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Unease ahead of 2023 grain harvest as record U.S. dryness spreads -Braun

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NAPERVILLE — More than 80% of the United States faces abnormally dry conditions, the biggest portion so far this century, and the recent escalation of dryness across several key grain states raises risks for the 2023 harvest.

Extreme fall dryness is more concerning for the U.S. winter wheat crop since there is less recovery time. Excellent U.S. corn crops have coincided with drought in the previous fall, though spring replenishment is critical for a successful harvest.

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Unusually dry fall weather has accelerated drought conditions in central U.S. states. In the Midwest, September-October may contend for top 10 driest ever, helping the Mississippi River reach historically low levels and severely disrupting grain movement along the waterway.

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According to the U.S. Drought Monitor, a record-large 82% of the country is experiencing abnormal dryness, slightly more than 2012’s high of 81%. Some 59% of the country has earned official drought designation, a share seen in just a handful of other weeks, mostly in late 2012.

U.S. government forecasters said Thursday that the river situation might not improve during the winter with drier than normal weather possible in the South. However, chances for above-average precipitation in the eastern Midwest could provide relief there.

The Drought Monitor data goes back only to 2000, but some years in that period, like 2012, offer a good comparison. Crop yields were horrendous that year amid one of the worst-ever U.S. droughts, and although dryness covers a larger expanse today than in 2012, the severity in the grain belt is luckily lower now.

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Some 15% of the crop-heavy Midwest is in severe drought or worse, the most since August 2021 but well below the 34% observed the same week in 2012. However, the recent spread of dryness is alarming, as Midwest drought coverage was just 10% in mid-September versus 43% this week.

DSCI AND CROPS

The Drought Monitor’s Drought Severity and Coverage Index, or DSCI, is measured from 0 to 500, with 0 representing complete lack of dryness and 500 the worst possible drought at 100% coverage. Midwestern DSCI is at 141 this week, the most for any week since early 2013.

DSCI readings are unsettling in top winter wheat state Kansas, where sowing for the 2023 harvest is in progress. The latest value of 355 is topped only by a 2012-2013 stretch, and that number would need to plummet significantly in the coming months for the 2023 crop to separate itself from bad company.

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Whenever DSCI was above 150 in April, Kansas had a terrible wheat harvest. There are eight such instances since 2000, and wheat yields ended anywhere from 14% to 37% below the long-term trend. Even if winter months are dry there, exceptional rainfall in March could right the ship.

Corn and soybean areas have more time to refill moisture reserves before yield risks arise, and that is more likely than not because spring rainfall is much higher than in winter. Also, soils can recover significantly with just one good month of spring precipitation, even following a drier winter.

Nebraska, which has been dealing with elevated drought all year, may be a good example. The state’s DSCI started 2021 at 275, but near-record March precipitation substantially eased the situation. Summer weather was largely supportive, and Nebraska’s 2021 corn yield was an all-time high.

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Although it is not common, strong corn yields can coincide with high DSCI at the height of the growing season as was the case in Iowa last year. The index peaked above 200 in the top corn state during summer 2021, but Iowa notched a record corn yield last year partly because drought conditions did not span the whole state.

As far as the Midwest is concerned, an abnormally dry fall is not at all a bad omen for the upcoming corn crop. Fall of 2003 was one of the driest on record, and the 2004 corn yield was among the most impressive ever. And despite the terribly dry finish to 2012, the 2013 U.S. corn yield was respectable given the circumstances.

If dryness persists into the spring and the river levels remain low, then from an overall supply perspective, there might be less pressure to produce a huge crop if grain movement to export terminals remains constrained.

But a poor start to 2023 would escalate stress for U.S. farmers, already facing extremely high production costs for the upcoming year. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Editing by Matthew Lewis)

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