Soybean harvest is now in full-swing in most areas of southern and western Minnesota, as many soybeans have now reached maturity, and timeliness is very critical to prevent soybean harvest loss. The prospect for wetter weather conditions in the next week or two in the upper Midwest has caused growers to be quite aggressive with soybean harvest in the past week. Early soybean yield reports are predictably quite variable in southern Minnesota, ranging from near 30 bu./acre to around 55 bu./per acre. Most growers are reporting near average to slightly below-average soybean yields thus far, mainly due to the extremely dry weather pattern that existed in many areas in July and August. On the whole, 2008 soybean yields in south-central Minnesota will likely be slightly below 2007 yield levels, and well below the excellent soybean yields of 2006.
Very little corn has been harvested in southern Minnesota, even though most corn has now reached physiological maturity (black layer). Most producers are planning to let the corn drydown naturally in the field before harvesting, in order to reduce corn drying costs. It is too early to evaluate 2008 corn yield levels; however, many experts expect 2008 corn yields to be close to or slightly above trend-line corn yield averages for the area. It will be a few weeks yet before we know if the 2008 corn yields are comparable to the excellent corn yields in much of this region in 2007 and 2006. This year, corn yields are not likely to reach the record yield levels achieved in 2005, due the wide variability of planting dates and growing season rainfall in 2008.
Grain Markets Decline Sharply
Corn and soybean prices have dropped dramatically in recent weeks, both on the Chicago Board of Trade (CBOT) and at local grain markets. Currently, there appears to be a lot of uncertainty in the grain markets, partly related to speculator positions, 2008 production levels and the overall weakness in the U.S. economy. CBOT December corn futures closed at $4.54 on Friday, Oct. 3, which compared to a close of $5.15 at the beginning of the week on Monday, Sept. 29. CBOT corn futures have dropped nearly $1/bu. since mid-September and more than $2/bu. since mid-July. CBOT November soybean futures closed at $9 on Oct. 3 – a drop of over $1/bu. from the closing price of $10.94 on Sept. 29. CBOT soybean futures have dropped over $3/bu. since late August and nearly $6/bu. since mid-July.
Cash grain prices in Lake Crystal, MN, on October 3 were $3.99 for corn and $9.04 for soybeans, which are very good harvesttime grain prices compared to recent years. However, theses prices are well below cash grain prices a few weeks ago. These were the lowest cash grain prices during the 2008, and lowest since postharvest 2007. Cash grain prices a year ago at this time were about $3.25-3.50 for corn and $8.50-9 for soybeans. By comparison, the cash grain prices at this time in 2006 were near $2 for corn and $5 for soybeans. Many growers took advantage of the favorable grain prices earlier this summer to price a significant amount of their anticipated 2008 corn and soybean production. Other producers will likely store a significant amount of their 2008 production, hoping for improved grain prices in the coming months.
A bigger concern with the recent dramatic drop in grain prices may be for profitability and cash flow projections for the 2009 crop year. The cash price for harvest delivery in 2009 at Lake Crystal, MN, on October 3 was $4.42 for corn, and $8.75 for soybeans. Crop input costs for 2009 are likely to be dramatically higher than 2008 costs, especially fertilizer, seed and fuel costs. Land rental rates are also expected to increase significantly in 2009 in most areas. Some analysts expect breakeven crop prices at trend-line yields for 2009 to be $4.50-$5/bu. for corn and near $9/bu. for soybeans. If that is true, the recent sharp drop in grain prices may have pushed 2009 harvest corn and soybean prices to breakeven levels – or lower. This could be an issue in the coming months, if grain prices do not rebound after harvest.
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.