Farmers experienced a dry first half of June which created some concern. It may have actually been beneficial to both corn and soybeans, as the dry surface soil conditions encouraged plant roots to grow deep in search of moisture. Deep roots prepared the plants for the traditionally hot and dry months of July and August. Hot is accurate, as several days reached the 90 degree mark, especially in August. Fortunately, the hot weather was accompanied by plenty of moisture in the Peoria area. Corn typically needs rain in July, and beans require moisture in August. This is true for the most part, but sometimes I believe we underestimate just how much August rains can add to corn yields. If you recall, there was a spell in August that seemed like the tropics in Peoria as rain, lightning and thunder seemed to be a daily occurrence. Although the corn was pollinated and the number of kernels already determined on the cob, the size and density were definitely affected.
It will be interesting to see the final yield results when the Illinois Ag Statistics Service comes out with the numbers for each county this winter. Along with its neighboring counties, Peoria County is sure to have a great corn yield and quite possibly, a record high. IssuesThere have already been numerous reports of 200 bushels per acre. Peoria County’s highest previous record corn yield was 192 bushels per acre, in 2004. 2005 brought us a drought-stricken harvest with a meager 119 corn yield average. Peoria County seemed to be somewhat isolated in terms of the drought in 2005, but we may be making it up this year. Things usually average out over time.
Commodity prices have also been encouraging this past year. The price for a bushel of corn has been over $3 since the 2007 harvest. Soybean prices finally made up for lost time this past June as they rose over $7 and $8, reaching $9 earlier this fall. Although soybean yields seem to be coming in at an average rate, the price will allow for good revenue on a per-acre basis.
All of this looks and sounds great for the farm economy and the Peoria economy in general. Farmers are usually generous to businesses when yields and prices are high. New farm equipment, grain storage bins, machine sheds, trucks, cars and maybe even a new kitchen could be on the list of purchases—not necessarily in that order.
Even though this has been a great year for farmers, what is the outlook for 2008? The pressure to maintain high prices for corn and soybeans increases as farmers try to maintain profitability. The Farm Program is designed to be a safety net for farmers when prices are low. This has been the case as corn and soybean loan deficiency payments and countercyclical payments were not made in 2007. Along with these larger grain yields and prices have come larger expenses. Just a few years ago, the average cost for a bag of seed corn was slightly over $100. Next year, the average bag could be over $200. Fertilizer prices have also practically doubled in the past couple of years. For several years, potash (potassium) was well below $200 a ton; it’s currently around $300 a ton and rapidly increasing. DAP, or diammonium phosphate (nitrogen and phosphorus), was below $300 dollars a ton just last year; it passed $400 a ton and is now closer to $500. Nitrogen fertilizer, which is a necessity for corn and usually applied in the form of anhydrous ammonia, has basically followed petroleum prices, since its primary ingredient is natural gas. And you know what has happened to prices at the fuel pump in the past couple years.
The farm community is pleased with 2007. Will this be a “one hit wonder,” or can we string together a whole album? IBI