By ILAN BRAT
July 2, 2008;
OAKVILLE, Iowa -- Farmer Keith Ball is taking a gamble.
Mr. Ball, 53 years old, said he will try to replant 80 acres that were flooded in mid-June when the Iowa River breached a levee.
So much of the growing season has passed that any soybean seed he puts in the ground won't generate the big yields he normally sees. But he can't pass up the chance to cash in on the price of soybeans, which broke the $16-a-bushel level this week for the first time at the Chicago Board of Trade. (See related article.)
"I don't care if you get 10, 20 bushels an acre; at today's prices, it's worth it," he said. An ordinary soybean harvest would be 50 bushels an acre.
All across the Midwest, where millions of acres of land were battered by record rainfall in June, farmers are trying to decide whether to replant or give up on this growing season in favor of collecting federally subsidized crop insurance. What they decide will have ripple effects from the main streets of farm towns to big-city grocery stores.
If enough acres are planted and the weather turns favorable, Midwest farmers could produce enough to help ease inflationary pressure hitting the food sector. On the other hand, more bad weather could further undermine many growers' financial viability, sending a shiver through their suppliers and lenders.
Crops planted this late run a risk of an early frost killing them before maturity. Insurers dramatically reduce their coverage of corn planted in southeast Iowa after June 25 and soybeans planted after July 10.
Meanwhile, prices of fertilizer, pesticide, and diesel have skyrocketed, raising the financial stakes for any farmers willing to go back into their fields.
Still, "at the present high prices, even half the yield of corn is tempting," said Jim Jensen, an Iowa State University extension specialist who addressed worried farmers Monday.
Most farmers in this part of Iowa have crop insurance. Still, it would not completely compensate them for the money they could potentially make on a healthy crop this year. A farmer here can purchase insurance that covers as much as 85% of average production over the past several years. With corn and soybean prices at twice their year-ago levels, however, many farmers could reap revenue far above normal if the weather cooperates.
Kenneth Meeker, 65, owns 1,200 acres of corn and soybean fields between a hill and the Mississippi River. Since mid-June, almost all the fields he planted have been under water.
"This is Meeker Island right here," he says of the one acre of corn that has survived. The rest of the land within view is covered with rotted vegetation or murky water. "I got zero for income this year."
Mr. Meeker figures his land won't be dry enough to replant this season. He hopes insurance will allow him to recover the $500,000 he spent on planting.
With the stakes so high, federal officials are struggling to gauge how much land Midwest farmers will be able to put back into production in time.
The Agriculture Department said this week its surveys of thousands of farmers into late June found that they had managed to plant more corn than forecast in March. Monday, the USDA said growers planted 87.3 million acres of corn, up from the 86 million acres in its earlier report. The corn shift, which is expected to help compensate for fields that were later washed out by flooding, ignited a steep drop in corn prices this week.
Soybean prices, meanwhile, have soared this week because many farmers made room for more corn by planting fewer soybeans than expected.
If there is an silver lining, it is that soybeans is the one crop that still has a chance of producing.
"I hate to make a home run while the other guys have struck out," Mr. Ball said. "We're feeling like we're pretty fortunate, but also feel guilty that we're going to benefit from the markets and these other guys are not."
Write to Ilan Brat at ilan.brat@wsj.com
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