Corn prices are up about 70 percent from May. Cash prices Tuesday in Central Illinois were $5.4750 a bushel compared to $3.48 a bushel last year. Some analysts expect prices to continue to increase, perhaps even testing the record high of $7.65 per bushel in 2008.
Several factors are driving prices higher. The allowed level of ethanol, which currently uses about a third of the U.S. corn crop, is increasing from 10 percent to 15 percent for vehicles made since 2007. That won’t affect demand immediately because a number of issues will have to be worked out before E-15 starts appearing at local service stations. The more immediate factors are increased demand from emerging markets and a recent downward adjustment in this season’s estimated harvest.
Locally, the hot and relatively dry summer meant farmers started harvest about a month early. The continuing dry weather made it a fast harvest. Often local farmers push to finish harvest by Thanksgiving. Many this year will be finished by Halloween. Yields have been good.T
he only significant difficulties have been transpor tation and storage bottlenecks. Most Central Ohio corn is moved by rail cars. Elevators scheduled trains based on a normal harvest. These schedules were difficult and sometimes impossible to change when corn and soybeans started flooding grain elevators weeks earlier than anticipated. Once an elevator fills its silos, it shuts off truck deliveries until it gets railcars to clear out its bins. That complicates the harvest, particularly for farmers with little on-farm storage.
The high prices aren’t necessarily a bonanza for farmers. Many sold most of their anticipated crop earlier this year at lower prices. That’s done to protect their investments in this year’s crop. Commodity markets are very volatile and big price increases can quickly turn into big reductions. Higher pr ices are of ten followed by higher prices for seeds, fertilizer, agricultural chemicals and equipment.