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Extension > Agricultural Business Management News > Record Corn and Soybean Prices Gone, Now What?

Wednesday, October 1, 2014

Record Corn and Soybean Prices Gone, Now What?

By David Bau, Extension Educator

The record corn and soybean prices of recent years now look like a memory with much lower current prices and future market prices. Crop production expenses, farm profits and cropland rental rates all increased during this golden era of farming. Since the beginning of 2014, forward contracting prices for corn and soybeans have averaged $3.98 and $10.86 respectively. On the table below, you can see these prices are well below the last few years but above the 12 year average. The first two columns indicate the average price for corn and soybeans starting with forward contract price at beginning of year and going through September 30th of the following year a 21 month period. The next two columns list the cash prices starting at harvest (October) in calendar year and going the September 30th of the following year, 12 months. The next column lists the average rate for southern Minnesota cropland rental. The last column lists the average price as a percent of $4.00 corn and $10.00 soybeans.

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As the indicated in table, rents have not gone done since 2002 although increasing only $1.00 from 2010 to 2011. This was two years after prices had fallen in 2009 as only 88% of $4.00 corn and $10.00 soybeans. The ten averages were $4.04 for corn and $9.90 for soybeans. Current new crop fall of 2014 cash corn price is $3.26 and $10.11 for soybeans in Worthington and since the beginning of 2014 corn has average $3.98 and soybeans $10.86 which is an average of 104% again lower than in 2013. The last time the average price was in this range was during 2007 and 2008 when rents averaged $125 and $147 respectively.

If prices remain at these current levels, how long before rents begin to decline and approach the 2008 averages? If the 2009 price decline is an example of a timeline, it may take up to two years to see average rental rate decline. At current prices with average yields farmers on average could lose over $185 per acre on corn and make a small profit on soybeans based on the average rent of $243 listed for last year.


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