Prospect of Record Corn and Soybean Production Send Prices to Worrisome Levels

Gregory Meyer reported on Friday at The Financial Times Online that, “Surveyors who visited farm fields this month have kicked dirt off their shoes and reached a striking conclusion: the US is on the cusp of record corn and soyabean harvests.

“The government’s first crop production report of the year for the two commodities, released on Friday, suggested no end to a glut that has depressed grain prices, socked farmers’ incomes and weighed on land values.”

From USDA’s Crop Production Report

The FT article stated that, “The US is the world’s biggest producer of corn and soyabeans. This autumn its farmers are set to harvest 15.2bn bushels of corn, up 11 per cent from last year, and
4.06bn bushels of soyabeans, 3 per cent more than last year, the US Department of Agriculture said. Both figures topped analysts’ estimates.”

Reuters writer Mark Weinraub indicated on Friday that, “The USDA forecast corn yields for Illinois, the second biggest state for production of the yellow grain, at 200 bushels per acre. If realized, that would be 25 bushels per acre higher than in 2015.

“In Iowa, the biggest corn producer, yields were forecast at 197 bushels per acre, up from 192 bushels per acre in 2015.”

And the Associated Press pointed out on Friday that, “Ten states are expected to set new bushels-per-acre corn yields…”

Correspondingly, Donnelle Eller reported on the front page of Sunday’s Des Moines Register that, “Another bumper crop is driving corn and soybean prices ever lower, potentially shorting Iowa farmers of nearly $2 billion in revenue and leading to a third consecutive year of income losses.

“Some experts worry that corn prices at Iowa elevators, already below $3 a bushel, could plummet to $2.30 to $2.50 a bushel, levels that most farmers in the state haven’t seen in a decade.”

Ms. Eller added that, “New projections from the U.S. Department of Agriculture on Friday show that farmers will harvest record corn and soybean crops. The agency said that average corn prices nationally could fall as low as $2.85 a bushel and soybeans could drop to $8.35.”

In related news, the Associated Press reported on Saturday that, “Minnesota’s crop, livestock and dairy farmers are suffering with continuing rock bottom prices for their commodities, driving some into bankruptcy.”

“The number of troubled agricultural loans is rising statewide and the number of farmers offered mediation by lenders is up 20 percent so far this year,” the AP article said.

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