Midwest corn and soybeans look good, but prices lower than expected

CHAMPAIGN, Ill. -- A farming season that once appeared to be doomed by the weather has turned out pretty well for Midwest soybean and corn crops.

But, to the surprise of farmers harvesting soybeans and corn, it's the fall of once record-high prices that now threatens to take a lot of the shine off 2008.

"Our potential was there," said Rolland Vandeveer, who has more than 5,000 acres of corn and soybeans near Salem, Ill., about 80 miles east of St. Louis. "This probably was going to be our best year for the last 20 years."

Farmers in Illinois and Iowa, the country's top corn and soybean producers, endured wet, cool springs that slowed planting and growth. Then they watched heavy, soaking rains and rising rivers swamp their fields, forcing many to plant their crops two or even three times.

All the while, prices held close to the record highs of the past couple of years, price peaks driven by the ethanol boom and growing global demand for food and livestock feed.

But as summer wore on, crops looked better, expectations improved, and prices sagged.

Corn was selling for about $7 a bushel and pushed toward $8 in midsummer, but has since fallen back to about $4.

Similarly, soybeans are selling for just under $9 a bushel now, well below the $16-plus they were going for in June.

The current prices are still high by historical standards, but they don't look so high to farmers paying more than they've ever paid for fertilizer, fuel and other things they need to grow a crop.

"We've had a huge increase in production cost over this time, and people's expectations have changed so much over time," Pat Westhoff, an agricultural economist at the University of Missouri said, explaining that farmers are accustomed to unusually high prices for their crops. "People have gotten used to that kind of world, but we're not in that world anymore."

Price problems aside, farmers and crop experts say the soybeans and corn being harvested so far look pretty good, particularly given the rough start to the season.

The Illinois Department of Agriculture says about 20 percent of the state's 11.9 million-acre corn crop has been harvested so far, compared with about 63 percent at this point the past few years. Forty-five percent of the 9.2 million acres of soybeans have been harvested, 25 percent shy of the usual 70 or so.

The U.S. Department of Agriculture has gradually ratcheted up expectations for both crops since the wet spring.

Earlier this month, the USDA said it expects American farmers to harvest 12.2 billion bushels of corn, which would be the second largest corn crop on record after last year's biggest ever. The agency expects 2.98 billion bushels of soybeans, 11 percent more than a year ago.

With that in mind, Westhoff said many farmers will still have a good financial year. But in some cases, the combination of high costs and diminished prices could prove painful.

He said if someone owns all the land they operate, the chances are good that they can cover their costs and likely make a significant profit. But it might be more difficult for those who rent.

Monty Whipple, like a lot of farmers, figures it was time for the run of sky-high crop prices to end.

Whipple grows corn and soybeans near Utica, Ill., about 90 miles southwest of Chicago.

"You know that it has its up and downs and cycles, and nothing stays glamorous forever," he said.

But he admits that he, and maybe a lot of others, started thinking those prices might just last a while longer.

"We all get caught thinking things will never go back down," he said.