While demand for corn this spring and summer skyrocketed — partially fueled by demand for ethanol to add to gasoline supplies — farmers whose livelihoods depend on sale prices are surprised at recent price drops.
“Everything is dropping,” said Jim Grace, a farm business management educator with the Steuben County, N.Y., Cornell Cooperative Extension. “In the last 10 days or two weeks, (the price of corn) has come down $1.50.”
While corn scheduled for December delivery closed at $4.08 a bushel, or about 56 pounds, prices were closer to $8 a bushel in the end of June.
“The economy was booming,” Grace said. “The demand was there. Ethanol partly drove it.”
At a time when oil prices neared $150 a barrel, many in America looked to corn-based ethanol for fuel for cars, he said, and flooding in the Midwest added fears that the cornfields in Iowa and other Corn Belt states were severely damaged.
However, with the recent downturn in the economy, and news this year’s harvest — of 12.2 billion bushels — will be the second-highest ever, the price of corn has plummeted.
Farmers need the price to go up, otherwise they won’t recoup their planting expenses.
“About $3.50 to $4 is the break-even price.” Grace said. “If the market price is $4.25 or $4.50, you’re making a profit, but not much.”
But though the price was higher this fall, it does not mean that farmers' expectations at the beginning of the planting season were so far off.
“They’re pretty close to what they were talking this spring,” Grace said.
One way to make more on their corn is for farmers hold onto corn until prices go up, but the downside is having somewhere to house it.
“Some of the storage facilities are full, or nearly full,” Grace said. “If you've got your own storage bins, you can store it, but if you’re a farmer who planted it to sell, you could have a problem."
Another option, Grace said, is to turn the corn into ethanol.
Citing production starting at the Northeast Biofuels distillery in Fulton, N.Y., he said that may become an option when the plant becomes fully operational.
One New York corn farmer, Andy Spencer, said he has been shocked by the recent declines in corn prices.
“In the last few days, it’s gotten scary,” he said, adding prices have dropped $1.67 in the past two weeks.
Of the around 625 acres of corn he planted this year, about half of it is to go to market, while slightly less than half will be used to finish his Holstein steers for sale.
But at least the harvest itself isn’t suffering.
“This year was a very good crop,” Spencer said.
So far this year, the only corn he has taken off has been for silage, which accounted for about 200 acres of his crop. The yield for the crop was very good, and the rest of the corn harvest is looking as fruitful.
The Evening Tribune
