Farm Horizons, November 2009
Grain prices not as high as 2008
By Starrla Cray
The corn and soybean harvest is plentiful this fall, but profits might not be as high as in previous years for many local crop farmers.
Grain prices have fallen since the record highs of 2008, while input costs have continued to rise.
“Rent is higher, taxes are higher, and your bottom line is that much less,” said Kevin Campbell, who farms three miles out of Winsted.
In 2007, the average high for soybeans was $11.09 per bushel, and in 2008, it rose to $15.50 per bushel, according to University of Minnesota Extension Educator Dave Bau. Corn was at $4.15 per bushel in 2007, and jumped to about $7 per bushel in 2008.
“The record high prices were caused by growing demand and world exports,” Bau said. “Now, grain prices are declining somewhat. The record prices slowed down demand.”
The 2009 harvest is bringing roughly $9 per bushel for soybeans, and $3 for corn.
“The market has kind of corrected itself,” Bau said.
The 2010 futures prices are similar, with $8.19 for beans, and $3.37 for corn.
“At this point, everybody’s hoping they’ll go up before they sell,” Bau said. Typically, grain prices are lowest at harvest time, and they often increase in the spring.
“We’ll wait until January or February,” he said. “That’s when you start getting an idea of what the real markets are.”
Up until three years ago, Campbell had been a dairy farmer, and had used his crops to feed his livestock.
“At that time, the price of milk was our only concern,” he said. After he sold the cows, Campbell built bins to store his grain.
“Basically, the only grain that’s moved is what people don’t have storage for,” he said, explaining that having space to keep grain until prices rise can save farmers money in the long run.
“It’s going to pay for itself,” said Campbell, who has about 100 acres of corn and 100 acres of soybeans.
Prices have already gone up from their lows this year, Bau said.
“Bean prices are recovering a little bit,” he said.
Although this year’s grain prices are lower than in 2008, they are still above average.
“We’re not anywhere near what it’s been for the last decade,” Campbell said.
In 2005, corn prices were at $1.94 per bushel for an average high. For beans, the average high price in 2006 was $6.29.
“We’re way above that,” Bau said.
This year’s prices also beat average highs from 1974 to 2008. For soybeans, the average high was $7.38, while the average low was $4.97. Corn averaged $2.84 for a high, and $1.83 for a low.
“We’ve had great prices compared to the average highs,” Bau said, adding that the only problem has been the cost to produce the grain.
“Input costs went up dramatically,” he said.
“It costs a lot more to plant,” Campbell added. According to an article from the Farm and Ranch Guide, the three costs that have risen the most include fertilizer, land rent, and seed.
As for yields, Bau said corn is looking better than last year, while beans are slightly better.
“In general, the crops in Minnesota are looking pretty good this year,” he said.