Monday, July 20, 2009

Corn, soybean prices slipping in last month

REGIONAL—N’West Iowa grain prices have gone into a downward spiral recently after going on a bumpy roller coaster ride.

Despite slightly fluctuating corn and soybean prices through the months of February, March and April, prices saw a somewhat steady incline in May until they peaked during the first part of June.

But, prices have been on a steady decline since.

John Hansen, grain manager at the Farmers Co-op Society in Sioux Center, said the fluctuating prices earlier in the year could be attributed to the drop in the price of petroleum.

“Part of that also has to do with the fears of inflation floating around,” he said. “The economy is not improving as much as everyone thought it was.”

As the corn and soybean prices peaked, Hansen said the livestock, dairy, poultry and ethanol industries were losing money and were depending on corn to stay afloat.

“It’s Economics 101,” Hansen said.

Grain prices bottomed out on July 10 at Ag Partners in Sheldon — with corn at $3 per bushel and soybeans at $9.96. Hansen said the decline is largely due to the national economic downturn, adding that an unseasonably cool summer and the large amount of precipitation Iowa has received as of late also are contributing factors.

“Who would have ever thought we would get 6-8 inches of rain the first 10 days in July? That’s unheard of,” he said. “I was talking to farmers that have been doing this for 50-60 years, and they said they have never seen this consistent of precipitation.”

Despite the recent weather conditions, Hansen still considers the cooler summer weather to be good for growing conditions and said farmers can expect good yields should no major weather catastrophe occur.

However, until the economy starts improving, Hansen doesn’t see grain prices increasing much, if any at all.

“I wouldn’t look for prices to stay very strong or get stronger until something changes,” he said. “We probably won’t see a huge spike up until well into 2010 or even 2011, as the economy starts to improve.”

So, what does that mean for N’West Iowa producers?

“They need to have a good business plan,” Hansen said. “When the opportunity arises, sell at a decent margin. Don’t try to hit the home run for $4-$4.50 per bushel of corn. In today’s market, it doesn’t look like that’s going to happen.”

This article appeared in the July 18, 2009 edition of The N'West Iowa REVIEW.

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