Corn production
Clark County ranked 17th among Ohio’s 88 counties in corn production in 2011 with a harvest of 10.4 million bushels. Champaign County was 12th with 12.3 million.
Source: U.S. Department of Agriculture
Projected corn yields are turning downward like leaves of plants curling in baked, dusty fields.
There’s a chance, however, that Clark and Champaign county farmers with reduced yields may come out cash ahead this year as per-bushel prices have risen to counteract expectations of a poor harvest.
But the director of grain operations for the regional farm cooperative Trupointe said a shift in the market last week might force farmers to make important decisions that will affect their bottom line soon.
Randy Broady said that in a year shaping up like the drought year of 1988, Clark and Champaign county farmers are better off than Northern Ohio counties.
“Our territory is from almost the Ohio River clear to Fort Wayne (Ind.), and we have areas that are OK to areas that have severe drought,” he said.
This area has had “several rains that the northern parts did not,” he said. “It’s not going to be a bumper crop” in Clark and Champaign counties, he said, “but it’s not going to be a big, fat zero.”
Because of the widespread drought, in the past 30 days, the price of grain has gone up $1.50 to $2 a bushel, Broady said, enough that it will help offset the yield loss.
Broady offered this example: A farmer with a strong yield of 200 bushels per acre of corn at a modest price of $5 an acre would receive $1,000 an acre for his crop. In contrast, that same farmer with a reduced yield of 140 bushels an acre might take in less grain at harvest. But if the price is $7.25 a bushel because of an overall drought, he’d receive $1,015 an acre.
Other factors are now weighing on farmers: Higher prices are starting to reduce demand for corn, and farmers are facing serious decisions about marketing their grain as this shift occurs.
Because it will restrict the supply of grain, this year’s drought has forced both corn and soybean prices steadily upward to a five-year high, Broady said.
But he said a Wednesday report from the U.S. Department of Agriculture may signal the kind of “key reversal” he saw in droughts of 1983 and 1988.
Although the report continued to project a lower supply of corn because of the drought, which would help keep prices up, it also predicted those higher prices would decrease the demand for corn in key markets for animal feed, export and use in ethanol.
As a result, “the prices should stabilize,” Broady said. This is crucial for farmers, he said, because through a season of rising prices, “a lot of farmers have not sold a lot of grain.”
With all that grain uncommitted, many farmers will now have to decide whether to hold on to it in hopes that prices will continue to rise, or sell it in fear that prices have peaked and will begin to slide.
Broady expects to be busy advising people on risk management, knowing there’s no way to assure getting the highest price for grain and often using options contracts as a way of steering the best course.
Although these are business decisions, Broady said, such decisions also are “built around emotions.”
And although the emotions often involve the degree of risk farmers are willing to take, he said, this year has upped the ante because of the roller coaster of expectations.
“In April and May, it looked like there was going to be a huge crop, and the price would go down,” he said. Now sliding into what appears to be a damaging drought, “people tend to panic,” Broady said, “and we try to be the voice of reason” at a time when so much money is on the line.
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