BY DOUG LEDUC, Greater Fort Wayne Business Weekly
dougl@fwbusiness.com
There was a lot of excitement about increasing corn prices last fall, and the talk persuaded some farmers to increase corn acreage even if it meant using more chemicals to plant the crop two years in succession in the same field.
Greg and Gary Thrush are glad they stuck to their normal crop rotation this year on the 3,000 acres they farm mostly in DeKalb County from a base about five miles southwest of Garrett.
They had about 55 percent of their acreage in corn and the rest in soybeans. Much-needed August rains ended an area drought in time for the beans but not for the corn.
"The soybeans came through it fairly well, and we think the corn will be off by about 30 bushels (per acre)," Greg Thrush said prior to an agricultural outlook session presented Sept. 18 at the Fire Mountain Restaurant in Auburn by the Purdue University Cooperative Extension Service. "We were awfully lucky."
On corn, the father and son typically shoot for bushel-per-acre yields of 175 to 180, and they're expecting to see about 150 this year.
Unfortunately, "the east side of the county didn't fare as well as the west side," Thrush said. "The other side of the county will be lucky to get 100 bushels."
For most DeKalb County farmers, "it's not going to be a bumper crop, but I think it's better than we had any right to expect six weeks ago," said Dave Holloway, agricultural educator for the county's Cooperative Extension Service office.
Chris Hurt, an agricultural economist at Purdue University, said at the outlook session the average bushel-per-acre yield for corn in northeast Indiana was 145, well below the state average of 160 and the area's average of 154 last year.
Northeast Indiana's average bushel-per-acre yield for soybeans was 40, much closer to the state's average of 43, though below last year's area average of 50.
Hurt said corn and soybean prices have risen in response to higher demand from biofuels producers and from foreign customers, who have been benefiting from a weak dollar and worldwide economic growth.
The Bunge North America grain elevator in Waterloo was buying soybeans in mid-September for $9 per bushel, up from $5.25 a year earlier, and it was buying corn for $3.12, up from $2.10.
Several ethanol plants have opened in Indiana this year, and more are expected to come online during the remaining months of 2007 and next year. But, Hurt said, the price of ethanol and price of corn will affect the amount of corn plants use to produce the biofuel.
At the recent ethanol price of $1.60 per gallon, production starts becoming less attractive when corn prices rise above $3, he said.
"We think there could be some upward limits on corn prices - $3.60 to $3.70 a bushel," he said.
The soybean processing and biofuels plant opened in Claypool last month by Louis Dreyfus Commodities will crush more than 50 million bushels of soybeans, about 25 percent of Indiana's annual soybean production. Bunge operations in northeast Indiana already crush a similar amount.
Hurt projects the increased demand created by the new plant will raise area prices on a bushel of soybeans between 15 cents and 25 cents this year and an additional 10 cents to 15 cents next summer.
Prices on inputs such as seed, fertilizer and other farm chemicals tend to rise when farm incomes increase, and because corn requires more input investment than soybeans and soybean prices may have more upward potential this year, they may deserve increased attention as farmers make their plans for next year, Hurt said.
But "it's a little early to be saying what we ought to be growing," he said.
"The bottom line is, the world's tight on everything. If we get a bad weather pattern in any of these growing areas, that's what's going to be hot."