MINNEOTA, MINN. — On an October weekend, combines rumbled through fields and the grain elevators were overflowing as I drove along the highways of southwestern Minnesota farm country. The soybeans were picked and the corn was close behind.
Here in Lyon County, farmers were dancing with anticipation to get at the last of the corn in fields, fields that still held standing water from late summer flooding even though it hadn’t rained in three weeks.
“And if you’ve got good corn, you’ve got good yields — 180 or 190 bushels per acre,” according to my friend Rodney Stensrud, whose farm is near here.
All in all, 2010 is a good year for farmers lucky enough not to be flooded out. October cash grain prices are at record highs, pulled along by new ethanol requirements for fuel and generally crummy weather in key growing areas around the country and the world. Future prices are even higher.
Corn prices at a two-year high
Prices vary around the region, but $5 or more will get you a bushel of corn and $11 will buy the same volume of beans. According to Bloomberg, corn prices reached a two-year high of $5.88 a bushel on Oct. 13 and soybeans touched $12.145 on Oct. 15, the highest levels in 16 months.
Corn is up about 60 percent and soybeans are nearly 30 percent higher since June. Farmers usually sell some grain ahead of time, the rest on the cash market and hold some for later, so not every bushel will fetch $5 or $11. But the average will be solid. And farmers saved more money this year because the grain was dry when picked, so they could skip the propane-fueled corn drier.
That’s good news for rural communities, where many farmers will plow their profits back into their operations in order to avoid a big tax bill. A JP Morgan analyst recently predicted cash receipts from growers will rise 24 percent.
Meanwhile, Germany became the latest country to consider raising the percentage of ethanol in its gasoline, from 5 percent to 10 percent. Germany uses both grain and sugar to make ethanol, whereas in the United States most of the production is from corn.
The China factor
One note that has farmers worried is the Chinese government’s raising interest rates, making U.S. grain more expensive. The Chinese are the world’s largest consumers of grain and soybeans but are worried about inflation.
And consumers everywhere will pay more for cereal grain products. Golden Valley-based General Mills announced last week a 25 percent rise in prices on some foods, but it did not disclose which brands would be affected. “Increasing input costs necessitated this change,” the company said in a statement.
In early October, the U.S. Department of Agriculture estimated Minnesota’s corn crop at a record 1.26 billion bushels, up nearly 16 million bushels from last year’s record. The USDA is forecasting soybean production at 329 million bushels, up 16 percent from last year and breaking the 2006 record of 319 million.