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Grain market reprieve ending?
When ag economist Darrel Good kicked off the 2012 Illinois Farm Economics Summit at DeKalb County's Center for Agriculture on Tuesday, he acknowledged that it's very early to project crop prices for 2013. And, he said, people sometimes quibble with his assumption that U.S. corn and soybean yields will likely rebound to something close to trendline yields next summer. After all, much of the U.S. remains in a drought.
"My point is, we're not trying to grow much corn right now," Good told farmers, lenders, and others gathered at the meeting in Sycamore, Illinois. Yields could still be good next year if normal rains return.
If that happens, he looks for national average yields above 160 bushels an acre and a crop "north of 14 billion bushels. That's the size of the crop everybody was talking about this spring."
Argentina also has a chance to grow a better corn crop this year, up from the 2011-12 crop of 827 million bushels to more than 1 billion bushels.
Much of that is exported.
Good expects corn prices to average more than $7 a bushel in the current marketing year. But in the marketing year following the harvest of 2013 corn, prices could average between $4.75 and $5.50 a bushel.
He doesn't see that happening too quickly.
"Our best hope is that we could maintain the current level, at least through February," he said.
That's the month when prices are set for the insurable value of corn and soybeans, based on new-crop futures prices.
If current prices do hold through February, then, "That means we're going to have another year of very high price guarantees in crop insurance," Good said.
Good believes prices for soybeans may feel pressure sooner than corn, with the USDA projecting a record South American harvest.
He projects an average farm price near $14.50 for last year's soybean crop. The average for the 2013-14 marketing year could be in the $11 to $12 range, he believes.