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Northern farmers expect strong corn prices

Corn stands well over waist high in late June, south of Moorhead, Minn. This field was planted April 4, early in the season.

GRAND FORKS -- Rallying farm commodity marketing prices driven by expectations of a poor harvest in the hot, dry central Corn Belt are causing a stir in the Northern Plains' expanding corn planting areas where crops still look promising.

Mike Clemens, Wimbledon, farmer and board member of the North Dakota Corn Growers Association, said he recently bought back some of the corn hedges he'd made on the Chicago Board of Trade. He said he decided to lighten some of his positions after seeing the way some of the corn was rolling up farther south.

"We had positions sold and we bought them back," he said. "We think there's an opportunity to resell at a higher level. It takes a major (market price) move to do something like that.

"You think you're going to have a good crop, but you have to wonder if the high pressure and heat dome will spread north," Clemens added. "We've been on the fortunate side of the jet streams. We've got to be meteorologists as farmers, you know."

But, he said, each farmer will respond differently to volatile markets, he said.

Carrol Duerr, manager of the Colfax Farmers Elevator in northern Richland County, said the prices are higher today than they were in mid-June.

"Ten days ago, if I could have been bidding what I am today, people would have been selling more bushels than they are today, because of the chance of what they think could happen in the future," Duerr said. "The Corn Belt report looks tough. The weather maps say it's supposed to be hot and dry."

Duerr planned to look at a Friday crop planting and stocks report that provides the U.S. Department of Agriculture's estimate of major crop acreage to see if the government is predicting a downward drift in yield potential.

Clemens said he thinks the Friday report would be dwarfed by the weather reports.

"The report is ancient history," he said, because the crop was largely planted by May 1. "I think the crop conditions are more important right now than the number of acres they've got planted. The future of the weather patterns are for more hot and dry. I expect more (price) rallies."

Frayne Olson, a North Dakota State University Extension Service crops economist/marketing specialist, said the reason for a rally is "never as simple as just one thing."

"Until recently there's been an expectation built into the markets that we're going to have this monster corn crop," Olson said. "We had the early planting season in major growing regions in the U.S. and very favorable weather."

The attention in the markets had diverted to the macroeconomic issues, such as the U.S. and European economies.

Meanwhile, the U.S. growing season seemed to be pedaling along, with showers in major corn-growing areas. "But the growing season has now caught up with us," he said. "We're getting rains, but the crop is using up moisture faster than it's being replenished. Weather forecasting models all suddenly said the same thing -- a hot, dry spell was coming at critical (reproductive) stages."

As the price rallies have come from the market fundamentals, the investment community has gotten involved.

"They started jumping on the bandwagon as well," he said. "The financial community comes in and out of the market very quickly. Huge pools of money shift around quickly."

Dwight Aakre, NDSU Extension Service farm management service, said both the corn and soybeans look good in the region right now. "The big factor is what yield we're going to have," he said of whether farmers can capitalize on the rallies.

Aakre said a lot risk remains, but so does potential for positive bottom line returns on corn and soybeans. Farmers can lock in cash contracts in eastern North Dakota and western Minnesota in the $5.60- to $5.70-per-bushel range for corn, with harvest delivery. They can lock in soybeans at $13 to $13.25 per bushel, he said.