Home / News / Crops news / 'White flag' for corn users?

'White flag' for corn users?

Jeff Caldwell 08/10/2012 @ 9:38am Multimedia Editor for Agriculture.com and Successful Farming magazine.

This year's drought, the resulting effects on crop yields and the market consequences add up to a lot of uncharted waters for many farmers, at least in the last couple of decades.

Friday's USDA Crop Production and supply/demand reports showed that, while U.S. corn and soybean yields have been slammed by the drought -- where right now, corn's pegged at 123.4 bushels/acre and soybeans at 36.1 bushels/acre -- grain usage for livestock feed and ethanol have also been lowered. Analysts say that means rationing is well underway, and that's likely got traders' attention. But, there's a long way to go on that front, and some farmers are starting to wonder whether or not those sectors and the people buying grain for them are almost ready to "wave the white flag."

"Many of my neighbors are asking 'when does the white flag come out for the local end-users?'" says Agriculture.com Marketing Talk frequent contributor ne 50. "Many had until 45 days ago to buy corn at lower than $5.00 numbers. So, if they did get 50% to 60% bought at that price, the rest at $8.00 or more gets them to a $6.50 to $7.00 average. Looks pretty good right now for an average. It's next year that bothers the hell out of me."

Adds Marketing Talk veteran contributor ag678: "If you are not vertically integrated and you did buy a lot of corn, and you are faced with running it through cattle or an ethanol plant at less profit than if you just sold it back to the market, at what point do you resell it to the market? If you were a farmer feeder today, would you rather sell for 8.00 and haul it town or would you put it through cattle get 7.00 and have to do chores everyday?"

They have reason to worry, according to Cargill senior grain merchandiser in Eddyville, Iowa, Ray Jenkins. Right now, it's clear that corn prices at $8.00/bushel aren't doing enough to ratchet back demand enough to even out balance sheets. That means that, holding true to one of its primary functions, the grain market will have to "keep pressure on" end-users. That means prices will likely be completely justified in staying at mostly strong levels for as long as the next year.

CancelPost Comment
MORE FROM JEFF CALDWELL more +

Sudden Death Syndrome Popping Up in Midwest… By: 08/26/2014 @ 7:11am The ample moisture in the last week or so in parts of the Corn Belt has been a boon for corn and…

Corn Conditions Up, Soybeans Down -- USDA By: 08/25/2014 @ 3:21pm Corn conditions moved slightly higher while soybean conditions dipped in the last week, the latter…

Grain Farm Incomes Won't Dictate… By: 08/25/2014 @ 3:07pm Grain prices may have fallen -- and continue to do so -- but that doesn't necessarily mean the…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Crop Ratings Weigh on Farm Markets