Corn at $7, weather favorable as farmers prepare to plantAs many farmers prepare to plant corn this month, prices at elevators in Mitchell are around $7 per bushel, which is about $4 higher than they were at this time last year. South Dakota Corn Growers Executive Director Lisa Richardson attributed a large part of the run-up to rampant market speculation.
By: Ross Dolan, The Daily Republic
As many farmers prepare to plant corn this month, prices at elevators in Mitchell are around $7 per bushel, which is about $4 higher than they were at this time last year.
South Dakota Corn Growers Executive Director Lisa Richardson attributed a large part of the run-up to rampant market speculation.
“We’ve added $1 a bushel to prices since the planting intentions report came out March 31,” she said. “And that’s all speculation, because we haven’t got any corn in the ground.”
The price was $7.08 per bushel Wednesday at the Dakota Plains elevator north of Tripp, $7.05 per bushel at the Farmer’s Alliance elevator in Mitchell and $7.05 per bushel at the Cargill elevator in Emery.
“I don’t believe we’re at historic prices yet,” Richardson said, noting that corn approached the $8 per bushel mark on the Chicago Board of Trade during the last great run-up in 2008, but that number hasn’t been threatened until recently. May CBOT corn posted at $7.66 a bushel on Tuesday.
If current elevator prices in South Dakota aren’t a record, they’re close.
A check of average statewide elevator prices previously collected by South Dakota State University found the prior top mark to be $6.99 a bushel in 2008.
Cash corn in South Dakota hit $7 in 2008, Richardson said, “but today there’s very little corn out there that hasn’t been pre-sold. It may be sitting in a bin, but it’s under contract for sale at different times. Few of my members have any grain left to sell.”
Prices typically rise in spring to nudge growers to commit acreages to various crops, Richardson said, but this year there’s also strong speculation operating in the markets.
“There are billions of dollars from hedge funds out there and they will go to wherever they can make money,” she said.
But there’s also solid market demand underpinning this price run-up. “You have solid export demand, feed demand and ethanol demand behind this market,” she said.
“Producers are excited, I would say, and a little nervous,” Richardson said, “because nothing stays up forever.”
Farmers were able to get considerable fall tillage work done and they are prepared for a strong planting season, but it remains for the weather to cooperate, she said.
“There’s good demand, supplies are down and exports are good, all of which results in good prices,” said Steve Noyes, deputy director of the South Dakota Office of the National Agriculture Statistics Service in Sioux Falls.
“It’s not just one crop; it’s across the board for both crops and livestock. It’s nice to see that all of agriculture can share in the better times and better prices.”
Current worries center around a possible La Nina weather cycle, which could bring a wet spring and dry August, Richardson said. Some producers in the James River Valley still have land under water and soft roads could also hamper planting.
Producers are ready to go, she said. A report last week indicated South Dakota farmers are expected to produce the state’s second-largest corn crop on record.
“The acres are there, the technology is there and the producers are very efficient at what they do,” Richardson said.
Craig Stehly was loading corn from a bin a couple of miles east of Mitchell on Tuesday and noted that, even with the high prices, he probably won’t plant much more corn this year compared to last year.
“Around here, you’ve just got to stick with the rotation,” he said. “Corn on corn doesn’t seem to produce well in this area.”
He added that “anywhere we can plant corn we will, so we will probably do a little less wheat this year, but it won’t be a huge difference.”
Stehly said he should be able to get all his crops in on time.
“We have enough moisture to hold the crop until July or August, so as long as we don’t get excess moisture, we should be in good shape.”
Chad Blindauer, president of the South Dakota Corn Utilization Council, farms north of Mitchell and said he won’t change his planting pattern very much because of high corn prices.
“If everything goes according to plan, we will have a little bit more corn because of our rotation, but we are not making any wholesale chances just because of the high prices,” Blindauer said.
Blindauer noted that while he still has some wet fields, most of his land is drying out well.
“Normally I like to start planting corn about April 20th, and if we keep having days like this, I think we will be.”
Blindauer also has cattle on his farm and said the price of corn has made raising those cattle more difficult, but not impossible.
“It’s a challenge, but not only do we have close-to-record corn prices, but we are right up there with cattle prices, as well.”
When grain prices reach historic highs, there is a fear that demand will drop and prices will overcorrect, leaving the price per bushel at lower levels.
“That is always a big fear when you get to these high levels — you can overcorrect and go the other way too far,” Blindauer said.
Blindauer said that although corn prices are high, consumers should not directly relate that to rising food prices.
“About 11.6 cents of every dollar spent on food goes back to the farmer, and that number has been going down the last few years, so the two are not related.”
Blindauer said a rise in transportation and packaging cost is to blame for a rise in food prices.
- Chris Huber contributed to this report.