Financial crisis drives down crop prices

Tim Landis

Even as Christian County farmer Bryan Fesser went to work on his corn crop Monday, turmoil in financial markets a world away was driving down the price per bushel at local grain elevators.

“The last couple of years, there’s no rhyme nor reason to corn prices,” said Fesser, who has 3,000 acres of corn and 400 acres of beans to bring in this year.

Market upheaval also has made it more difficult to time sales, said Fesser.

“It used to be you’d never get a 30- and 40-cent spread (in the price) in a day’s time,” he said.

Anxiety on Wall Street — which has now spread to world financial markets — has helped drive grain prices back to what a University of Illinois farm economist described as a break-even point for farmers after a spring and summer when “up” seemed to be the only direction for farm-commodity prices.

Prices have fallen toward $4 a bushel for corn and $9 for beans after surging to record highs — near $8 for corn and a little more than $16 a bushel for soybeans — as recently as July.

Neither is the commodity effect limited to grain. Falling crude-oil costs worldwide helped bring gasoline prices in Springfield below $3.30 a gallon at some stations Monday. That’s down 40 cents from a month ago, according to AAA Chicago.

“It’s being driven by the logic that the financial crisis is spreading to a worldwide basis, and that it’s going to result in much lower economic growth … which reduces income and buying power for all goods and services,” said Scott Irwin, a farm economist with the University of Illinois at Champaign-Urbana.

Irwin said it is important to remember that grain prices are still well above historic averages, but $4 corn and $9 beans are a rough dividing line between profit and loss for farmers.

Tighter lending rules also have begun to reach down to the farm, according to the American Banking Association Center for Agricultural and Rural Banking in Washington, D.C. The group released an advisory last week warning farmers to expect more questions about their credit requests and asset values.

Christian County Farm Bureau manager Eric Johnson said farmers face the added problem of a later harvest this year as a result of spring and summer flooding that slowed planting.

“People are moving around a lot. They’re harvesting what they can,” said Johnson, adding that farmers, too, are keeping a wary eye on financial markets. “There’s a lot of apprehension. These are tough times.”

Corn with a moisture content of 15 percent or less is considered ideal for harvest, but Johnson said some farmers are bringing in grain with higher moisture levels because of the later start this year.

Fesser said area grain elevators typically are taking 4 to 5 cents per percentage point off the price for corn that exceeds the 15-percent standard. “Some of ours has been coming in at 22, 23 percent,” he said.

Still, he said he considers himself fortunate to sell corn at more than $4 a bushel a little more than a year after getting barely $3. He added that early yields of 180 to 225 bushels an acre have been “excellent.”

Tim Landis can be reached at (217) 788-1536