Growers in the Midwest are headed for the third year of season-average corn prices below $4 a bushel. Given the cost of planting, cultivating and harvesting a crop, “This … implies 2016 would be the third year of losses if costs are not lowered,” says economist Gary Schnitkey of U-Illinois. At farmdoc daily, Schnitkey revised his early-summer calculations of likely crop revenue and costs to reflect lower commodity prices. Corn revenue from high-yielding land fell by 6 percent and soybean revenue dropped by nearly 10 percent.
After paying expenses, some farmers would not have enough money to pay land rental costs. “If cash rents need to be set now, use of these lower prices in the revised budgets is warranted,” wrote Schnitkey. “The alternative is to cut non-land costs in some other areas.”
The USDA is to release its quarterly Grain Stocks report at noon ET today. Traders expect it to show hefty increases in the corn, soybean and wheat stockpiles from a year ago.