09/02/12 — Corn prices high, but yield average

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Corn prices high, but yield average

By Steve Herring
Published in News on September 2, 2012 1:50 AM

North Carolina, unlike most of the country, is anticipating a bumper corn crop that will benefit from what is being reported as all-time record prices being paid for the grain.

The picture in Wayne County, however, is not as clear where a corn crop that held a record-yield potential early in the season is now expected to be a mixed-bag at best.

Harvesting in some parts of the county has begun, but it will likely be later in September before a clearer yield picture emerges, said John Sanderson, Extension Service field crop agent.

Before getting too excited about the price corn is bringing -- currently just over $8 per bushel -- people need to remember how much production costs have risen, he said.

And they should expect to see those prices, as well as the impact of a reduced yield, reflected in higher prices at the supermarket, Sanderson said.

"I think we will probably have an average year," he said.

The normal county average yield is in the 80-bushel-per-acre range, he said.

What likely will determine this year's yield involves when farmers planted their crop and what stage of growth the corn was in when the county was cooking under a June-July heat wave during which the temperature reached triple digits for about three weeks.

It is difficult to determine the average price growers are receiving since some may have contracted their crop for this season at a specific price, he said. In those cases, growers sign contracts to deliver a certain amount of the crop at a specific price.

"It is sort of like hedging against the market," he said. "It could go lower. So if you book it now for next year you know what you are going to get. But you also take the risk that it (marker price) could be higher, but you still have to meet that contract."

Over the last 10 years, the county has seen corn prices as low as $2-$3 a bushel but the $4-$5 range is more the normal, Sanderson said.

Corn prices now are in the $7-$8 range.

"All of that sounds great, but the inputs are costing the growers more -- fertilizer, chemicals, equipment, repairs all of that," Sanderson said. "It's kind of the story behind the story.

"I guess nobody is interested in how much more it costs to produce it, but is interested in what people are getting for it. Fertilizer cost has just skyrocketed in the last couple of years. Fertilizer and nitrogen are commodities, too, and their prices go up and down."

New equipment cost is "almost scary" for a tractor or combine, Sanderson said. Also, the higher prices will affect the cost of feed, he said.

"It is kind of a double-edged sword for most of our growers," Sanderson said. "They not only grow corn and soybeans, and other crops. They also have hogs and turkeys and chickens. So it is going to be reflected on that side of their business because of the price of feed.

"You probably are already hearing about them reducing the number of hogs and chickens and turkeys and cows because of the cost of feed. He just can't afford to feed them. He can't pass that cost on that easily so what they are doing is reducing the numbers which eventually is going to make the cost of items go up in the grocery store as the commodities get shorter. So eventually all of this will be passed on to the consumer in some form."

After several years of poor corn yields, some county farmers are looking at other crops -- about 20,000 acres were planted in corn this year, down by about 5,000 acres from last year.

"I guess the biggest things farmers are doing right now is they are putting some land they would have planted in corn into other crops, like grain sorghum," Sanderson said. "Some have planted more wheat and soybeans. There has been some pressure on corn acreage going into other crops."