The banner year for corn may not be what it’s cracked up to be.
Brandon Fast says it used to cost him $250 a wheel to replace the tires on his 18-wheeler on his farm near Mountain Lake, Minnesota.
Now, that price is nearly double — just one reason he’s not yet celebrating the near-historic $8 a bushel and up corn prices popping up at some ethanol plants and grain elevators throughout southwestern Minnesota.
“It’s almost one step forward, two steps back at this point,” said Fast, a corn farmer who also runs a seed and chemical business, on Thursday. Between new tires, fertilizer and a backlog of shipping containers in Chinese ports, Fast worries attention given the rocketing prices will mask the real story.
“We have land owners who think that we’re just making hand-over-fist as they hear on the radio about $8 corn and $16 beans,” said Fast. “But we’re not making as much as they think we’re making, of course, because our inputs are going up.”
On Monday, corn futures on the Chicago Board of Trade surpassed — for the first time in nearly a decade — $8 a bushel, an eye-popping number given the price just two Aprils ago sank to $3 at the onset of the pandemic.
Farmers, who can be circumspect in the good times while waiting for the bad, have said they worry the quickening pace of prices may just as soon tumble.
“Eight-dollar corn is about as good as it gets,” said Ed Usset, a grain marketing economist for the Center for Farm Financial Management at the University of Minnesota, on Friday. But farmers are wary of the day when “the price falls apart, but the costs don’t,” he said.
The drivers behind the high price are multi-layered. Even before Russia’s army crossed the norther border of Ukraine in late February, effectively ending hope for a normal growing season in Europe’s breadbasket, some corn bids had already sold in the $6-$7 range.
Also impactful, say grain economists, was drought in South America that withered harvests.
“You have a major player trip like South America,” noted Usset. “And that started things.”
“But,” he added, “the war is a big deal.”
The war in Ukraine, on top of already good demand has pushed corn prices above $8, a place not seen since the U.S. drought-ridden summer of 2012, when Carly Rae Jepsen’s “Call Me Maybe” played on airwaves and Barack Obama was in the Oval Office.
On Wednesday, at a roundtable discussion on congressional negotiations for the upcoming farm bill at the Minnesota Corn Growers Association office in Burnsville, Gary Wertish, president of the Minnesota Farmers Union, thanked the Biden administration for allowing summer sales of E-15, which is usually banned in warmer months under the Clean Air Act due to concerns around air pollution.
“Got to mention that first at the Corn Growers building,” Wertish said.
But he also acknowledged “high commodity prices” and told U.S. Sen. Tina Smith that his fear was the fall, noting rising prices in a highly concentrated industry for fertilizer manufacturers.
“They’re going to charge what they can because they can,” Wertish said.
The culprits are more than just fertilizer. Farmers across the region say chemical applications and diesel and even land costs are all up.
Craig Kavanagh, a grain division manager at Glacial Lakes Cooperative in Murdock, Minnesota, has seen rising land prices shoot to over $10,000 an acre. Such valuations translate to higher rents for some farmers.
“We’re going to need higher prices to pay for this,” said Kavanagh.
One grain merchandiser south of Mankato, Minnesota predicted the price, adjusted for inflation, should be hitting $10 a bushel. Few analysts see quick resolution to the conflict in Ukraine.
Still, farmers are remaining cautious.
In Murray County, Minnesota, farmer Bryan Biegler, who also serves as the president of MCGA, said his immediate concern is the chilly, wet spring. There’s also still frost. And he can’t plant over frost.
“It’s still early yet,” said Biegler, noting the early May goal to have his crop in the ground. “But it can make a guy uneasy.”
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