Wednesday, November 05, 2014

Record grain crops could lead to lower prices and force more farmers to store corn and soybeans

Not many farmers are happy about this year's projected record-breaking grain harvest. That's because supply is expected to far outweigh demand, meaning that already falling prices could continue to drop, Grant Gerlock reports for NPR. Prices for a bushel of corn are already under $4, about half of prices from two years ago. And it doesn't look like prices will see an upturn any time soon. (Getty Images by Daniel Acker: Grain stored in Sheffield, Ill.)

The U.S. Department of Agriculture expects farmers to haul in 4 billion bushels of soybeans and 14.5 billion bushels of corn this harvest, Gerlock writes. Farmer Gene Trausch told Gerlock, "We out-produced ourselves. You always hope your neighbor burns up, hails out, whatever, dries up, but you have a good crop. You know, that's just the way it works. But everybody had a good crop this year."

That could lead to the lowest prices in five years, Gerlock writes. Add in rail delays, blamed on increased shipments of oil and last year's bad winter, and farmers will need to store grains. That creates a new set of problems because farmers who lack enough storage space are forced to store grain on the ground, risking its spoiling.

Trausch said many farmers are being forced to tighten their belts and save money, Gerlock writes. Trausch told him, "It's going to hurt. Because the store fronts in town like in Minden, Kearney, Hastings, Grand Island, wherever—they're going to be hurting. And then also, your implement dealers. They're just not going to sell nothing." John Deere has already been affected, saying it plans to layoff 1,000 workers at plants in Iowa. (Read more)

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