Production up, prices downSub-$5 mark for corn is lowest headed into harvest since 2010
By: Ross Dolan, Forum News Service
MITCHELL, S.D. — Corn prices are retreating in the face of a strong harvest forecast.
Jim Morken, general manager of the Farmers Alliance elevator in Mitchell, said the U.S. Department of Agriculture supply and demand report issued Thursday shows there will be a comfortable supply of corn for the next year. That translates to lower prices for the 2013 harvest.
Corn was selling for $7.63 a bushel at the Mitchell elevator at this time last year. Thursday, the price was $4.66 a bushel.
Historically, per-bushel local prices for the Sept. 10-13 period were: 2004, $2.10; 2005, $1.55; 2006, $1.96; 2007, $3.14; 2008, $5.38; 2009, $2.84; 2010, $3.86; 2011, $7.15; and 2012, $7.63.
Higher 2012 prices were partly due to the shortage of corn caused by the drought, Morken said, and 2011 saw a price spike due to a shortage of planted acres and some high moisture anomalies that damaged crops.
“In the last 10 years, the industry has changed dramatically,” Morken said. “I think it’s fair to say with the higher costs of production today that we won’t see a return to $1.50 and $2 corn.”
Once the ethanol industry got its legs, Morken said, prices began their upward drive.
“Generally, our bigger price spikes have come as a result of weather-related issues in the corn market,” he said.
The 2011 and 2012 harvest years were unique with production and drought problems both years, he added.
“At the same time, demand was strong both years, so prices were up.”
Another factor affecting prices this year is that world markets had to find other sources for corn in 2012.
“That displaced some of our traditional export markets,” Morken said. “And they don’t come back overnight.”