Price Report: Corn Price Crisis

The agriculture research and advisory firm AgResource forecast corn prices will dip to $2.80 in 2016, the lowest price in 10 years. Increased production in the United States and Argentina, two of the highest grain producers, will continue pushing these prices downward.

The United States has been producing record levels of corn in the past few years, after $8/per bushel corn in 2012 gave farmers a reason to plant more. Decreasing the number of acres available for the federal Conservation Reserve Program, which pays farmers to not plant crops, forces producers to do something with the land, such as plant corn.

Meanwhile, Argentina lifted export taxes and restrictions, opening the door to corn exports and encouraging more corn production in Argentina. Corn production in Brazil is also expected to rise.

Depending on soil quality, the cost of production for a bushel of corn is typically around $4 per bushel. With current corn prices at just more than $3 per bushel, farmers are already losing money and poised to lose even more as corn prices continue to drop.

These factors contribute to agriculture producers’ lack of confidence in the 2016 crop year. The Progressive Farmer Agriculture Confidence Index showed producer confidence dropped to a record low of 91.5 in March, where 100 is neutral. In a March survey, 45 percent of farmers described their farm income as bad and 40 percent said income was normal. Commercial agriculture confidence also dropped to 83.4 in March on the same index.

The high surplus of corn and continued increase in production while demand remains relatively stable means this downward trend of corn prices may continue, leaving farmers to explore other avenues in business such as dairy and livestock.

Crop prices (April 11)

Rio Creek Feed Mill – Algoma

Fox River Valley Ethanol – Green Bay

Basis:  The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States:  $2.04

United States one year ago:  $2.39

Wisconsin:  $2.02

Wisconsin one year ago:  $2.37

Northern Door:  $2.14

Sturgeon Bay:  $2.09

Other Commodities

Gold:  $1,259.50/troy ounce

Silver:  $15.93/troy ounce

Oil:  $40.39/barrel
Sources:  aaa.com, agweb.com, gasbuddy.com, cnn.money, Reuters, Wisconsin State Farmer