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2017 Logan County Farm Outlook Magazine
LINCOLN DAILY NEWS
March 23, 2017
Page 9
not set by the seller). Also, some producers enhance
their profits by growing alternative corn crops such
as non-GMO or organic.
Prices are largely set by five major players who buy,
sell, process and export 90 percent of all the grain
crops: Cargill, ADM, Bunge, Dreyfus and Glencore.
Since 2013 these five companies have controlled
the market in their own favor by maintaining the
supply high and the demand too low to allow prices
to move upward.
Many producers and analysts also say that the
USDA keeps prices low for these major consumers
by overestimating the size of the corn crop in their
annual crop estimates. The $4.00 corn seems
illusive. This is truly the conundrum (an unsolvable
problem) of corn.
The play:
An individual corn farmer cannot do anything to
directly influence prices. Because there is so much
production, surplus yields cause prices to be low.
If an individual farmer decides to raise less corn
on purpose to play the market, some other farmer
somewhere else in the world will decide to raise
more corn. Farmers are victims of their own efforts,
stuck in a catch-22. No single farmer can influence
prices.
And farmers are so independent and competitive
that they will never organize with other farmers to
plan out their yields to cause the market to go up.
The only way that prices can go up precipitously is
for there to be a bad year and at least a part of the
producer market to suffer losses. However, those
producers suffering loses might include those in
Central Illinois.
The Plan:
In 2006
the ethanol
market was
optimistically
planning for
the possibility
of a tripling of
the production
of ethanol
from 5 billion
gallons to 15
billion gallons,
supplying
10% ethanol
for nearly
every gallon
of gasoline sold. Such an increase of ethanol
production would have been good for the corn
farmer in 2006, raising prices significantly since
every bushel of corn raised in the U.S. would be
needed to produce that much ethanol.
Since 2006 ethanol production has grown to 15B
gallons, but corn yields have outpaced ethanol
production and although ethanol production now
accounts for over 50% of the corn crop, there is
still a significant surplus of corn driving prices
southward.
Continue
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