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Corn Dropped Below $4 Last Week

By Ryan Hanrahan

Reuters’ P.J. Huffstutter reported that “Chicago Board of Trade corn futures (last) Friday dipped below $4 per bushel in the front-month contract Cc1 for the first time since November 2020, as hefty U.S. and global supplies weighed over the market.” May corn futures prices, however, remained above $4, closing at just above $4.13 last Friday.

“The speed at which corn prices have fallen has startled growers and market analysts, who say low prices could impact the U.S. farm economy as producers are finalizing their spring planting plans,” Huffstutter wrote.

CBOT Corn Futures Prices. Courtesy of Reuters.

CBOT Corn Futures Prices. Courtesy of Reuters.

The Illinois Grain Bids report, for Feb. 23, showed central Illinois average prices for corn at $3.77. The Iowa Daily Cash Grain Bids report, for Feb. 23, showed Iowa average prices for corn at $3.91.

Why Prices are Dropping

Reuters’ Karen Braun reported last week that “the expectation for massive U.S. corn stockpiles both this year and next has driven the decline of futures prices. A record 2023 crop is seen lifting 2023-24 ending stocks by 60% over the previous season.”

“USDA last week projected an additional 17% climb in ending stocks for 2024-25, which starts Sept. 1,” Braun wrote. “The 2.532 billion-bushel figure would represent the largest U.S. carryout since 1987-88.”

Reuters’ Tom Polansek reported last week that some of those U.S. stockpiles are due to U.S. growers who “miscalculated when they held on to corn (after harvest) rather than booking sales. The ‘store and ignore’ strategy of waiting for higher prices has not paid off, leaving some farmers cutting back purchases of pricey equipment and planting less corn.”

Huffstutter reported that Karl Setzer, partner at Consus Ag Consulting said that “‘there is literally nothing holding up the corn market right now, because we just produced too much. It doesn’t matter that we have corn demand, or that ethanol production is up 4.3% from last year, or that feed demand is perking up,’ he said. ‘There’s just too much corn.'”

Why Low Prices are Problematic

Braun reported last week that “just a few years ago, corn at or above $4 per bushel was often viewed favorably by U.S. farmers from a profit perspective. But $4 today is not the same as it was back then since production costs remain elevated after spiking a couple of years ago.”

“In Wamego, Kansas, Glenn Brunkow, a fifth-generation crop and livestock farmer, plans to delay upgrades to machinery and may try to repair equipment himself, rather than paying a dealership,” Polansek reported. “‘We’re tightening expenses as much as we can,’ he said. ‘We’re trying to limp through putting off some expansion with the livestock, just trying to limp by.'”

Outlook Isn’t Positive

“Analysts do not expect a major bump in demand to draw down corn stockpiles,” Polansek reported. “U.S. exports of agricultural and related products fell 10% by value in 2023 to a three-year low, as plentiful supplies from Brazil and elsewhere challenged U.S. export sales.”

“Demand from the U.S. meat industry, which feeds corn to livestock, is limited as pig farmers face lackluster pork demand while cattle ranchers slashed their herds due to drought in the Great Plains,” Polansek wrote.

“Biofuel demand, which typically accounts for about one-third of U.S. corn production, also worries Rod Weinzierl, executive director of the Illinois Corn Growers Association, as Americans buy more electric vehicles,” Polansek reported. “‘This year every fork in the road has been bearish,’ said Matt Wiegand, commodity broker for risk management firm FuturesOne in Nebraska.”

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Why Rob Saik is Trying to Build the World’s Most Connected Agriculture Network

Video: Why Rob Saik is Trying to Build the World’s Most Connected Agriculture Network

In a recent interview at the SeedLink Conference in Brandon, Man., Rob Saik, author, speaker, and CEO of AGvisorPRO, took a trip down memory lane, reminiscing about the beginnings of his career and what the future holds.

Graduating from the University of Alberta in 1983, Saik embarked on a journey that started in Brandon, Man. “I got a job with Elanko, got a U-Haul truck, threw everything I had into it, drove to the Victoria Inn, and lived there for three months while they tried to find an apartment for me to move into. So I started my career in Brandon,” Saik shared.

Fast forward to the present, Saik has evolved into an accomplished author and speaker, traversing the globe to engage in high-level discussions about the future of agriculture and the critical role it plays in feeding the world. Yet, despite his global presence, he finds himself back in Brandon, addressing a group of seed growers. But why? Saik emphasizes the fundamental importance of seeds, stating, “It all begins with a seed, doesn’t it?”

Reflecting on his own experiences as a farmer, Saik expresses his excitement when a planted seed germinates and evolves into a thriving crop. He underscores the significance of technology and breeding in seed development, recognizing the crucial role they play in ensuring farmers can propagate seeds, grow profitable crops, and contribute to global food security.

Saik delves into the challenges faced by the agricultural community, particularly the rapid pace of technological advancements. He believes that the key lies in connecting farmers to experts swiftly, boosting farmers’ confidence in adopting new technologies, and ensuring the timely implementation of these advancements. According to Saik, this approach is crucial for steering agriculture towards sustainability and profitability.

As Saik works on his upcoming book, tentatively titled prAGmatic, he sheds light on its central theme. “The thesis would be that I want to write a book that takes what the consumer wants, challenges what the consumer believes, and positions that against what the farmers can actually do pragmatically,” he explains. The book aims to bridge the gap between consumer expectations and the realistic capabilities of farmers, promoting sustainable intensification as the necessary path to feed the planet.

Looking ahead to 2024, Saik emphasizes the need for enhanced connectivity within the seed industry. He discusses his platform, AgvisorPro, which is designed to facilitate connections between farmers, experts, and companies in a way that transcends conventional social media platforms. Saik envisions a credible, connected agricultural network that goes beyond the noise of platforms like LinkedIn or Twitter.

In a passionate vision for the future, Saik imagines a tool for teachers that allows them to pose questions from students, answered by verified farmers and ranchers. This, he believes, would provide an authentic and valuable educational resource, connecting classrooms with individuals who truly understand the intricacies of agriculture.