Corn prices surge, triggering a wave of sales by US farmers
Iowa farmer Caleb Hamer picked up his phone this week and called a local buyer of corn, eager to get his grain sold as the prices rose to their highest levels in over a year.
Grain dealers in Iowa Illinois Indiana and Nebraska reported that farmers across the Midwest increased crop sales after corn and soybean futures spiked on Friday when the U.S. Department of Agriculture cut its harvest estimate for 2024. Corn prices have risen by about 10% in the last month.
Prices had fallen to 2020 levels last year because of oversupply. This led to a decline in farmer's incomes, and a severe impact on the rural economy.
However, the rally has not made U.S. crops particularly profitable as prices are still low and it looks like a tough year. The cost of seeds, chemicals, and land rentals are on the rise for growers ahead of spring planting. Some economists believe the farming sector is in a recession.
Hamer stated that you need to lock in sales to ensure revenue.
Growers may also be concerned about the economic impact if Donald Trump implements his plans to impose tariffs on products from China and Mexico. This could lead to retaliation, which would affect U.S. agricultural trade.
A new U.S.-China Trade War would be a blow to farmers who have seen their net income plummet by nearly 23% in the last two years.
University of Illinois economists reported on Tuesday that the economics of growing corn and soybeans in Illinois, the state with the largest production of both crops, remain poor for a third consecutive year.
Betty Resnick is an economist with the American Farm Bureau Federation. She said that while the rally improved sales, it didn't change the grim profitability of row crops.
Ben Scholl, President of Lewis B. Osterbur & Associates - a specialty grain buyer - said he had sold about 20% of the corn he normally sells in a year over the last four weeks.
Trucks carrying corn from farmers waited to unload at the Green Plains ethanol facility in northern Iowa.
Matt Carstens, the CEO of Iowa-based Landus – one of the biggest grain cooperatives in America – said that on Monday, Landus will encourage its farmer customers to sell.
Carstens stated, "We are looking at tariffs and a loss of the China Market." "Right away, you don't really know how the demand will look this year."
Cargill's staff sent a text message to Ohio farmer Chris Gibbs on Tuesday offering $5 per bushel of corn, for delivery by April 15 or later.
Gibbs stated that local buyers offered about $4.30 last fall, which was well below his production cost. Gibbs said that after selling corn this week he would have $7,000 extra in his pocket. This is enough to pay half of his spring fertilizer costs.
Gibbs stated, "I have a lot of cash and I can feel a bit relieved." Reporting by P.J. Huffstutter, Heather Schlitz and Julie Ingwersen (Chicago); additional reporting by Julie Ingwersen; editing by Tom Polansek & Diane Craft).
(source: Reuters)
