In the past five decades, extreme drought conditions in the United States such as those experienced in 2012 have been followed by generally favorable growing conditions and yields near trend values.

However, current dry soil moisture conditions in much of the United States and some recent forecasts that drought conditions could persist well into next year have raised concerns that such a rebound in yields may not occur in 2013, according to University of Illinois agricultural economist Darrel Good.

“There is a relatively high probability of large crops, increasing stocks, and lower corn and soybean prices in the 2013-14 marketing year,” Good said.

”Such a probability might warrant some aggressive pricing of next year’s production. However, current tight supplies and production uncertainty are expected to keep prices relatively high in the early part of the new year. If that is the case, the spring price guarantees for crop revenue insurance could once again be at very high levels, offering protection from low prices that would result from large crops,” he said.

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Good said that five or six years ago, the corn-yield discussion was dominated by ideas that corn yields were increasing due to new seed technology and that corn yields were “bullet proof.”

That discussion seemed to gloss over the impact of an extended period of very favorable weather.

“The pendulum has now swung in the other direction, with the current corn yield discussion dominated by the potential of an extended period of dry weather and sub-par yields,” Good said.

“Only time will tell if the concerns are legitimate. For now, such concerns may motivate another year of large corn acreage. A return to a near-trend corn yield would then result in a very large crop in 2013.

“A large crop along with a plateau in the amount of corn used in the production of ethanol would result in a substantial buildup of stocks during the 2013-14 marketing year and corn prices at or below the levels prior to the drought of 2012,” he said.