Corn prices have tumbled this year
Corn, which has long been popular, has become one of the worst-performing U.S. commodities this year with prices tumbling 37%. Many investors fear that prices will drop even more as farmers begin harvesting what many say is a record crop.
The weak corn market comes just 13 months after prices had soared to a record price of $8.3125 per bushel. That was when the worst U.S. drought in several decades battled the Farm Belt. The high prices resulted in farmers planting the most corn acreage that had been planted in at least 77 years this spring. With favorable weather, the crop has thrived and will be record breaking. Now there is plenty of corn, the demand from foreign customers and ethanol producers had been sluggish.
As a result, corn futures in September fell to their lowest level in more than three years. On Monday, corn futures for those set for December delivery for 2.8% to $4.4150 a bushel on the Chicago Board of Trade. That was the lowest closing price for a front-month contract since Sept. 2, 2010, and down 47% from the record last August.
The U.S. Department of Agriculture estimated on Sept. 12 that this year’s corn harvest will total 13.8 billion bushels, which is a record total. It was 28% larger than last year’s crop and 5.7% greater than the year of prior record, which was in 2009. Corn prices tend to hit yearly lows during the harvest, which in just now in its early stages across the Midwest.
Weather forecasts indicate there are very minimal chances that an early frost could hurt the crop this year. About 12% of the harvest had been completed by Sept. 29, the USDA reported. If corn prices drop even lower, there could be broad repercussions. The lower prices could benefit the poultry and livestock producers who feed their animals grain. That should keep price increases down in the grocery stores.
Cheaper prices for corn will put a pinch on farmers, potentially leading them to cut back on purchasing farm equipment. Some farmers may opt to plant other crops next year. Some experts argue corn prices will climb and that U.S. exports will be picking up in the near future. Others argue the crop is being overestimated because the chilly, wet weather during the spring could have impacted the crop negatively.