More Rain Could Mean Higher Corn Prices

May 22, 2002

COLUMBUS, Ohio - Corn prices are likely to increase within the next several weeks if wet weather persists throughout the eastern Corn Belt, says an Ohio State University Extension agricultural economist.

"Based upon the Chicago Board of Trade, corn prices right now are $2.30 and could climb 10 to 12 cents higher because of the weather," said Matt Roberts. "I think the real question is what it will be like the next two weeks. If wet weather continues for both Indiana and Ohio, we'll see those corn prices start to rise and soybean prices soften." Excessive rainfall in Indiana, Ohio and parts of Illinois has significantly delayed both corn and soybean planting. Ohio corn growers only have 17 percent of the corn crop planted, compared to 74 percent this same time last year. Planting is two weeks behind the five-year average. Six percent of the soybean crop has been planted so far, compared to 70 percent last year.

Roberts said that growers are remaining optimistic that they will get their corn crop in the ground on time. "The window for planting corn still has not closed," he said. "It's very reasonable given Ohio's typical growing conditions that one can plant corn through the end of May and still see very good yields given a good growing season." He added, however, that if growers are pushed to the limit, a significant shift from corn to soybean acreage could occur that might impact farm profitability over the long term.

"Given the new Farm Bill, if we see a significant shift to soybeans, that might begin to impact farm profitability simply because soybean support is not as generous as it has been in the past," said Roberts.

The government's loan rate for soybeans in the 2002 Farm Bill is set at $5.00 per bushel, down from $5.26, while corn was increased from $1.89 to $1.98 per bushel.

"The changes in prices changes the relative profitability of those crops," said Roberts. "By switching acreage from corn to soybeans, there will probably be some implications, but it's still a little bit early to worry about the impacts of large scale shifts." Roberts said that analysts are calculating a shift back to larger soybean acreage than what was originally forecasted in the U.S. Department of Agriculture's annual prospective plantings report released in March. "There is little doubt that if the wet weather persists for another week or so, that the corn harvest will be smaller than currently projected," he said.

Despite the grim outlook on corn planting, Roberts speculates that the situation is not severe enough to drive farmers to collect their government payments.

"I don't think we are anywhere near the point where we are talking about abandonment where people are taking payments because they couldn't get their crop planted at all or where those acres that got planted were flooded so bad that it killed the seedlings," said Roberts. "If growers haven't gotten anything in the ground for corn, there is still a window where they can get soybeans in the ground. I think they would prefer to try to plant something than take payments and have those fields sit idle for the rest of the season." Roberts added that it wouldn't be until mid-June before any indication surfaces that farmers have made claims on abandonment payments.

Author(s): 
Candace Pollock
Source(s): 
Matt Roberts