Chad Korth's Nebraska farm was mostly unscathed by the catastrophic floods that soaked nearby fields thanks to being atop a hill. But as the waters recede, he's not expecting to be spared the financial blow that's hitting the region.
After bulging waters from the Elkhorn River took out bridges and roads, Korth -- a third-generation farmer who raises corn, soybeans and cattle with his father in Meadow Grove -- said he'll have to chart out new courses to buy equipment. Meanwhile, local corn prices have declined because the flooding forced Valero Energy Corp. to idle its 135-million-gallon-a-year ethanol plant in Albion. Annual demand from the mill is usually about 47 million bushels of corn.
Beleaguered American farmers, already suffering from low crop prices and the U.S.-China trade war, have been dealt another blow by Mother Nature. Growers in the heartland this year have seen arctic cold blasts, been blanketed by snow and recently were inundated by floods. Archer-Daniels-Midland Co., one of the world's biggest agribusinesses, said recently that it expects weather disruptions to have a negative pretax operating profit impact of $50 million to $60 million for the first quarter.
Korth said he fears the worst for local farmers, citing a friend who lost 85 cows to flooding and another who sells seeds and has already seen order cancellations.
"It's going to put a lot of people out of business," Korth said. "It's just a terrible deal."
The flooding forced ADM to halt output at its Columbus, Neb.-based corn-processing plant because of washed out roads and rail lines.
Morgan Stanley consequently lowered its 2019 earnings per share estimate for the company by 6.6 percent to $3.13 partly because of rough weather, Vincent Andrews, an analyst, wrote in a a recent report. JPMorgan Chase & Co. analyst Tom Simonitsch also lowered his full-year estimate to $3.34 a share from $3.50, citing "a heightened risk of further flooding across the Midwest on top of the current disruptions."
Meanwhile, Valero said because of the snarled transportation out of the Midwest, the Austin, Texas, market will begin sales of non-ethanol blended gasoline. Flint Hills Resources LLC is adjusting gasoline production to "make up for the loss of ethanol," Deanna Altenhoff, a company spokesman, said March 21. Cargill Inc. said that while all three of its Midwestern ethanol mills are operational, it's also seeing rail challenges because of flooding.
On the Senate floor, Senator Chuck Grassley, an Iowa Republican, said that flooding has affected roughly two-thirds of the state's counties and that damages estimated for agriculture total $214 million, so far.
What's more, the weather woes for farmers could extend into spring.
Saturated soil in areas across the Midwest, northern Mississippi Delta and parts of the South threaten to delay planting corn and soybean crops through the first two weeks of April, according to Dan Hicks, a meteorologist at Freese-Notis Weather in Des Moines, Iowa.
The blow occurs at a time when the agriculture economy is already deeply suffering. U.S. net farm income is projected to be $69.4 billion this year, or 44 percent below the record set in 2013. Growers have racked up debt and a glut of crops as the trade war hurt demand.
For Korth, there's a disconnect when he hears people talking about the overall health of the American economy.
"Everybody talks about how good the economy is," he said. But for farmers, "it's terrible."
Information for this article was contributed by Brian K. Sullivan, Isis Almeida and Kevin Varley of Bloomberg News.
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