Low Prices Overshadow Perfect Planting Conditions

I80 Planting Iowa 050620

Iowa corn planting is being completed at a rapid pace. The state has 78% of corn acres planted, nearly 30% higher than the national average and nearly that same amount ahead of the state’s five-year-average. However, the woes of corn prices and ethanol demand are impacting farmers.

Iowa farmers are huddling up and figuring out which field is fit. This is during a spring where weather is decent but fewer stops in the field would make it better for Oxford Junction, Iowa, farmer Jayson Willimack.

“It seems as if we get 2-tenths or 3-tenths [of rain] every three or four days to kind of slow planting pace down just a little bit,” Willimack says.

Willimack had a nice stretch of days where he planted a big chunk of acres. Now, he needs the heat to arrive.

“We need some 75-degree or 80-degree days to really get some things straightened out and growing,” he says.

Willimack lives in a state where corn is usually king.

“Everybody likes to plant corn, everybody likes to harvest corn,” he says.

However, Willimack is planting more soybeans this year.

“[If] you start running economics, corn-on-corn versus soybeans, you just have a lot less invested,” he says. “Hate to say this but you have an opportunity to lose less money, possibly.”

It’s hard to blame him when the livestock industry is worried about their working capital.

“Pretty soon, we [may not] have enough working capital to feed the cattle anymore and the bank won’t take that risk,” says Jeff Pruess, a Clarence, Iowa, feedyard operator. “They will not lend you the money.”

Corn futures contracts are $3 on the board and ethanol plants are sitting idle across the Corn Belt.

“When you look at the ethanol demand, which we think is 400 million to 500 million bushels before the end of the crop year, I’ve got ending stocks in corn at 4 billion bushels,” says Dan Basse with AgResource Company.

Traders like Basse warn potentially high ending stocks could come with an extremely low corn price.

“[There’s a possibility of] $2.60 to $2.80 per bushel for a December low price,” says Basse. “I mean, it’s pretty ugly. There are baby bear markets; there are mother bear markets. This is a papa bear market.”

Willimack acknowledges his location is close to ethanol plants, wet mills, elevators and a river market, but other Iowa farmers don’t necessarily have all of those opportunities.

“Our basis is typically a lot stronger than other areas,” says Willimack. “When we start feeling it, other areas are feeling it worse than we are.”

As the grouping up and planning continues, they aim for high yields and hope the market will be there too.