DES MOINES, Iowa – Farmers set new corn and soybean records last year, harvesting the largest crops ever as a cool summer allowed the plants to mature under mostly favourable conditions.
The abundance has kept commodity prices low, however, meaning many farmers will struggle to make a profit this year, especially if they’re paying high rent for land.
Farmers harvested a record 14.2 billion bushels of corn, 3 per cent more than the 2013 crop, which set the previous record. The average bushel-per-acre yield was 171, significantly better than the 158 bushels per acre in 2013, the U.S. Department of Agriculture reported in its final tally of the 2014 crop year released Monday. The record crop came even though farmers harvested about 5 per cent fewer acres than in 2013. Record yields were estimated in 21 states, including Illinois and Nebraska.
Soybean production also set a record at 3.97 billion bushels, up 18 per cent from 2013. Farmers harvested a record 83.1 million acres in 2014.
But when farmers produce record crops, the abundance pushes prices lower. That means as many as a third of corn and soybean acres may be unprofitable this year, according to an analysis by FarmLink, a Kansas City, Missouri, company that provides data for farmers.
It’s the farmers who have aggressively added rental land in recent years, locking in higher rents in hopes prices would remain high, who may struggle to make a profit, said Chad Hart, an agricultural economist at Iowa State University.
“Those who own their land outright are probably still profitable today and those who have enjoyed stable long-term lower cash rental agreements are still probably profitable,” Hart said.
Corn prices hit a record high of $8 per bushel during a drought in the summer of 2012 and prices pushed farmers to increase corn acres to take advantage. But a good crop last year and another record this year have driven prices below $4.
The price on corn for March delivery bottomed at $3.30 a bushel in early October and was trading just above $4 on Monday.
Land owners spent about $3 a bushel on average planting, growing and harvesting corn, but those renting land likely had costs above $4 per bushel, said Todd Hultman, a grain market analyst at DTN, an Omaha-based agricultural market data provider.
Corn farmers experienced six strong years before prices began dropping last year, so it’s likely most have cash reserves and significant working capital to get through an unprofitable year, Hultman said.