What do recent precipitation deficits tell us about next summer?
It is important to emphasize that we are not attempting to forecast 2013 summer precipitation levels in corn and soybean producing areas of the U.S. Expectations about weather conditions in the summer of 2013 may be influenced by factors other than recent and current weather. These factors would include, for example, expectations about El Niño/La Niña-Southern Oscillation events and general climate patterns. The point is that making a connection between current moisture deficits and next summer's weather must be based on these "other" factors. There is simply no general tendency for current conditions to reliably predict what will happen that far into the future.
As a final point, we note that prior to the growing season new crop corn and soybean prices should reflect some risk of sub-par average yields in 2013. That "risk premium", however, should probably not be much larger than in any other year based solely on current moisture conditions. Current forward prices for the 2013 crops of corn and soybeans are well above the levels that existed before the drought of 2012 and likely reflect substantially more than average yield risk.
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