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Are volatile yields ahead?

June 17, 2012

DES MOINES - While Iowa is now in neutral territory for La Nina-influenced weather conditions, the potential for greater yield volatility highlights the need for risk management.

"It looks like La Nina may have ended around April 22, but we don't know for sure," said Elwynn Taylor, an Iowa State University Extension climatologist, who spoke at the 2012 World Pork Expo in Des Moines.

"Strong La Ninas - and this one was one of the strongest since the 1950s - tend to come back," he said. "We'll know by the week of July 10."

During a La Nina episode, the U.S. average corn crop has a higher risk of being below-trend line, Taylor said, adding that the U.S. is due to enter a period of volatile yields.

Extremes won't be uncommon in this 25-year cycle, in which yields could be cut by 30 percent nationally or could rise 20 percent nationally.

"While the price of crops has been far above the cost of production in recent years, we don't expect this to persist," Taylor said.

"Risk management will become even more important thing in your life in the months ahead."

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