Economic mess 'closed' crop markets
By CYNTHIA AUKERMAN
News-Gazette reporter
Greg Retter, manager of Snow Hill, calls the News-Gazette staff every afternoon to report grain prices. Monday he didn't make that customary call, and there was a good reason. Corn had fallen so low the market was essentially shut down.
Retter thinks "the government's economic mess" is playing havoc with grain prices. He says the supply and demand situation is still in favor of the farmer, even in the middle of the harvest season, and grain prices shouldn't be falling so precipitously.
On the grain market, if corn falls 30 cents a bushel in a trading period, the market is shut down. If it happens two days in a row, the trigger period is extended to 45 cents. With soybeans, the price triggers are 70 cents in one day, and an extended limit to $1.50 the second day.
Retter says the market picked up some strength overnight, but whether that will hold up during the day's trading is a question.
One reason the supply-and-demand picture should still be favoring the farmer and keeping grain prices at higher levels is that the yields that are coming in from this year's harvest so far aren't spectacular. Retter says soybean yields are fair to average, with some as low as 20 bushels to the acre, most in the mid 40s, and a few in the 50s.
"The yields aren't as good this year, but they aren't as bad as expected," Retter says. "And the corn is coming in late."
The corn is coming into Snow Hill so slowly that Retter doesn't yet have a good idea about yields.
In the spring and early summer, the area got good rains, but the rains quit in August before plants were mature. The soybeans set on a good amount of pods, but the beans in those pods aren't very big in size or in number.
Bill Bruggeman, manager at Hemmelgarn Grain in Union City, Ohio, thinks farmers will keep as much of their harvest at home as possible in the belief that a lower-than-normal harvest will bring the prices back up.
"When the farmers get their harvest in the bins, it's going to stay locked up until next summer," Bruggeman predicts.
On Monday Hemmelgarn took in about 10,000 bushels of corn, which is about one-fourth of the take on a normal harvest season day. The company has on hand about 190,000 bushels, about half of normal. Some of that is grain Bruggeman bought last spring at $7.19 a bushel.
Hemmelgarn makes feed for poultry operations.
The corn that has been coming in has been exceptionally dry. While Bruggeman has run some tests for farmers as high as 22 percent moisture, what is coming in to stay is as low as 14.7, with the ideal rate being 16.2 percent.
"The corn that was planted early is dry," Bruggeman explains. "The corn that was planted late is still drying down."
Bruggeman says there was no reason for corn to go as high as it did in the winter, because there was enough crop from 2007 on hand. He says the speculators got into the commodity market, and then the higher corn prices pushed other prices higher, such as soybeans, cash rent, seed corn and fertilizer.
For example, Hemmelgarn's paid $200 a ton for phosphorous exactly one year ago. Now it's selling for $1,200 a ton. Potash and nitrogen have experienced similar price increases.
Farmer Mick Whitesel said he paid $190 a bag for seed corn this spring and is afraid it will hit $300 a bag by next spring.
Now that corn has dipped so low, the question is what will happen to farmers who had to pay those higher prices for their ingredients for this year's crops? What about next year?
