The Daily Item, Sunbury, PA

News

February 25, 2013

Rosy forecasts don’t impress farmers

SUNBURY —  If crops recover from the severe drought that plagued much of the Midwest last summer, American farmers could realize their highest incomes in 40 years, U.S. government forecasters say.

Doug Klinger, a Selinsgrove-area farmer who controls more than 800 acres of farmland on which he grows soybeans, corn and other grains, said Friday he expects to have only a good year.

Prices for those commodities aren’t expected to be as high this year as last, when crop production worldwide was diminished by drought.

Corn is trading at about $6.875 a bushel on the Chicago Board of Trade, and has lost 19 percent from a record $8.49 in August as global supply concerns eased. Soybeans, trading at $13.84 a bushel, have tumbled into a bear market, losing more than 20 percent from last year’s closing high of $17.68.

“We can still make a nice profit at that current price level,” Klinger said. “But the reality is, you never know about the season. It’s so weather dependent. We can do everything right and then the weather doesn’t cooperate and a crop is wiped out. Or we can make a mistake, and because of great weather and less supply worldwide, we can have a great year.”

“It’s true,” said Mark O’Neill, a spokesman for the Pennsylvania Farm Bureau in Camp Hill. “Pennsylvania farmers rarely get excited about projected income based on forecasts before crops have even been planted.”

History and weather

Current economic forecasts for a good year are based on historical yield averages and do not take into account weather conditions.

“Certainly, farmers are hopeful that it will be a good year and that prices for corn and soybeans will be strong,” O’Neill said. “But if farmers don’t have good yields due to poor weather conditions or drought, they won’t be able to take advantage of favorable prices for their crops.”  

Meanwhile, projections for an outstanding year for farmers were also made in 2012, but those predictions were dampened by drought conditions across much of the nation, including the corn belt in the Midwest. In addition, the strong prices for corn and soybeans are not favorable for farmers who need to purchase those grains to feed their animals.

Feed costs play a key role in determining whether a livestock operation is profitable.  

“I believe this will be a good year for us, if the weather is good,” said Thomas Wyerling, owner of a farm near Beaver Springs.

Wyerling grows corn and soybeans. He closely watches the commodity market and said last year’s droughts in the Midwest, the problems in Brazil, Argentina and in Russia, helped bring on the record-high prices.

It’s not likely to happen again, he said.

“But prices are still fair, even though prices have dropped because a large crop is being planted this year in the U.S., 100 million acres of corn, 80 million acres, soybeans. And crop production in Brazil has improved, I understand.”

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