The Fergus Falls Daily Journal

By Tom Hintgen

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Corn prices not hurting local market

Published 12:40am Saturday, September 13, 2008

On Friday the USDA reduced its forecast for this year’s corn and soybean harvests due to dryer weather, potentially leading to higher commodity prices. The forecast for Minnesota’s corn crop was down slightly.

The higher prices have hurt some corn-based ethanol manufacturers, but not necessarily the ethanol plant northwest of Fergus Falls.

“Today (Friday), the dryer weather is having an effect on the market,” Otter Tail Ag Enterprises CEO Kelly Longtin said. “Corn is up $.18 Higher prices have both good and bad effects on all aspects of agriculture. The real results will be in a month when the harvest begins to see the true yields.”

U.S. corn production, according to USDA, will be 12.1 billion bushels, down from its 12.3 billion estimate last month. The soybean crop is

projected to be slightly lower, at 2.93 billion bushels, down from its

earlier estimate of 2.97 billion.

While the predicted corn crop will be eight percent below last year’s yield, it

would still be the second largest on record. The soybean crop would be

13 percent higher than last year’s and the fourth largest ever.

This represents a major turnaround from earlier this summer, when some

analysts feared the Midwestern floods in June had devastated the crops

and would make already-expensive agricultural commodities even

pricier.

Minnesota’s corn crop is now projected at 1.18 billion bushels, compared with the August forecast of 1.20 billion bushels and a record 1.19 billion bushels harvested in 2005. The state’s soybean crop forecast remains at 278 million bushels. The state record was 319 million bushels set in 2006.

For corn, Minnesota’s average yield forecast is now 163 bushels per acre, down two bushels from last month but up 17 bushels from last year. The average soybean yield forecast remains unchanged at 40 bushels per acre, one bushel below last year’s yields.

This month’s report is only the second of the USDA’s reports this year

to include actual field visits and farmer surveys, which analysts

consider more reliable. The reports are closely watched by companies that use corn and soybeans for livestock feed.

The Midwest floods sent corn prices to record highs of almost $8 a

bushel this summer, up from just over $3 in early 2007 and $2 in 2006.

But the USDA said last month that “nearly ideal” growing weather has

helped Midwestern farmers recover.

That has helped corn prices fall about 35 percent from their highs.

Corn declined almost 8 cents a bushel to $5.37 Thursday on the Chicago

Board of Trade.

Soybeans, meanwhile, jumped to more than $12 a bushel this summer, up

from $6.30 in early 2007. Soybean prices fell to $11.78 Thursday.

The USDA increased its price estimates for corn and soybeans. It

projected the season-average price for corn will be between $5.00 and

$6.00 per bushel, up 10 cents from last month, while soybeans will be

between $11.60 and $13.10 per bushel, also 10 cents higher.