Grain Prices Drop Recently
Market prices for corn and soybeans made some nice improvement in May, but have dropped back down again in recent weeks. The domestic and export demand for corn and soybeans remains strong; however, a large inventory of 2005 grain that is still in storage, combined with very good 2006 crop development in most areas of the Corn Belt, have lead to some recent pressure on the grain markets. The Chicago Board of Trade (CBOT) current corn price opened at $2.24/bu. on June 26, which compares to $2.57/bu. on June 5. Similarly, soybeans on the CBOT opened at $5.72/bu. on June 26, which compares to $6.09/bu. on June 5. The local cash price of corn in Southern Minnesota has also dropped nearly $.30/bu., from near $2/bu. in early June to about $1.70/bu. by June 26. Similarly, the local cash price of soybeans was near $5.50/bu. in early June, and has dropped below $5.25/bu. by June 26. This is a very typical summer grain price pattern in years with favorable crop development in the primary growing areas of the U.S.
The rapid pace of ethanol development in the U.S., and the recent national media attention to renewable fuels, have prompted some analysts to discuss future corn shortages, and much higher corn prices in the coming years. It’s still way too early to predict if the significantly higher corn prices will become reality. Interestingly, some of the ethanol plants have already priced all of their corn needs for 2006, and are now locking in prices on their 2007 corn needs. Producers that still have a significant amount of 2005 corn in storage need to realize that most of the predictions of significantly higher corn prices are not for the 2005 corn that is still in storage, and probably will not occur for the 2006 corn crop in the field. Unless we have some crop problems that reduce the overall U.S. corn production in 2006, we aren’t likely to see the dramatic rise in corn prices that some are predicting for awhile yet.
FarmFest Forums For 2006, Forum Tent, Gilfillan, MN
Tuesday, August 1:
10:30 a.m. – U.S. Senate Candidate's Forum On Agriculture And Rural Issues
1:30 p.m. – Congressional Candidate's Forum On Agriculture And Rural Issues
Wednesday, August 2:
10:30 a.m. – Governor Candidate's Forum On Rural Minnesota
1:30 p.m. – The Renewable Fuel Industry: Positioning For The Future
Thursday, August 3:
10:30 a.m. – Avian Flu, Foot And Mouth Disease, Agro-Terrorism: What Are The Risks?
1:30 p.m. – Farm Family Of The Year Recognition Program (Sponsored by the University of Minnesota and FarmFest)Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].