August 26, 2011
US corn, soy to reach record highs in 2011
US corn and soy prices are anticipated to see nationwide highs this year, which will be beneficial for farmers but may have an adverse effect on consumers.
The USDA puts the national average for corn this year at more than US$7 per bushel and soy at US$13.50, according to figures given by Purdue agricultural economics professor Chris Hurt. Hurt was the featured speaker Wednesday at the Pinney-Purdue Ag Center's Field Day.
"A lot of you I know are asking, 'How can agriculture be doing so well when the black cloud over the economy in the US and the world seems to be building?' " Hurt said.
Indiana's top two grains have nearly tripled in price over the course of six years due to significant demands, Hurt said. Since 2006, Congress has mandated an extra 500 million bushels of corn per year for ethanol production, nearly 30% of all corn usage.
On the other hand, soy demand is not spiking domestically, but a "dietary transition" in China's population has caused a surge in the market. China is consuming more meat and Hurt said it takes roughly four pounds of soy to produce one pound of beef. Other overseas buyers are purchasing crops in high demands due to the diminishing value of the US dollar.
Addressing the question "How Long Can High Grain Prices Last," Hurt said the market is too unpredictable to make sound forecasts, but he conjectures corn prices will subside back to the US$6 mark in the next four years as Congress cuts back on its ethanol demand.
Corn prices may tableau soon as consumers' breaking point may be US$8 per bushel. "They'll tell you at that price, you can keep your corn," Hurt said.
Local demand may also decrease since the nation is seeing food prices rise 4% on average each year while income has grown less than 1%.
More than 350 farmers attended the Field Day event to learn the latest on crop pests, cover crops, nitrogen management and truck trailer safety.
Pinney-Purdue Superintendent Jon Leuck said the 675-acre centre is working with 22 researchers on 40 different experiments. One of the newer ones involves producing biomass fuels from a hybrid poplar tree.
Also at the event, Purdue officials awarded Leuck with a plaque for his 16 years of service.
Leuck oversees the centre with one other full-time staffer. The centre hopes to add another full-time position, someone preferably with an agriculture background and experience with GPS technology.