Area farmers react to ‘strong push’ in corn and soybean prices

Southwest Iowa farmers are cautiously optimistic this week with corn and soybean prices that continue rising in their favor.

Brian Jones farms near Greenfield and said that these prices, which have hit the $5 per bushel mark on corn and the $11 per bushel plateau on soybeans, are a very welcome sign for producers after 2020 dealt them challenge after challenge.

“Obviously, there have been a lot of challenges this year in the ag industry. There’s just been a lot of uncertainty of exactly what was going on,” Jones said.

Jones said that looking back six months, price projections on grain painted a much more dismal picture for growers, one that would have some farmers without a profitable margin, however now a very different picture is playing out.

ISU grain marketing expert Dr. Chad Hart said that there are three factors he’s observing that are ushering in higher grain prices right now: supply, exports and support from outside of agriculture.

To give content to the current prices, Hart explained that soybean prices are up about 50% from six months ago and corn prices are up almost 60% from the same time.

Supplies are a little smaller than they were expected to be last summer, Hart said. That is in part due to the derecho and drought, which both effected farming in this state.

Exports are very strong right now and Hart says they are on a “record trajectory.”

Support from outside agriculture includes what Hart calls “speculative interest” when investors outside agriculture invest in commodities like corn and soybean.

“When you put all three of these factors together, you get this strong push in prices,” Hart said.

Hart expects that as a result to the higher prices farmers will be selling crop they have on hand and forward sell at least some of the crop they will be planting this spring.

The “beauty of this price rise,” Hart explains, is not just in the cash price seen today but in the futures as well.

“As an example, as you look at the Chicago Mercantile Exchange futures markets for our crops and livestock, we’re looking at prices for December 2021 corn up in that $4.50 range and beans north of $11 as we look out into 2021 and 2022,” Hart said. “This price increase isn’t just for those who have crop in the bin to sell but those who want to be forward looking and make a few sales on the crops they’re going to grow this year.”

Hart and Jones both say that they’re remaining cautious, however. Both explain that sharp rises in price can also mean the imminence of a sharp decline in price.

“They say the cure for high prices is high prices. That’s what makes everyone so nervous,” Jones said.

“That’s going to be the challenge, I think, for farmers,” Hart said. “We’re going to see a lot of strong price movement in both directions, so far the balance of those has been in the farmer’s favor.”