Falling prices lead to farmers putting crops in storage
FARGO - It's not just the stock market that's taking a pounding.
Prices of most of the region's crops have plummeted in the past two weeks. The dive includes a 25 percent drop in the price of corn.
That's causing farmers to store their crops and hope that prices rebound.
Problems on Wall Street bear most of the blame for plunging crop prices, said Mike Krueger, founder and president of the Money Farm, a grain marketing advisory service in Casselton, N.D.
"The financial mess is affecting commodity markets," he said.
Many investors want the security of cash and are selling commodities, he said.
The creation of commodity index funds has made it easier for average investors to buy and sell grain and other commodities.
A lesser factor for the price drop is a U.S. Department of Agriculture report that world supplies of corn and soybeans are greater than expected.
Grain prices could rally when economic turmoil subsides, Krueger and others say.
Krueger advised farmers to keep their grain for a while.
"Sit back and be patient," he said.
Most farmers are doing that, said Paul Coppin, general manager of Reynolds (N.D.) United Cooperative.
Selling of this year's grain crop "has pretty much ground to a halt," he said.
Farmers are storing grain in their own bins or paying elevators such as Reynolds United to do it.
Elevators usually charge about 5 cents per month per bushel to store grain.
Byron Richard, a Belfield, N.D., farmer and president of the North Dakota Grain Growers Association, said area farmers generally can afford to wait a few months before selling their grain.
But most will need to sell this winter to finance putting in next year's crop, he said.
Prices have been dropping for months. The price of corn, for instance, is down nearly 50 percent since this summer.
Farmers generally sold some of their crops before harvest for relatively high prices, which helps profitability this year, Richard and others say.
However, current prices aren't high enough for farmers to make money on next year's crop, given projected expenses, Richard said.
"At these prices, next year is a concern," he said.