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Corn production high, but prices have dropped
MISSISSIPPI STATE -- Corn prices were too good to last, and after growing the most expensive corn crop ever, Mississippi farmers are hoping to bring in high enough yields to still make a profit.
John Anderson, agricultural economist with the Mississippi State University Extension Service, said prices have been “melting down” since about mid-July.
“Corn prices had run up to a very high level because of Midwest flooding early this year,” Anderson said. “Since then, weather conditions have been very favorable across the Midwest, and crop conditions have steadily improved through July and into August.”
Anderson said with the growing demand for ethanol, there is a “fairly strong link” between the energy market and the corn market.
“Corn prices and oil prices have been moving fairly closely for the last couple of years. As oil has fallen sharply in the last month or so, corn has gone down along with it,” he said.
The U.S. Department of Agriculture estimates 38 percent of the corn crop will be used for feed and almost 30 percent of the crop for ethanol.
In late June, corn cash prices hit a high of about $7 a bushel while September futures were near $7.80 a bushel. Cash prices by mid-August had fallen to $4.25-$4.50 a bushel, and September futures were below $5 a bushel. Anderson said following USDA's August Crop Production report, corn prices bounced back some and appear to be stabilizing far below late-June levels.
“Corn prices fell close to $3 in about six weeks. This is about as dramatic a turnaround as you ever see,” Anderson said. “There certainly won't be a lot of profit in this crop because it was probably the most expensive corn crop anybody has ever grown because of the high cost of pumping water, fertilizer and seed costs, and rent on land for those who lease it.”
Erick Larson, Extension grain crops agronomist, said corn harvest started in early August about 10-14 days behind schedule.
“Harvest is late because spring rainfall delayed planting and cool May temperatures slowed corn development. Recent, substantial rainfall has slowed grain drying and muddied fields across all but the northernmost counties of Mississippi,” Larson said. “Corn harvest should be in full swing when fields dry up in south and central Mississippi.”
Severe storms also have blown corn down in many localized areas during the past several weeks. This will slow harvest considerably and cause grain loss in damaged fields.
Mississippi's corn crop is mostly irrigated in the Delta and nearly all nonirrigated in the hills area of Mississippi.
“Although we had a lot of wet conditions early this spring, we quickly dried out and began irrigating most of the irrigated crop in early June and had to continue through late July and even early August in parts of the state,” Larson said. “The rainfall we had early in the season will limit production somewhat because it inhibited root growth and expansion. The crop was extremely dependent on supplemental irrigation and timely rainfall during the season.”
Because of shallow root systems, Larson said the dry-land corn started to suffer “quite quickly and fairly substantially” after the plentiful soil moisture of June.
Despite these difficulties, Larson expects good state average corn yields. Last year, the state harvested an average 150 bushels per acre, which broke the previous state record by 14 bushels an acre.
“We've got a lot of corn planted on our very best soils the past two years. It replaced cotton acreage in many places, and much of this is irrigated,” Larson said. “Our dry-land crop is in better condition than it has been in the last two to three years because we haven't had as much drought stress.”
The USDA's Aug. 12 Crop Production report predicts the second-largest corn crop in history. They estimate the country's corn crop at 12.3 billion bushels and 155 bushels an acre because of “near perfect growing weather” in July. This estimate puts the crop at more than half a billion bushels above USDA's July prediction.