Farmers in Central Indiana say despite decent looking crops, they don’t expect to make much money this year as corn and soybean prices remain low due to huge disruptions in the agriculture market caused by the COVID-19 pandemic.
Jim Mintert, director of Purdue’s Center for Commercial Agriculture and a professor of agricultural economics, said corn and soybean crops look generally good across the state.
According to the U.S. Department of Agriculture’s most recent crop progress report, 51% of the state’s corn crop was in good condition, and 30% was considered fair. Those numbers were about the same for soybeans.
But that won’t do much to boost profits this year, Mintert said.
That’s because the demand for ethanol has plunged due to low gas prices and people driving less during the pandemic. Mintert said around 40% of the state’s corn crop goes to ethanol production.
Other disruptions caused by the virus outbreak have caused corn prices to drop from $4 to $3.50 since December. Soybean prices have also dipped from around $9.80 to $9 since November.
However, corn prices have rallied slightly in the last 10 days after farmers around the U.S. reported planting about 5 million acres less of corn than anticipated. Mintert said that means growers will produce about 1 billion bushels of corn less than projected, causing a slight bump in prices.
“It was a little bit of a surprise that changed things,” he said. “That’s what gave us the rally we had recently. It’s all based on the fact that we had less acreage on those key crops.”
But that hasn’t changed farmers’ gloomy financial outlook.
According to the Ag Economy Barometer, a survey released by Purdue University measuring farmers’ sentiment about the economy, growers in June felt better about this year’s crop than in the last two months, but farmers weren’t as optimistic as they were earlier in the year.
In June, 42% of farmers said they expected their farm’s financial performance to be worse than last year. That was down from 54% percent that felt that way in May, but still much worse than in April 2019, when just 27% expected a worse financial performance for their farm than a year earlier.
“People aren’t feeling great, by any stretch,” said Mintert, who co-authored the report. “I wouldn’t characterize the rebound we saw on the barometer as suggesting that farmers are expecting a good year, because they’re not. Farmers are still worried by the impact of coronavirus on their farm’s profitability.”
Kent Chism, a lifelong farmer in western Howard County who serves on the Howard County Farm Bureau board, said he isn’t expecting to make much money this year, but he’s hopeful that might change.
He said if the ethanol market rebounds, or international trade perks up in the coming months, there’s a chance prices could improve. Combine that with decent yields this fall, and Chism is hopeful it won’t be a terrible year.
“I’m in the optimistic camp,” he said. “I think we still have good yield potential, and I hope there are good prices yet to come.”
But, Chism said, he isn’t getting his hopes too high.
“We’ll just see what happens here on out,” he said. “You could have all kinds of other scares come. There are frosts yet, and that could move the market as well. I think we can make a little bit of money this year, but I don’t think it’s going to be a booming year.”