Central and northern Minnesota are in the worst shape with extreme drought conditions. Southern Minnesota is better. Timely rains there have crops looking good, including those on Harold Loeffler's farm near the small town of St. Clair. Surveying his corn fields, Loeffler is thankful.
"It's been a good growing season. It got a little dry, but the rains came just before there was a catastrophe," says Loeffler.
Loeffler husks an ear of corn with nearly full yellow kernels. He judges it pretty nice. He says the corn is maturing far ahead of schedule.
"It's not there until it's in the bin, so you don't want to count on it too much ahead of time. But it's looking good, it's fun to look at," says Loeffler.
Loeffler and other southern Minnesota farmers with adequate precipitation will help hold the state's crop production up despite the drought. Still, USDA estimates show more bad news than good in Minnesota farm fields.
Corn yields are expected to drop 8 percent from last year's record crop. Soybeans are in even worse shape, down 18 percent from 2005. For Minnesota soybean producers that's a loss of 58 million bushels, or nearly $300 million at current prices.
I feel very sorry for the ones that didn't get these rains.Harold Loeffler
In west central Minnesota parched fields like Brian Ruppe's will produce little grain. Ruppe farms near Benson and says it's been a long time between rains this year.
"I had .8 of an inch three-and-a-half weeks ago," says Ruppe. "And I only got it on part of my land."
Ruppe expects his corn yield to be half or less of normal. His soybeans still have a chance.
"It's just kind of sitting there, going backwards every day because of no rain. Just waiting to get a little shot. They could still put some pods and blossoms on and we could still maybe have an OK bean crop. But a lot of the lighter ground too, pretty burnt up there," says Ruppe.
The worst news for farmers like Ruppe is that grain prices are dropping. Corn prices at most elevators in the state are under two dollars a bushel.
Grain analyst Doug Hjort says it's all about supply and demand. Despite drought problems in the upper Midwest, most of the nation has good crops. The nation's corn harvest will be just one percent less than last year. The soybeans harvest will decline 5 percent.
The production drop though is mostly offset by large stockpiles left over from last year. Take corn for example. Hjort says nationwide there's still two billion bushels leftover from last year's harvest.
"In order to be bullish on corn and get prices moving sharply higher, that'd be 50 cents, $1 higher than we are now; you'd have to have that ending stock below a billion bushels," says Hjort. "More like 700 million or something like that. So we got quite a cushion going into the new year."
Hjort says corn demand is growing especially in the ethanol industry, but there are still plenty of bushels available and that's holding prices down. Thanks to timely rain, Blue Earth County farmer Harold Loeffler hopes to contribute a rich harvest to the nation's grain supply.
"I feel very sorry for the ones that didn't get these rains," says Loeffler. "Because that's tough. There's just nothing you can do about it."
There's still a month or more left in the growing season. If weather patterns change and rain falls the state's actual harvest could be better than current estimates. The bad news is that would add even more bushels to the national supply and reduce the chances of a grain price rally.