Large surplus, small prices hurt farmers

A board lists the current price for corn per bushel at The Andersons Grain facility in Champaign on Thursday, Feb. 4, 2010.
Wesley Fane The Daily Illini

Ken Dalenberg of Mansfield, Ill., is one of the local farmers feeling the effects of a decline in corn and soybean prices. After a Jan. 12 United States Department of Agriculture (USDA) report showed a larger supply of corn and soybeans than expected, returns on the crops will likely suffer for the rest of 2010.

“It looks to be a marginal year, unless we have exceptional yields,” Dallenberger said.

The USDA’s final crop production estimation reported the corn supply is 250 million bushels larger than expected, said Dale Durchholz, a senior market analyst for AgriVisor.

However, the report has not affected which crops Dalenberg will plant in the spring.

“I won’t change a thing because I made my plans in the fall,” he said. “No matter what commodities do, my plans will stay the same.”

He added that the late, wet fall prevented some farmers from fertilizing their fields, and these farmers might be able to change which crops they plant.

Brian Stark, regional sales manager for The Andersons grain elevator in Champaign, said corn prices have greatly decreased. He said corn was priced at $3.38 per bushel on Feb. 1, but before the report came out, it was at $3.92.

The market for corn has been slowly recovering since the economy’s state caused prices to fall off in 2008. However, the news of the corn surplus has been a setback for farmers.

Scott Irwin, professor of agriculture and consumer economics at the University, said the decline would have “a major impact on potential corn and soybean farmers in the area.”

Corn prices have dropped 15 percent in revenue since the report came out, he added.

Irwin said there had been a small recovery in price since the initial drop, but the price of corn was back down to $3.55 on Feb. 4. Before the report, prices for February and March were predicted to hit a high of $4.20.

Durchholz said it is important to keep the price decline in perspective. While the current corn prices are significantly lower than they were in January, they are high compared to the prices in 2007.

“Markets are drastically different than prior to 2008,” he added.

He added that 2008 prices were extraordinarily high at the beginning of the year. He also said the price decline is due in-part to the increasing dollar index values since early January.

Durchholz said that while prices are not picking back up any time soon, they will not go too much lower.

“The market is done going down right now,” he added.