Seeing Dollar Signs: High grain prices exciting for farmers

May 9—For grain farmers, it's been nearly a decade since they've seen corn and soybean prices that are making them see dollar signs.

As of Thursday, corn was selling for $7 per bushel and soybeans were selling for $15.4 per bushel. Those prices have doubled from a year ago. And according to grain futures, those prices could go even higher before the end of 2021.

Daviess County farmer Jeff Coke said he was on the phone with his commodity broker on Monday "trying to decide what to do."

"I've already been trying to contract some stuff for 2022 to try to take advantage of some of this," Coke said. "The lucky farmers are the ones who still had old crop left but most of us don't. Some of your older, wealthier farmers were able to hold on and they've hit a home run."

Ohio County grain farmer Darren Luttrell plants more than 4,000 acres of corn and soybeans along the Dundee bottoms.

Luttrell said they're have suffered through too many down years of grain prices.

"It's where we need to be to make a profit," Luttrell said. "It's awesome to see these kinds of prices. It goes to show you that it's a world market."

According to macrotrends.net, 2012 and 2013 were the last two best years for grain prices, with corn selling between $7 and $8 per bushel and soybeans trading between $13 and $15 per bushel.

Multiple factors are driving current prices that could eclipse those of seven and eight years ago.

Clint Hardy, Daviess County ag extension agent, said China had curbed back its purchase of American grain for about two years but has now ramped it back up, creating a major demand.

"Some of the trade agreements were finally resolved and China is importing a large amount of North American grain — corn and soybeans and soybean products. We're in a good position right now."

Another reason for the higher grain prices is that Brazil's corn crop has been negatively impacted by a dryer weather pattern. And without Brazil's corn crop entering the world market, that has placed greater need for U.S.-grown corn.

"Their production was less than anticipated," said Hardy about Brazil's harvest. "So this is a much-needed opportunity for grain farmers because the past six or seven years have not been very profitable."

Soybean prices have also been helped by the push for renewable energy.

Ronnie Edge, Owensboro Grain's VP of marketing, said the demand for soybean oil has been a boon for that commodity.

"In the past, soybean meal was a major thing for animal feed and the oil was a by-product," Edge said. "And to get rid of it, you did vegetable oil or bio-diesel. But now it's renewable energy and it's changed the whole landscape and people are trying to wrap their heads around that."

Although there is optimism that the premium grain prices will stick around for this year and even into 2022, there is still that worry that this good thing will eventually return to below-average prices.

And when that happens, farmers are faced with ever-increasing input prices — costs that go into producing a good or service — that exceed grain revenue.

"The only problem you have with high grain prices is that it causes input prices to go up, and then when grain prices fall, the input prices do not fall," Edge said.

With the 2021 planting season underway, farmers have begun locking in prices on their estimated yields.

Hardy said optimism remains regarding the 2021 crop.

"Forward contracting the 2021 crop began all the way back even in December (2020) and then in January of this year," Hardy said. "Since that time, the prices have gradually increased and it's putting farmers in the position for a very profitable year, if the weather holds and our yields are good."

Don Wilkins, dwilkins@messenger-inquirer.com, 270-691-7299

Don Wilkins, dwilkins@messenger-inquirer.com, 270-691-7299