Corn, soybean prices falling

DEWEY — Corn and soybean prices, which hit record highs in August, have been dropping since then and may fall further, a commodity research analyst said.

"There is still risk downside in prices," Brian Basting of Bloomington-based Advance Trading told about 50 farmers Tuesday at an agricultural seminar sponsored by the Dewey Bank.

Corn, which traded in the $8.50-a-bushel range this summer, now sells in the $7.20 range — a drop of 15 percent.

Soybean prices, which were as high as $17.80 a bushel, have fallen to the $14.10 range, a decline of about 20 percent.

Pointing to previous price drops following peaks, Basting said a return to expected long-term levels "is going to happen sometime. I'm very confident it will happen."

Basting acknowledged prices could move in either direction, depending on weather and demand factors.

But he warned of a "possible steep price drop for corn," noting there's less demand from the ethanol industry and "one of the weakest export programs for corn in 40 years."

Plus, the 2012 U.S. corn crop proved to be "a little bigger than we thought it was," he said.

Basting said prices were high this summer because drought afflicted both the U.S. and South America during the past growing season.

But a favorable growing season in South America this winter could turn things around, not only for corn but also for soybeans.

With soybean prices as high as they are, farmers will be "highly motivated to plant more beans in South America" this winter, he said.

Nick Paulson, an assistant professor of agricultural economics at the University of Illinois, told farmers that increases in cash rents will likely slow in 2013.

They're not likely to rise by 16 percent again, he said, referring to figures from the National Agricultural Statistical Service.

Cash rents tend to equal between 30 percent and 40 percent of gross revenues, though recently they've been at the lower end of that range, he said.

Paulson said the average cash rent in Champaign County is $243 per acre, with counties to the north and east having lower averages and counties to the west having higher averages.

Dave Prahl, a merchandiser for Premier Cooperative, told farmers that aflatoxin has been "a big challenge" in corn this year, particularly in the areas that had the worst crop yields.

The incidence of aflatoxin tended to be higher in some parts of northern Champaign County and in the Jamaica and Indianola regions of Vermilion County, he said.

Aflatoxin is a toxin that can occur in corn stressed by drought, and there are limits on how much aflatoxin is acceptable in livestock feed.

It's difficult to sell corn when aflatoxin exceeds certain limits, and Prahl said "it may take us awhile."

Lots of testing is involved, and "everyone wants to buy at high discounts," he said.

Comments

News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments