Corn prices: Sky-high by Fourth of July

Morgan Wesson

America’s leading cash crop, corn, is growing well in upstate New York, as flooding in the Midwest sent the price of a bushel to $7.72 today. That’s more than three times the September 2007 price of $2.30 a bushel.

“So buy the futures market and retire!” suggested Dean Huff, only in jest. Farming corn is gamble enough for the East Bloomfield and Honeoye crop farmer. He has 1,500 acres of corn in the ground. That corn crop looks profitable again in 2008, a welcome relief after many lean years for upstate crop farmers.

“If things go well this could be a good year,” Huff said.

East Bloomfield dairy farmer John Lincoln, also president of New York Farm Bureau, grows corn, all of it for his 200 dairy cows. Growing your own corn helps a dairy farmer make ends meet as feed costs skyrocket.

“For the Finger Lakes and western New York crop farmers it’s been a boom year,” said Lincoln of 2007. Now 2008 is adding twists all its own.

“Mother Nature is still in control,” cautioned Lincoln. “The early spring — and now the very timely showers — left the corn crop (in the Finger Lakes region) growing well.”

Corn itself is improving. “Genetics is everything,” said Lincoln, praising seed stocks that are increasing yields for farmers.

This latest corn price spike began in early June. Rains wrecked the nation’s midwestern corn crop. Now farmers elsewhere like Dean Huff are playing a hand they do not enjoy. “Now you have a lot of money invested in your crop, and it’s a gamble. All you’re doing is handling more money, and if you make a mistake, you’re in trouble,” he said.

Lincoln agreed. “I don’t think consumers always appreciate that. Yes, corn and soybeans and milk are worth more, but with every farming cost rising now, it’s a whole new level of risk farmers face today.”

The casino that is corn offers seats at the table for everyone — except consumers. Fertilizer and farm equipment producers hold winning hands. Politicians observe as corn prices roar ahead in the wake of new ethanol subsidies. Inflation hit the supermarket aisle, hurting constituents but helping crop farmers. Then oil prices hit the roof.

The prospering dairy industry, fed by worldwide export demand for its products, is hurting this summer as fuel and feed costs for soybeans and corn spiral up. “It’s not a wonderful year for dairy cows,” said Huff. He has a modest dairy herd. Most of his corn is sold as feed grain for pigs and chickens, and to New York’s newly minted ethanol producers.

“New York is a corn deficit state,” added Lincoln. Farmers here grow less corn than New York consumes. That trend is holding as state based ethanol producers absorb the corn and then some that farmers here planted last year to cash in on rising prices.

In 2008, “This area has seen a lot of fields plowed up and put into corn,” said Lincoln.

Not every corn farmer holds strong cards. “Early corn is growing real well.” But if you waited too long to plant here, you may have a spotty corn crop. “Later corn is growing uneven. The ground got dry,” said Huff.

Corn commodity market pricing tends to be higher than farmers can get locally and now reflects anticipated shortages predicted by a June 10 U.S. Agriculture of Department report tracking sodden midwestern crops. The crop picture changes from month to month with the weather.

Huff remembers a similar corn crop in 1972. But conditions in 2008, with ethanol playing a relatively new role, are unprecedented.

“Corn prices have (almost) quadrupled. Soybeans tripled,” said Huff.

The bad news rests in overhead costs. Crop insurance is becoming essential in an era when a single failed planting can take down a debt-heavy farm. While corn prices could save farmers from costs again this year, diesel fuel and gas, farm equipment, fertilizer, electric power, natural gas, and feed prices are at or near historic highs.

“Look at hay prices. Roundup (herbicide) went from $22 a gallon to about $45 a gallon,” said Huff. Wet fields for the moment are also making it harder for farmers to maintain crops.

Crop farmers hoping to upgrade or add new gear face higher prices and scarce decent used equipment. Many new implements get exported before American farmers can buy them.

“John Deere, Case IH and the rest of them are taking orders nine months ahead of time,“ said Lincoln.

If corn settles out with prices that again return costs to farmers there will be profit again in 2008. The big picture for consumers is less inviting.

“We have historically produced plentiful food at low prices,” said Lincoln of American farming. “What we’re seeing is a whole new level of prices, generally.”

Contact Morgan Wesson at (585) 394-0770, Ext. 256, or at