WeatherBill, the pioneers in weather insurance and risk management, released results from the first in a series of weather financial impact reports for the U.S. growing season. This first report quantifies how much growers stand to lose as a result of planting delays caused by heavy rains across the Eastern Corn Belt. WeatherBill’s analysis found that between 834 million and 1.6 billion bushels of corn are at risk across the top corn producing states as a result of planting delays due to the extreme weather – a loss of yield that could equate to between $5.8 billion and $11.2 billion, depending on how quickly planting progresses as fields dry.
With corn prices still near record highs, the 2011 growing season still has the potential to be one of the most profitable for Midwestern farmers. Yet, as the Crop Progress Report released by the United States Department of Agriculture (USDA) on May 9 reports, growers nationwide only completed 40 percent of planting compared to a five-year average of 59 percent.
Based on a comparison of the best and worst planting seasons, states experiencing delayed planting as a result of the excessive wet spring conditions are already on track to lose more than $5.8 billion in crop revenue. If these top-producing corn states continue to experience excessive early season rainfall, losses could more than double if past seasons are any indication.
Equally revealing, the states that have been the hardest hit by wet weather this season represent more than 60 percent of the nation’s corn-growing acreage. According to data collected by state climatology offices, the top five states that have been impacted so far this season are Illinois, Indiana, Iowa, Ohio and Wisconsin.
Illinois experienced the rainiest April since 1895, and the Ohio Valley region had its wettest April on record. Wisconsin is having the third wettest spring the state has experienced in the last 30 years. These historic rains could lead to a potential record yield loss, putting growers’ profits and the nation’s corn production under significant pressure.
Below is a breakdown of WeatherBill’s report indicating the best and worst case scenarios for revenue tied to corn yield in each state based on spring weather to date ranked by worst case shortfall. The low loss year column represents the shortest, or fastest planting season in recent years. The high loss year model represents the slowest planting season, or the one in which growers experienced the greatest delays.
Adverse weather events each season have caused growers across the Midwest to protect their profits through Total Weather Insurance™ (TWI) policies offered by WeatherBill. TWI is a full-season weather insurance program that protects growers from financial loss due to weather events that can cause yield shortfalls, even when they fully utilize federal crop insurance. TWI policies provide coverage over and above federal crop insurance, providing growers with the ability to lock in a level of profit even in the face of adverse weather during the growing season. TWI’s first component - Excessive Early Season Rainfall - automatically compensates growers for the weather events that can cause yield losses they will face later in the season as a result of not getting the crop planted during the ideal planting period.
“U.S. growers are more than capable of planting quickly in less than ideal conditions to generate high yields,” said Jeff Hamlin, director of agronomic research for WeatherBill. “With higher yields comes higher risk. WeatherBill expects that over 50 percent of TWI policyholders across the Midwest will receive payment from WeatherBill in the upcoming weeks for Excessive Early Season Rainfall and two thirds of policyholders whose Early Season coverage periods have concluded have already received checks triggered by this season’s weather events. Growers didn’t even need to file a claim. WeatherBill monitors all weather data and sends payments to growers automatically.”
The methodology used to compile the Weather Financial Impact Report, relies on local university research analysis from each of the top 12 corn producing states to determine the potential number of bushels of corn produced in those states that would be at risk as a result of delayed planting. WeatherBill evaluated historical data from each state indicating the percentage of acres of corn planted by the week of May 9 of a given year – both the highest and the lowest percentage years – and compared each set of numbers to the current $7 a bushel commodity price at the time of the May 9 planting reports and the average bushels of corn potentially produced by each state.
Editor's Note: For a complete copy of the report.