimating corn buybacks so far of about 200,000 bushels at three elevators.

“They’re far more nervous about the corn than the beans at the moment, but if we go another 10 days without moisture then we’re going to start seeing beans dying as well,” he said.

Most farmers have some level of crop insurance, which mitigates some of those losses.

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