A little rain can make a big difference in the prices of corn and soybeans.
During a hot, dry spell earlier this summer, Divernon-area farmer Andy Goleman sold corn for fall delivery at a little more than $4 a bushel and soybeans for approximately $11, as futures markets anticipated smaller, weather-related harvests for both grains. After healthy rains and federal forecasts of record yields, corn for September delivery was selling at about $3.35 per bushel on Friday and soybeans at about $9.98 a bushel.
“There were some real opportunities. We took advantage and had some nice sales,” said Goleman, who split his 900 acres evenly between corn and soybeans this year.
“You also don’t want to oversell,” Goleman said. “It’s why you have to be careful.”
Farmer surveys in Illinois and US Department of Agriculture (USDA) estimates at the mid-point of the growing season both point to the potential for record corn and soybean yields. Farmer income is another matter as a result of lower commodity prices. The Congressional Research Office, a forecasting arm for the US Congress, early this year predicted a third consecutive year of declining farm income after more than a decade of mostly rising prices for commodities and land.
The official estimate of $54.8 billion would be down 3 percent if the prediction proves accurate.
But much like commodities, such as oil, metals and natural gas, developments in weather, and demand at home and overseas, can result in overnight price swings.
“USDA reports show prospects for records crops, and it is hard to argue with that given recent weather and reported crop conditions,” University of Illinois farm economist Darrel Good said.
At this point in the season, $4 per bushel for corn and $10 per bushel for soybeans are considered the break-even point between profits and losses. A recent report of lower crop production in South America could help to boost prices in coming weeks, Good said.
Jeff Kerwan said he expects yields on the best soil to be toward the upper end this year on his 2,500-acre corn and soybean farm near the Quad Cities.
“Right now, we have a very good corn crop and a very good soybean crop,” Kerwan said. Yields typically range from 160 to 230 bushels an acre for corn and 40 to 60 bushels an acre for soybeans, he said.
Kerwan said he sold some corn and soybeans at higher, early-summer prices.
“We’re all hindsight marketing now, wishing we’d done a little more,” Kerwan said. “It’s all about knowing the market and knowing your crops.”
The latest survey of farmers statewide released last week by USDA found 80 percent of corn and 76 percent of soybeans rated in good to excellent condition. The annual corn-yield survey of the Sangamon County Farm Bureau will not be until next month, but local manager Jim Birge said reports from the field are good for both crops.
“With all the timely rains, the corn crop has really turned a positive corner,” Birge said in an e-mail. “Without any catastrophic event, corn bushels should be quite high. Soybeans are so unpredictable that you never really know what you have until just before you harvest them, but at the moment they look pretty good.”
Rochester-area farmer Jimmy Ayers also took advantage of higher corn and soybean prices early in the summer.
“The prices were good for a short window there,” Ayers said. “At that point, we had some good sales.”
Image credits: Daniel Acker/Bloomberg