Heavy rains in recent weeks have wiped away drought conditions in much of Minnesota and left farmers in a position to reap big profits in 2012.
Part of the reason is that drought continues elsewhere, cutting the nation's corn yield and driving prices up.
The early season drought in Minnesota gave farmers dry soil and perfect planting conditions. Then almost on cue, rain started falling to get the crop growing. Of the state's $7 billion-plus corn crop, 83 percent is rated good to excellent at this point.
"I wish all my corn fields looked like this one," Brian Greenslit said Thursday as he walked into one of his fields near Franklin in southern Minnesota. Typically it might produce 180 bushels per acre, but Greenslit thought it could exceed 200 bushels this fall.
To be sure, some fields, including some of Greenslit's, have been hurt by too much rain, hail and wind. But there's a developing drought area in Iowa, Ohio, Indiana and Illinois.
"We need a rain in that area in the next 10 days or it's going to go extremely downhill," said Gregg Hunt, a commodity broker for Archer Financial Services in Chicago.
This year's corn crop is expected to be the largest in 75 years, more than 96 million acres, according to the U.S. Agriculture Department. But the drought has traders worried, and prospects of smaller-than-expected yields fueled a dramatic spike in corn prices. In two weeks prices rose from a little above $5 a bushel to $6.34.
Hunt said more dry weather is predicted, which could push corn prices even higher.
"This market I think has a good shot of doing much like it did last year," Hunt said. He thinks the price could hit $7, a very profitable level for farmers.
That could also cause food costs to rise, said U.S. Department of Agriculture economist Ricky Volpe, but probably not as sharply as most consumers might guess.
Every 10 percent increase in corn prices raises the price of meat 1 percent at the grocery store, Volpe said. And even if meat prices increase faster than that, the impact will be partially offset by falling prices in other food categories, like fresh vegetables. So for now at least, Volpe says the USDA is expecting food inflation this year to be about average.
"That means that a typical consumer's shopping basket, measured over the course of the year, is expected to increase in price 2.5 to 3.5 percent over what they paid in 2011," Volpe said.
For Minnesota farmers though, a 10 percent increase in corn prices can be a 10 percent increase in income. If the weather and prices hold and they get a big harvest, they'll make more money than they would have expected a few months ago.
But Greenslit noted that higher prices reduce demand.
"It doesn't do anybody any good to profit at someone else's expense," said Greenslit. "If it means the loss of their business."
That's already playing out. At least four U.S. ethanol plants have stopped buying corn and temporarily shut down because they're unprofitable. Rising corn prices also could lead to a pullback from livestock and poultry producers, which depend on the grain for feed.
But at the moment, it looks like those forces are exerting little downward pressure on the price of corn.