Record corn harvest may bring lower commodity prices
Tue, 12 Aug 2014 22:58:10 GMT —
Gary Unnewehr strips the husk off a fully-developed ear of corn. A nearly identical one sprouts from the same stalk.
"Normally, you get one to one-and-a-half ears," he said.
This year's cool, wet weather means farmers and agriculture officials expect a bumper crop of corn. Figures released by the U.S. Department of Agriculture late Tuesday morning show American farmers may harvest more than 14 billion bushels of corn this fall, an all-time record. Missouri farmers alone are expected to harvest 533 million bushels, shattering 2004's record of 466 million bushels. Unnewehr said he expects to get 140 to 150 bushels per acre this year. He usually gets 100 to 110 bushels out of an acre.
Missouri Corn Growers Association CEO Gary Marshall told KRCG 13 the extra corn means the U.S. has a chance to move back into overseas markets it lost after the 2012 drought. Ukraine has been a key corn supplier to Europe, North Africa and the Middle East for several years, but Marshall said the violence there is preventing many Ukrainian farmers from moving their product to market. He said American corn is increasingly in demand in traditionally Ukrainian-dominated markets. Moreover, Marshall said China is America's top corn customer, using it for everything from livestock feed to ethanol.
But that does not mean demand will meet supply. Marshall said ongoing trade disputes with China mean Chinese demand for American corn fluctuates. American corn being exported to Europe faces a 100 percent tariff. Closer to home, Marshall said livestock production is down. That means there is less demand for corn to be used as animal feed. This type makes up the bulk of the harvest. Marshall said this means many farmers will be forced to store their corn in silos. The corn is good for up to a year if stored properly.
The record harvest does not necessarily mean record profits for farmers. Nasdaq data show corn prices have dropped steadily from more than $5.00 a bushel in May to $3.58 per bushel at the close of business Tuesday. Marshall said the corn harvest could easily exceed USDA forecasts, further depressing prices.
"That limits farmers' ability to pay their debts, to service their debts, to go out and buy new equipment or even used equipment," he said.
Marshall said those low corn prices might not translate into cheaper food. He said prices at the grocery store have remained constant despite the falling corn prices.
Unnewehr said he is not worried about falling corn prices.
"Normally, if you pick 100 bushels and get $5 a bushel, it's about like getting 150 bushels per acre and getting $3 a bushel," he said. "It boils down to the same thing."
Unnewehr said he will plant the same amount of corn next year.