Sky-high corn bushels spur a drop in prices for 2014

Friday, October 24, 2014
A ground pile at Mid-State Seed, in Marshall, towers over the skyline Thursday, Oct. 23. (Jacob Hatfield/Missouri Farms)

With the fall season being head-long into harvest, the corn yield across Missouri has reached a record high.

Word from farmers across the region has shed light on how productive the season has been. Averages of 200 bushels per acre are common place in fields across the state, and in some spots, numbers have risen to more than 300 per acre.

Talk of how the surplus is affecting the market is prevalent, as well. The yield for the 2014 harvest season is the result of picture-perfect growing conditions with a mild summer and adequate rainfall.

Willa Wiese, a grain accountant at Slater Farmers Grain Terminal said numbers are high all the way around.

"Poor ground that should stay in pasture did 180 bushels to the acre ... all the way to 250 plus for better ground" Wiese said.

2014 has been the best year on record, and Wiese explained how the past year's numbers have measured up.

"Our best yield here was 186 and that was in 2009," Wiese said. "The price has gone down quite a bit, since we had shorter crops, we were using more ... you got a 10 billion bushel crop that you can use a lot for ethanol and seed and export, it doesn't take long to use it up, but when you have a 14.5 its a different story."

Wiese also explained logistical troubles are beginning to coalesce with transporting the grain, being as how train services are not what they used to be. She further elaborated on past experiences showing similar problems up north.

"We've seen these problems last year in the Dakota's coming down here. It's hard to get your trains back. ... Ours are coming back, but sometimes we have a day or two delay before we get them," Wiese said. Some speculation about the cause of the slower rail transportation could be that other markets -- such as oil, coal and containers -- are more profitable than grain.

"Im not saying for sure what the deal is, but that's what happened in the Dakota's. ... Of course we've got a large crop to move too," Wiese said.

According to Wiese, they, as well as most surrounding grain elevators, have all been filled to capacity, which creates problems up and down the chain. Many area farmers have built their own grain bins where they can store their crops on their personal farms. If no alternate storage sight is available, it puts a significant halt on the harvest routine.

Wiese said they've even had to put down a ground pile this year, which is a first, and explained the grain will be covered and hopefully stored by December.

In comparison to the previous year's harvest, Wiese speculated corn was anywhere from 60 to 200 bushels per acre in 2013. Dealing with such high numbers, this year's corn prices are speculated to be low until usage and export rates are solidified.

It's no secret when a surplus occurs, prices decline, but with the 2014 harvest season still chugging full steam ahead, the dollar price per bushel has yet to establish a firm number.

When speaking with Bob Garino, the Missouri state statistician for the USDA, he said this year's corn market has seen a significant jump in yield compared to years past.

"The market is affected by the overall corn harvest of the country, of which Missouri is a part of that. And just like a lot of the Midwestern states, Missouri is experiencing a record corn crop in terms of harvest, yield and total production," Garino said. "If you've watched the corn prices over the last six to eight months, you've seen the price kind of creep down, and it's definitely having an impact on markets."

At present Garino stated Missouri is estimated to be approximately 180 bushels per acre, which is a record increase by 18 over the previous record from 2004, which was at 162 bushels per acre statewide. To put these numbers in perspective, Garino shared prior numbers in which weather conditions were adequate, but yield amounts would be considered average.

Garino said a reasonable year with adequate weather typically produces yields of 140-150 bushels per acre, with the 2013 harvest yielding 136.

"Prior to last year when we had the drought, we had a yield of 75 that year," Garino said. "And then previous to that we had two off years where we had yield of 114 and 143 ... so anything around 140 is probably considered an average year."

Garino said they will eventually make district and county estimates to determine the regions of the state where yields fare better, but mentioned the "boot-heel" and northwestern regions are typically the highest yielding parts of the state.

With a copious surplus being a sure thing for this season's harvest, one could wonder how far in the future prices will be affected by the overload in grain.

"You'll have some impact next year. What will probably happen is you'll have a lot of carry-over stocks. We'll have a pretty good supply of corn throughout the year," Garino said. "If we have a reasonable harvest next year, even if it's not a record harvest next year ... we'll still maintain a decent stock level so the prices will stay lower."

Garino said it will take a year of below-average harvest to bring the prices back up again. Currently the price per bushel for December corn is at $3.50, down from last year, which was approximately $4.50 according to www.agwebb.com.

Garino explained prices spiked in 2012 right around mid to late summer with corn drawing close to $8 a bushel and maintained that higher value, fluctuating around $7 until it was clear the 2013 harvest would produce a good yield. At that point the prices dropped closer to $5.

With weather being an ever-present factor, the corn yield this year has already secured its position as the record high, but with all that goes up, it seems something must come down -- and in this case, the dollar signs are on the decline.

When looking to the future market, Garino said this year's surplus will affect the market until the next crop is bad.

"If we have a typical year, even if it's a little bit lower ... since the carry-over stocks are decent, it won't be that big of a jump," Garino said.

Contact Lucas Johnson at ljohnson@marshallnew.com