|
|
|
Corn crop down, soybeans increaseBy Jennifer Bremer
The U.S. is in the midst of harvesting the second largest corn crop ever, this year; yet, some pressure seems to be pushing the markets according to Iowa State University grain marketing specialist Chad Hart. "While we have the second largest crop ever, only second to the 2007 crop, there is also a lot of corn in the field yet, which could affect some of the final numbers," said Hart. Yields continue to increase over last year, according to the November 2008 U.S. Department of Agriculture report. However from October to November a slight decrease has been seen--from 153.9 bushels per acre in October to 153.8 bushels per acre in November. Hart warns that the yields could continue to change since so many acres still need to be harvested. Prices from October to November are down as well--from $4.75 in October to $4.40 in November. Hart said prices could move back up if supplies end up being lower than expected. World corn production is expected to be down 1.3 percent next year from this year's marks. Acres continue to shift to other countries with China expecting a 2.4 percent increase in corn production next year. "China continues to compete in the world market for corn and livestock production," he said. Soybean production Soybean production, on the other hand, has been up dramatically from 2007 to 2008. Yields, however, have hurt because of less than favorable growing conditions in key soybean producing states. October 2008 yields were 39.5 bushels per acre as compared to 42.7 bushels per acre for the 2007 crop. A price decline was seen in soybeans as well, from $10.45 in October to $9.85 in November. World soybean production has seen an increase in recent years, which is expected to continue into 2009--with an expected increase of 6.7 percent. U.S. production forecast for 2009 is expected to increase 9.1 percent. Increases are expected in major producing countries around the world also, including Argentina and China. Factors affecting markets Hart said there are so many factors affecting market prices for corn and soybeans. "Adjustments on the livestock side are considerable as livestock producers are cutting back production due to higher feed costs," said Hart. Biofuels--ethanol and biodiesel--have affected prices also. "An increase in production is needed in order to help meet the Renewable Fuels Standard," he said. "Not only will we need more production, but we will also need more ethanol plants to meet the RFS." Acres in production have been affected by expiring CRP contracts as well. A little more than 1 million acres came out of contract this year according to the USDA-FSA figures, but the amount coming out in the next five years will be quite a bit more. "The farm bill says 32 million acres need to be in CRP by 2012. Currently, we have 34.7 million acres in the program," Hart explained. "A lot of the acres that are expiring are being planted into wheat when they are brought out so it doesn't affect corn and soybean production very much." Input costs have been on most farmers' minds with high fuel prices as well as higher prices for fertilizer, crop insurance, seed and utilities. Hart estimates farmers will need corn prices to be between $4.26 and $4.47 per bushel in order to break even depending on their land cost. The same figures for soybean farmers would mean they need prices to be between $9.35 and $10.06 per bushel to break even. Stock-to-use ratios have been pressured recently, too. Hart said the stock inventory hasn't been this tight since 1996. World stock-to-use ratios are very tight as well--more so on corn than on soybeans. Risk management Hart said farmers need to be sure to look at government programs available to help protect their crops from loss. "Crop insurance is also a good way to protect you investment," he said. "Nearly 85 percent of the acres in Iowa are covered with crop insurance." Futures and options are another way to sell grain to get a profit. Thoughts on the future Hart expects a continuation of tight stocks for both corn and soybeans. "We will continue to see competition for acreage and economic concerns will push the markets also," he said. He said market volatility will remain high, as the markets have a link to the energy markets. With more market players involved, many different trading objectives are present and affect the market as well. "Given all the current factors, the 2009 outlook is for prices to be around $4.50 for corn and $9.50 for beans," concluded Hart. "We may see a little strengthening, but most likely we will be hanging on right where we are at." Jennifer Bremer can be reached by phone at 515-833-2120 or by e-mail at jbremermaj@hotmail.com. 11/24/08 Date: 11/20/08 Advertisement
Copyright/Privacy
Copyright 1995-2009. High Plains Publishers, Inc. All rights reserved. Any republishing of these pages, including electronic reproduction of the editorial archives or classified advertising, is strictly prohibited. If you have questions or comments you can reach us at High Plains Journal 1500 E. Wyatt Earp Blvd., P.O. Box 760, Dodge City, KS 67801 or call 1-800-452-7171. Email: webmaster@hpj.com |
Market Snapshot Inside Futures |
