Pharos-Tribune

Business

March 27, 2011

Positive outlook

Despite recent fluctuation in market prices, Cass County grain farmers may have something to look forward to this year.

“We’ve seen high prices since last fall,” said Tamara Ogle, the Cass County Purdue Extension agriculture educator.

Dye to a variety of factors, Ogle pointed out that corn prices have decreased slightly in recent weeks. Some include the earthquake and tsunami in Japan as well as the thought that farmers are increasing corn acreage.

“We still see strong demand for corn and I think we will continue to see this due to ethanol and exports,” she said.

Market prices have been incredibly volatile, according to a Purdue University agricultural economist.

“They’ve been moving up and down in response to events like the earthquake in Japan and the unrest in Libya and so on,” Corinne Alexander said. “It becomes difficult to predict prices for next year.”

She added that the December corn futures were trading at $6.08 on Tuesday afternoon, but several days before they were trading at $5.50 because of the earthquake.

Despite volatility of the prices, Alexander said there is a positive outlook for the 2011-2012 farming season.

“Most forecasts, because the ending stocks are tight for both, expect cash prices to be at the same level or above,” she said. “It means record prices.”

Alexander said the U.S. Department of Agriculture released its March crop report with a forecast for corn at $5.40 for the entire marketing year from Sept. 1, 2010, through Aug. 31, 2011.

The previous record cash prices was $4.20 during the 2007 to 2008 crop season. Alexander said the report states farmers are probably looking at price averages between the $5.60 to $5.70 range from Sept. 1, 2011 through Aug. 31, 2012.

“The price will depend on the yields this summer,” she said.

Cass County farmer Dean Hartley said prices are looking good right now. His secret to a successful year is something simple.

“We will just plant and hope for decent weather,” he said. “Nothing fancy or intelligent.”

With the increased market prices, Hartley pointed out input costs have followed the trend.

Input costs are expected to be higher this year compared to last year, but substantially lower than those in 2009, Alexander said.

Since crop prices are much higher and input costs are up moderately, Alexander said the overall income should increase quite a bit.

As far as planting trends for the 2011-2012 farming season, Ogle said there is an expectation for more continuous corn because of higher prices.

“A lot of farmers will still stay with the traditional corn-bean rotation,” she said.

Since farmers have not started planting yet, it is too early to say what they will actually do.

She said Indiana generally stays with a 50-50 corn and soybean rotation, but some farmers may lean towards planting more corn. An official report is expected by June.

Each year, Hartley grows wheat, corn and soy beans. His plans are to keep the farming operation the same this year, which means a 50-50 split for the corn and beans.

For Hartley, it is more cost effective to remain in the same rotation each year.

As far as a demand for either commodity, Alexander said the United States has a tight inventory for both soybeans and corn this year.

Since America is the only exporter of corn, Alexander said, there will be a stronger demand for corn with the tight inventory.

As of Aug. 31, storage stocks are expected to be 675 million bushels of corn, which equals an 18 day supply. The corn harvest will not start until late September or early October, which means one to two weeks between the supplies of ending stocks and the start of new crop.

Planting is expected to start soon. In order to start working in the field, the ground will have to dry more, Ogle said.

“Ideally, planting will start by mid-April,” she added.

Hartley said the weather seems close to normal so far this year, but the ground is still pretty saturated.

He isn’t concerned about anything for the planting season, at least nothing more than normal.

“You’re always curious what hand Mother Nature is going to deal you,” Hartley said. “ ... We’re just hoping to come out ahead.”

Hartley expects to do potentially a little better than last year, but reinforced it was not in his hands.

“The whole fate is in Mother Nature,” he said.

• Denise Massie is a staff writer at the Pharos-Tribune. She can be reached at 574-732-5151 or denise.massie@pharostribune.com.

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