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Most Minnesota corn farmers escape flooding as prices hit new highsMINNEAPOLIS (AP)--Heavy rains have washed out cornfields and delayed the planting of millions of acres in other parts of the Midwest, but the season is looking bright for many Minnesota corn producers. The torrential rains that have flooded parts of Iowa, Indiana, Illinois and Wisconsin have pushed corn to its highest price ever. Corn futures for December delivery hit $7.915 a bushel June 16 on the Chicago Board of Trade, nearly double the price of a year ago. "I don't hear a lot of grumbling from farmers like I have in the past," Minnesota Agriculture Commissioner Gene Hugoson said June 16. "With these higher prices, they're optimistic they can pay down some debt and purchase new equipment. It's really changed their outlook." The high prices for corn and soybeans are being driven not just by flooding, but also by surging exports and increased demand for corn from ethanol producers. That's been a windfall for corn, soybean and wheat farmers, but many hog and poultry producers are losing money because soaring corn prices are pushing up the cost of feed. The high price of corn has already led some large ethanol producers to scale back expansion plans, and livestock producers likely will shrink their herds if feed prices remain high, agriculture analysts said. Whether receding floodwaters and the drier weather in the forecast gives hard-hit farmers a chance to replant remains uncertain. Dave Swenson, an economist at Iowa State University, said he just took a 350-mile drive through central Iowa to see the crop damage firsthand. "I saw farmers standing in the middle of fields that were totally ruined," he said. "No corn is going to come out of that land." Nationwide, about 57 percent of the corn crop was in good or excellent condition as of Sunday, down from 60 percent a week earlier, compared to 70 percent a year earlier, the U.S. Department of Agriculture said in a weekly report. About 12 percent of the crop was in poor or very poor condition, up from 9 percent a week earlier and 8 percent last year. "It's unusual to see a crop stressed this early in the year," said Michael Swanson, a senior agricultural economist at Wells Fargo, who said crop conditions often deteriorate later in the summer due to the heat. Less than half of Iowa's corn crop--49 percent--was in good or excellent condition and 15 percent was rated poor or very poor. But about 63 percent of Minnesota's corn crop is in good or excellent condition, with only 6 percent rated poor or very poor, and about 99 percent of Minnesota's corn crop is already planted, compared with 95 percent nationwide. Many Minnesota farmers are trying to lock in today's high prices through so-called "forward contracts." "When I sold at $5 (in February), I never thought I'd see this again in my lifetime," said Jim Nichols, a farmer from Lake Benton and a former state agriculture commissioner. "Now, it's $7 a bushel. Corn looks very beautiful right now." But Nichols worries about the ethanol producers that buy his corn and turn it into fuel. "There are winners, and there are losers, and as farmers, we've got to worry about the losers, too," Nichols said. "A lot of my customers are ethanol plants and a lot of those are farmer-owned. We don't want to see them suffer." Duane Behrens, a hog farmer in Fairmont, said he stockpiled enough of last year's corn to feed his hogs through July, but after that's gone he'll have to buy it at market prices. If corn prices stay at $7 to $8 a bushel, Behrens estimates he'll lose up to $25 to $30 her hog. Since he normally sells 4,000 hogs a month, the losses could top $100,000 a month. Behrens said he's thinking about whether he should buy all his corn now, even at these high prices, in case the flooding sends prices even higher. "We can pay these higher corn prices," he said. "But the question becomes, how long will your lender go along with it?" 6/30/08 Date: 6/24/08 Advertisement
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