Waterloo Cedar Falls courier, IA
11-14-07
Harvest prices remain high after production report
By MATTHEW WILDE, Courier Staff Writer
HUDSON, Iowa's corn crop won't be as bountiful as expected, but it's still a
record-setter.
Tuesday's weekly U.S. Department of Agriculture Crops and Weather Report
indicated harvest is winding down in Northeast Iowa. Only 7 percent of corn is
still in fields, while soybeans are virtually finished.
USDA crop predictions as of Nov. 1 put average corn yields at 175 bushels per
acre statewide, down 3 percent compared to last month. The soybean forecast is
unchanged at 52 bushels per acre, but up 1.5 bushels from last year's yield.
The latest reports are keeping cash corn and soybeans prices, not to mention
futures markets, at historic highs. Marketing experts and farmers say there will be
some tremendous opportunities to cash in, not only for this year's crop but
beyond.
Cash corn closed Monday at $3.50 per bushel at East Central Iowa Cooperative
in Hudson. Soybeans closed at $9.72.
"No matter how you put a pencil to it, farmers are making money. Isn't this
incredible?" said Brad Stewart, the co-op's grain merchandiser.
During the last two weeks, he said a substantial number of bushels were sold to
take advantage of profitable prices. March beans, he said, were recently selling
at $10.61 per bushel on the Chicago Board of Trade, near a record high, he said.
Grain movement statewide last week was rated 10 percent heavy, 29 percent
moderate, 35 percent light and 26 percent none, according to the crop report.
Still, Stewart thinks there could be more money to be made. Farmers may want
to hold back some bushels to sell if the final production numbers in January are
downgraded again, and the market starts jockeying for future acres. Corn and
soybean buyers could increase bids to influence next year's plantings, Stewart
said.
"Some are still holding on to beans. It's really a smart thing because we don't
know what will be going in the ground in the spring," Stewart said.
Based on current conditions, the nation's farmers will harvest 13.2 billion bushels
of corn, which is 25 percent more than 2006. Iowa farmers will account for 2.44
billion bushels of the record national harvest.
National soybean production is estimated at 2.59 billion bushels, down 19
percent from last year's record high. Iowa farmers are expected to combine 443
million bushels.
Farmers planted the most corn since 1933 this year to meet booming ethanol
and export demand. This came primarily at the expense of soybeans. But, many
farmers may switch back to a more traditional corn/soybean rotation due to high
soybean prices and increasing corn input costs.
"Very few like to plant corn three years straight. When you put a pencil to it,
soybeans may be the way to go," Stewart said.
Only 1 percent of the state's soybeans still need to be harvested, the crop report
said. For farmers done combining, producers are busy applying fertilizer,
manure, doing fall tillage and fixing waterways and tile lines.
David Calderwood, a rural Traer farmer and former president of the Iowa Corn
Growers Association, said he's already marketed 70 percent of this year's crop.
He's already selling corn and soybeans that won't go into the ground until spring
and in 2009.
As for the remaining 30 percent of this year's corn and soybeans yet to sell,
Calderwood said he'll keep pricing a little during market upswings until it's gone.
"I'm still looking for corn and soybeans to rally at the end of December and early
January," Calderwood said. "(Buyers) will be jockeying for acres before planting.
"I also feed hogs, so we'll be looking for volatility to lock in lower prices as well,"
he added, noting he sells all grain and buys hog feed. "We play the market on
both sides."
The key drivers of the corn market is the price of crude oil ethanol and export
demand, said Bob Wisner, Iowa's leading grain economist at Iowa State
University in Ames.
Wisner said the latest production report will have a mild impact on prices, if any.
But if petroleum prices continue to spiral up, spurring ethanol production that
requires corn, and foreign buyers continue to put orders in, prices could spike.
"Exports are up 45 percent (compared to last year) and are stronger than 1995.
That set the stage for $5 corn." Wisner said. "Markets will continue to be quite
volatile for the next few months."