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2014 Fall Farm Outlook:
Will corn producers make money this
year?
A look at 2012’s low yields and high
prices versus 2014’s high yields and low prices
By Nila Smith
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[November 07, 2014]
LINCOLN - Ask a Logan County grain
producer if he is going to have a profitable year in 2014, and the
answer you get will be “yes, no, maybe, but probably not.”
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It may seem contradictory, but the fact of the matter is, all
these answers are going to be correct in this upside-down harvest.
Based on cash corn prices at country elevators on October 24th, the
likelihood that even the farmer with the best yields is going to
show a profit this year is slim. But, and there is always a but, if
that same farmer can hold on to his crop and sell after the first of
the year, he may squeek by this year.
So the real question becomes, can they afford to wait? It depends on
what they have in cash reserves, and how their cash flow will be
affected if they do.
In the late part of September, which was the edge of being a late
harvest this year, corn prices dropped to a sickening $2.80 to 2.90
per bushel on cash. The fall in price was disheartening to area
producers who were looking at some of the highest yield figures this
area has seen in several years, if ever.
Perhaps the most disheartening part of this story was in looking
back at 2012 when yields were horrible but prices were remarkably
high, and realizing that the potential for profitability that year
was better than it is now.
In 2012, the year of the drought, harvest figures for corn in Logan
County came in at 96.5 bushels per acre. But cash corn at the
country elevators was at a record high of approximately $7.63 per
bushel, yielding approximately $735.00 per acre in gross revenue.
According to figures published by the University of Illinois cost of
production that year was $851 per acre, so even the very best fields
lost about $116 per acre.
In June of this year, the U of I predicted fall harvest would come
in at 196 per acre on corn. With that as the basis, area farmers
stand to lose approximately $248 per acre on this year's crop. Some
early harvest reports came in saying yields were much better than
the estimate and local producers could be looking at 240 to 260
bushel per acre. But, with a production cost per acre $881, the best
case scenario is that farmers are losing approximately $41 per acre
this year.
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John Hartman of Farm Credit Services recently said he believes sound management
is going to be a key to surviving this harvest year. “Farmers will have to push
the pencil to try and figure out if it will pay to wait,” Hartman said.
“Probably at minimum, sales will occur only when they need to pay bills, loan
payments. This could put some pressure on their lines of credit. Profit margins
look to be much tighter even with the high yields. I don’t think the higher
yields will completely offset the lower prices. Plus it always costs more to
harvest a big crop with more fuel, repairs, drying and storage costs. Hopefully,
farmers have been building their working capital position these last few years.
They will probably have to dip into it in the near future.”
He added, “That last part sounded negative, I would rather be cautiously
optimistic … so I am hoping for a price rally … and soon!!”
Another factor Hartman said would figure into this year is; do the farmers and
elevators have enough storage? “I think the majority of this crop will be
stored, in hopes of better prices the first six months of 2015. At issue is
storage space; can the elevators and on farm storage cover it?” If the grain
cannot be stored, then producers may be forced to take what they get, and hope
for a better year next year.
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