Grain farmers expect good year with corn, soybeans

By Tim Krohn, The Free Press

Mankato, Minn. (AP) - Stellar. Remarkable. Fantastic.

Those are the words farmers and analysts use to describe the fall harvest.

While the just completed corn and soybean harvest won't likely set a record, it will rank among the best. And an unexpected surge in grain prices because of poorer harvests elsewhere in the Corn Belt are positioning grain farmers for a lucrative year.

Those high corn and soybean prices, though, are worrying hog producers who will pay more for feed just as the hog sector was beginning to right itself after two years of losses.

"It's been a stellar fall," said Al Brudelie, a farmer and head of the farm management program at South Central College. But with the wide fluctuations in the markets, we're going to create some winners and losers in agriculture."

On Sept. 24 an unusual deluge of rain hit, bringing more than 10 inches to areas south of Mankato, pushing rivers out of their banks and flooding fields.

As fast as it came, the water left as hot, breezy weather dried fields quickly and a dry October let farmers harvest unhindered.

"With the wide fluctuations in the markets, we're going to create some winners and losers in agriculture."

"It was a remarkable turnaround," said Pat Duncanson, who with his brother, Karl, farms fields across southern Blue Earth County.

"We had 10 inches of rain. Within five days we began harvesting and never stopped."

Chad Berghoefer, who leads the agronomy team for Pioneer seed company, said he's never seen a harvest go so smoothly.

"This is probably the most efficient harvest we've had. The rain fell just before harvesting beans. We didn't know how the water would be handled, but they were back in the field in a week."

Brudelie, who farms north of Truman, saw the results of 10 inches of rain when he later got in the field. "I had corn I picked where you could see the water line a foot above the ear."

Berghoefer described soybean yields as "phenomenal" with an average of 60 bushels per acre and some as high as 80 bushels.

Corn yields ranged from 180 to 210 bushels per acre across the region.

Farmers were further helped by the corn being dried naturally in the field. Corn must be below 15.5 percent moisture to be stored without spoiling and farmers burn expensive LP gas to dry corn that's too wet.

In early October, the USDA revised sharply downward its predictions on the size of the nation's corn harvest, sending grain prices skyrocketing.

That will translate to higher feed costs for livestock.

"Hogs have been holding their own, but now what's going to happen?," Brudelie asked. "If the pork prices hold, they could be OK, but they may be treading water. I think livestock in general is going to struggle."

He said the spikes in grain markets aren't just due to supply and demand, but more investors looking for a safe haven.

"There are all these investors in commodities. People are taking money out of the stock market because of the volatility and putting it in commodities markets."

While homes and commercial real estate have taken a beating in value, not so with farmland, said David Bau, of the University of Minnesota Extension, based in Worthington.

"The sales are still strong, the prices are maintaining their high levels. The trend last year was a slight increase overall. This year I'm hearing the sales are high and strong," Bau said of good farmland that is bringing $5,000 an acre or more.

Bau said land prices are high partly because crop farmers have done well, and partly for the same reason commodity markets are being bolstered by investors.

"One thing driving this is where do you put your money if you don't put it in land. The stock market?"

Despite the strong year, some sectors of the farm economy took hits in the past year and there remain uncertainties.

New federal figures show net farm income received by Minnesota producers in 2009 was down 47 percent from 2008, which was considered a very good year. But it remained well above 2007 levels.

The government said the decrease resulted from lower crop and livestock prices and higher seed expenses.

Total cash receipts for Minnesota farms totaled $13.3 billion, down 15 percent from 2008. The total value of crops sold, at $8.4 billion, was down 12 percent. Cash receipts from livestock marketing were $4.9 billion, down 20 percent from 2008.

Brudelie said some farmers, particularly livestock farmers, have been under financial pressure.

"There's a lot of volatility out here and I think that's going to continue," Brudelie said. "The commodities, the volatility in the dollar and all the things going on in the world economy, it all comes home. Things happening in the world come back locally in a hurry."

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