Potential record-setting corn yields have contributed to a bleak market for corn farmers. University of Georgia agricultural economist Nathan Smith believes next year’s corn price will be worse than this year’s.
“I think next year we’re looking more at corn farmers just trying to survive,” said Smith.
September corn prices are projected at $3.66. For December, the price is projected to be $3.77. Georgia corn prices are projected between $3.75-$4.25 per bushel, depending on the region of the state. The prices are well below the $6 and $7 contracts that some Georgia farmers signed last year.
Enduring consecutive years of prices under $4 would not be ideal for Georgia farmers, but their options may be limited when planning for next year’s crop.
“The concern for next year is, if they cut back in corn — they already did that this year — what are they going to plant? Look at cotton prices,” said Smith. Cotton, a normal rotational crop with corn, is currently priced at 64 cents per pound. “Peanuts aren’t going to be up there either. Across the board, as good as it looked a couple of years ago, it’s looking as bad this year.”
For some farmers, covering this year’s production expenses will be a challenge with prices below $4.
“Without land rent, if you want to break even on total costs at 200 bushels, we’re looking at $4.60 a bushel. You’re talking about a $5 price to cover all costs and pay yourself,” said Smith, who does not project prices to reach that high this year.
The most likely scenario in which Smith sees corn prices trending upward would be if demand increases, in particular with ethanol production, or if China buys more corn.
High yields are due in large part to a resurgence in corn production in the Midwest, also known as the Corn Belt. After enduring a prolonged drought, the region’s corn production is on the rise, which has helped flood a saturated market.
The United States Department of Agriculture predicts 14,032 million bushels of corn will be produced for 2014-15. This is 172 million bushels higher than previously projected.
Smith warned farmers of the grim outlook at winter and spring meetings.
As evidenced by acreage, Georgia farmers were ready for a bleak forecast. After growing 510,000 acres last year, only 325,000 acres were planted in corn this year. That number could drop below 300,000 in 2015 if farmers choose to scale back production even more, which Smith says is likely.
Corn farmers can get an early outlook on the 2015 growing season when Ag Forecast is held in Georgia in January.