Farmers see high yields but low prices

As area farmers work to get their harvests in, they are busy enjoying large yields. But how much money they will make from selling the crops remains to be seen.

The U.S. Department of Agriculture is forecasting record crops this year for corn and soybeans, the two largest U.S. crops in terms of production. Unless there is a devastating freeze or torrential rains before the harvest ends, corn production is projected at 366 metric tons and soybeans at 106.5 million metric tons.

Soybeans will be favored for available on-farm and commercial storage because of higher market prices. More corn likely will be left to stand in the field for drying and temporary storage, said Bill Wiebold, University of Missouri Extension corn specialist.

Handling all this production will be complicated. Arthur Neal, a USDA transportation and marketing official, said about 3.5 percent of the crops, equivalent to 762,600 truck loads, cannot be kept in permanent storage structures such as silos -- the highest share since 2010.

But that doesn't appear to be much of an issue in Southeast Missouri.

Tim Hutchcraft, location manager at Lansing Trade Group in Essex, said there is no difficulty moving the crops.

"We have just as much outbounds as we do inbounds," Hutchcraft said. "Right now, we've got plenty of storage and no transportation issues."

Nationally, widely reported logistical challenges need to be dealt with as farmers face another problem: a drop in revenue.

With the prospect of abundant harvests, buyers have pushed prices into a free fall. The corn futures contract recently slid below $3.50 a bushel on the Chicago Board of Trade, well below the $8 level it fetched in 2012, a year when crops were stressed by drought.

For all U.S. farmers, the USDA is forecasting about a 14 percent drop in farm-related income in the government's current fiscal year that ends Sept. 30.

Hutchcraft said that is a concern, but he is optimistic things will work out.

"What we have to store will be determined by the market prices," Hutchcraft remarked. "We may have to hold some and see what the price does. But right now things are going OK."

Hutchcraft said his company has stayed ahead by having plenty of transportation lined up, as well as making sure storage is plentiful.

Falling prices may hurt the pockets of farmers nationally, but it has proved a boon for ranchers by lowering the costs of feeding their animals.

But price declines will not show up quickly in stores, warned Scott Irwin, an economist and professor at the University of Illinois.

"It will take some time -- one or two years -- to feed through to meat and egg prices in groceries, which are the most direct connection to the farm. But we will get some impact because the prices have gone so high," Irwin said.

For processed products such as breakfast cereals, he said, the effect will be "relatively modest" because less than 20 percent of the cost comes from the raw commodity prices.

"Right now, the farmers are all just busy trying to get their crops in," Hutchcraft said. "I'm sure there will be time later to wonder what the market will do. Right now, though, there aren't any transportation issues and there's plenty of space. It's just a really good, quality crop."