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Just weeks after harvest, drought means positive basis for corn in southwest Minnesota

In November, the U.S. Department of Agriculture designated 10 Minnesota counties as primary disaster areas, making them eligible for emergency loans. USDA also has designated four South Dakota, 10 Iowa counties, four Nebraska counties and counties in Missouri, Kansas, Oklahoma and Montana disaster counties.

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U.S. Drought Monitor map released Nov. 15, 2022.
National Drought Mitigation Center
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A drought that has intensified late in the growing season has some ethanol plants paying a premium price for corn just weeks after harvest has been completed.

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George Goblish, Vesta, Minnesota, farmer
Courtesty / American Soybean Association

George Goblish, a farmer at Vesta, Minnesota, said a positive basis is “unheard of this time of year.”

The ADM ethanol plant at Marshall, Minnesota, was about 12 cents above the basis on Friday, Nov. 18.

“They were a really dry spot,” Brian Kletscher, manager of the Highwater Ethanol plant at Lamberton, Minnesota, said on Friday, Nov. 18. His plant was paying 3 cents above the basis price but was likely going to go 5 cents over.

His immediate area of southwest Minnesota had a “pretty decent crop,” he said, with corn yields running roughly 180 to 230 bushels per acre. But around Marshall, about 40 miles northwest, he said yields were 125 to 150 bushels.

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Goblish, a board member at Highwater, farms in Redwood and Lyon counties but had to file for crop insurance on his acres in Lyon County, where Marshall is the county seat.

“Two years back-to-back out on that field in Lyon County,” Goblish said of filing an insurance claim. “Crop insurance does not cover the loss if a good crop was produced, especially at these prices.”

While yields were good in his area, Kletscher said there were more areas of poor corn yields not far away in southern South Dakota, Nebraska and Kansas, all putting pressure on the market.

“Surprisingly with the dry weather we had even this past summer, we saw really good yields,” Kletscher said.

“The corn in this area, it's gonna be here for us to grind. It's just a matter of when the farmers are gonna be willing to haul it out, what kind of price they’re going to want for it,” Kletscher said. “And that's where we have to push it a little bit to get the farmers moving the corn. But we're good on corn on hand, and we've got good supply bought into the December, January timeframe, but we want to make sure we don't miss out on any bushels local.”

Drought and disaster areas

A band stretching from Lyon and Murray counties in the southwest to the Twin Cities area is in D3 or extreme drought, according to the U.S. Drought Monitor. Almost all of Redwood County is in extreme drought.

In November, the U.S. Department of Agriculture designated 10 Minnesota counties — Anoka, Lincoln, Lyon, McLeod, Murray, Nicollet, Pipestone, Redwood, Rice and Wright — as primary disaster areas, making them eligible for emergency loans. Also eligible are 26 more counties contiguous to those counties.

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Counties in the darkest red are D4, or exceptional drought. Parts of Minnesota and South Dakota are D3, or extreme drought.
National Drought Mitigation Center

USDA also has named six South Dakota counties as primary disaster areas because of drought: Beadle, Fall River, Jerauld, Kingsbury, Oglala Lakota, and Sanborn, with contiguous counties also eligible for emergency loans. There were 10 Iowa counties, four Nebraska counties and counties in Missouri, Kansas, Oklahoma and Montana designated as disaster counties.

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Snow cover

Mike Landuyt grows corn and soybean and feeds cattle near Walnut Grove in Redwood County.

“For corn we were 10-15 bushels above average,” he said. But with no rain late in the growing season, soybean yields were 12 to 15 bushels per acre below average.

“With having to shovel feed bunks and stuff, we don’t ever hope for too much snow,” he said, adding that some moisture would be welcome.

“As long as it soaks in,” Landuyt said. “Our ground is getting hard now.”

Goblish also was wishing for a warm up to let some of the snow that had already fallen melt and soak in.

But for Goblish, plenty of snow cover would be welcome.

“I don’t have livestock, and I like to snowmobile,” Goblish said.

Jodi DeJong-Hughes, a University of Minnesota Extension educator based in Willmar, said some snow would really help.

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“It would be very beneficial for the soil if we can get a blanket of snow early. One, it'll protect the soil from wind erosion, and two, we need some moisture for spring planting and to recharge the soil profile,” she said. That's especially true for those farms that did some fall tillage.

But, of course, snow is no sure thing.

“If in the spring we are still short on moisture, I would keep the spring tillage shallow, just a few inches to keep as much soil moisture as possible,” DeJong-Hughes said. “If farmers have cover crops that overwintered, terminate them early so that they're not using up the moisture intended for the crop.”

Goblish said there is something else farmers could do. “Might have to buy more crop insurance.”

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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