Weak Corn and Soybean Prices Impacting Producers

Rick Barrett reported late last week at the Milwaukee Journal Sentinel Online that, “As farmers approach fall harvest, profits remain elusive even as fields are brimming with corn and soybeans.

“This week, a new report from Purdue University and the CME Group showed that falling crop prices are weighing on the minds of farmers.

Earlier this year, farmer sentiment was buoyed by a rally in key commodity prices. But excellent growing conditions led to improved crop-yield prospects — a point of pride for farmers that also has dragged prices lower.”

Mr. Barrett explained that, “Since June, the price that farmers can expect for corn delivered in December has fallen more than 25% to about $3.25 per bushel – hovering near the break-even point for some growers.

“Soybean prices have plummeted by a similar percentage to below $9 per bushel.

“Farmers who sell their corn and soybeans on the commodity markets could lose money on their crops, said David Widmar, a Purdue University farm economist.”

The Journal Sentinel article pointed out that, “Farmers who are highly leveraged and face continued high expenses are in the most trouble if prices don’t improve soon.

“The downturn will harm the rural economy, too, as each dollar of net farm income results in an additional 60 cents of economic activity, according to University of Wisconsin research.

“This could be a stressful period for rural communities that depend on agribusinesses, according to Widmar from Purdue University.”

And Tim Landis reported on Saturday at The State Journal-Register Online (Springfield, Il) that, “Slumping commodity and farmland prices are rolling through the rural economy as the fall harvest begins in Illinois and across the Midwest.”

Mr. Landis noted that, “Manufacturing layoffs at John Deere, Case New Holland and Caterpillar have been linked to the farm economy slowdown. Closer to home, owners of a German-Bliss dealership said slowing farm-equipment sales were among the reasons for closing the store at the west edge of Springfield last month. Dealerships in East Peoria and Princeville were not affected.”

The Journal-Register article added that, “Based on a Purdue University formula, the profit-loss line is somewhere between $4.02 and $4.39 per bushel for corn and $9.88 to $11.70 per bushel for soybeans, depending on yields and soil types. As of Thursday, according to CME Group, corn was selling at $3.25 for December delivery and $3.47 for March delivery. Soybeans were selling at $9.90 for delivery this month and $9.77 for January delivery.”

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