Grain Surplus, Strong Dollar Could Hamper Record Growing Season
MINNEAPOLIS (WCCO) -- As a stiff, southern breeze shimmers a ripening field of soybeans, fall harvest cannot be far behind.
This summer's growing season is about as close to perfect as it gets for grain farmers like Bruce Peterson of Northfield.
"The yield will help. I mean, it's price times yield and that's what drives revenue," Peterson said. "The last few years we've had excessive rains where there's been some drowned-out areas, and I think that's the key this year is the whole state should have consistently-good yields."
In fact, the U.S. Department of Agriculture predicts a record Minnesota corn harvest -- averaging 184 bushels per acre.
Normally that is great news, but the glut of stored grain and a strong U.S. dollar will hold down grain exports and prices.
Farmers were paid about $7.50 a bushel for corn and over $17 a bushel for their soybeans in 2012. Those grains are trading for roughly half today, with corn at $3.50 and soybeans at $8.50.
"When prices are down right now, yields are important because the more bushels you squeeze out of each acre of corn, it helps offset some of the lower price," Minnesota Corn Growers Association's Adam Czech said.
Many farmers will struggle to break even or even post a loss due to higher production costs. But consumers may indeed benefit; lower-priced grain drives down the cost of ethanol and helps make livestock less expensive to feed.
"Farmers are still paying a lot of money for fertilizer, for seed, for fuel, for other input costs that it takes to raise a crop," Czech said. "It's going to be tight for a lot of corn farmers this year."
A lot can change between now and when the grains are all safely in the bins. But it is unlikely the market prices will shift significantly.
Warm and windy conditions could help dry the corn between now and harvest time, reducing the need to spend a lot on propane to dry it.
