Good yields dampened by worry
Corn, soybean prices up but other conditions have farmers concerned
By Michele Linck, mlinck@siouxcityjournal.com | Posted: Saturday, October 04, 2008
Matt Brown augers grain into a semitrailer while harvesting a soybean fifeld southwest of Le Mars, Iowa, in rural Plymouth County on Thursday. (Staff photo by Tim Hynds
Corn and soybean prices are near historic highs, but some Northwest Iowa farmers say they still have plenty of worries this harvest season.
And they're not just the perennial concerns about hail storms and frosts that reduce their yields and increase their costs overnight.
"It's because the volatility in the commodity markets -- corn, beans, cattle, hogs -- is very high," said Mark Brown, 62, a fourth-generation farmer on a 115-year-old family operation who grows corn and soybeans and feeds cattle in western Plymouth County.
"Corn was $7.25 cash at one time. Now we're down below $5. Four or five years ago, it was $1.75. The volatility is greater than we've lived with for 80 years."
Ron Hook, Iowa State Extension Service farm management specialist, said farmers are also worried about the rising costs of inputs: seed, fertilizer and chemicals. Those companies now require payment with the order and sometimes don't guarantee delivery, given the global demand for the products.
Not long ago, he said, farmers paid upon delivery. Now, needing cash in hand earlier in the year means they may need a loan, which adds interest to their costs.
Another big worry is the financial condition of the United States and its effects on the global economy, Brown said. Since the meltdown of capital markets, prices for corn and beans have dropped. The world still wants U.S. commodities, but it wants them cheap.
Brown said farmers he talks to figure they need to sell corn at $4.25 to $4.50 a bushel to break even. "We're behind the 8-ball with $4 corn with inputs this high," he said, noting that some farmers sold futures last fall at $3, a historically high price at that time.
Mark Rensink, 53, of Sioux Center, Iowa, who farms land including his family's Century Farm, started harvesting his beans this week. After suffering a near-fatal health emergency in December, he is putting market volatility in perspective; but it still concerns him.
He said it's tough to understand the current economy. "We try to be experts, but trying to figure out trends is just about impossible," he said, citing the current volatility of the economy and high prices for fertilizer, chemicals and fuel. Electronic trading and Sunday trading only add to the pace and the stress; things can change dramatically in just an hour or two.
"I basically live by faith and go from there," Rensink said.
Along with the worry is some good news, at least for this corner of the state, which dodged crop-damaging floods and storms that hit eastern Iowa and elsewhere.
Local yields won't break any records, according to Joel DeJong, Iowa State University Extension Service crop specialist in the seven-county northwest corner of the state, but expectations are still high. Farmers could see 180 or 190 -- maybe even 200 -- bushels per acre for corn. He said farmers already harvesting soybeans are seeing 50 to 60 bushels to the acre.
Duane Van Zee, a commodities broker in Sioux Center, also sees the brighter side. He farms 680 acres, too, and feeds cattle.
He acknowledges input costs are high and the markets are volatile. And he agrees that a few farmers -- those paying top dollar, $250 per acre, to rent land -- will need to get $4.50 for corn. Most pay closer to $160 per acre.
Van Zee even concedes that next year's worldwide financial situation is a legitimate concern.
"But this year's gonna be a great year in Sioux County," he said, noting a lot of local farmers are buying new combines, tractors and trucks.
"Yes, we are" having strong sales, confirmed Beth Vander Helm, who has worked for 22 years at Icon Ag Solutions' Ireton location in Sioux County. "The last couple of years have been excellent."
And they're not just the perennial concerns about hail storms and frosts that reduce their yields and increase their costs overnight.
"It's because the volatility in the commodity markets -- corn, beans, cattle, hogs -- is very high," said Mark Brown, 62, a fourth-generation farmer on a 115-year-old family operation who grows corn and soybeans and feeds cattle in western Plymouth County.
"Corn was $7.25 cash at one time. Now we're down below $5. Four or five years ago, it was $1.75. The volatility is greater than we've lived with for 80 years."
Ron Hook, Iowa State Extension Service farm management specialist, said farmers are also worried about the rising costs of inputs: seed, fertilizer and chemicals. Those companies now require payment with the order and sometimes don't guarantee delivery, given the global demand for the products.
Not long ago, he said, farmers paid upon delivery. Now, needing cash in hand earlier in the year means they may need a loan, which adds interest to their costs.
Another big worry is the financial condition of the United States and its effects on the global economy, Brown said. Since the meltdown of capital markets, prices for corn and beans have dropped. The world still wants U.S. commodities, but it wants them cheap.
Brown said farmers he talks to figure they need to sell corn at $4.25 to $4.50 a bushel to break even. "We're behind the 8-ball with $4 corn with inputs this high," he said, noting that some farmers sold futures last fall at $3, a historically high price at that time.
Mark Rensink, 53, of Sioux Center, Iowa, who farms land including his family's Century Farm, started harvesting his beans this week. After suffering a near-fatal health emergency in December, he is putting market volatility in perspective; but it still concerns him.
He said it's tough to understand the current economy. "We try to be experts, but trying to figure out trends is just about impossible," he said, citing the current volatility of the economy and high prices for fertilizer, chemicals and fuel. Electronic trading and Sunday trading only add to the pace and the stress; things can change dramatically in just an hour or two.
"I basically live by faith and go from there," Rensink said.
Along with the worry is some good news, at least for this corner of the state, which dodged crop-damaging floods and storms that hit eastern Iowa and elsewhere.
Local yields won't break any records, according to Joel DeJong, Iowa State University Extension Service crop specialist in the seven-county northwest corner of the state, but expectations are still high. Farmers could see 180 or 190 -- maybe even 200 -- bushels per acre for corn. He said farmers already harvesting soybeans are seeing 50 to 60 bushels to the acre.
Duane Van Zee, a commodities broker in Sioux Center, also sees the brighter side. He farms 680 acres, too, and feeds cattle.
He acknowledges input costs are high and the markets are volatile. And he agrees that a few farmers -- those paying top dollar, $250 per acre, to rent land -- will need to get $4.50 for corn. Most pay closer to $160 per acre.
Van Zee even concedes that next year's worldwide financial situation is a legitimate concern.
"But this year's gonna be a great year in Sioux County," he said, noting a lot of local farmers are buying new combines, tractors and trucks.
"Yes, we are" having strong sales, confirmed Beth Vander Helm, who has worked for 22 years at Icon Ag Solutions' Ireton location in Sioux County. "The last couple of years have been excellent."
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