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Corn prices keep slumping, and farmers keep planting more

Adam Belz, Star Tribune (Minneapolis) on

Published in Business News

MINNEAPOLIS -- Corn farmers are throwing another government-backed Hail Mary this year, planting more of the crop than in 2019 even though prices are near the bottom of a six-year slump.

"They call it plant and pray," said Al Kluis, a commodities broker in Wayzata. "What you want is a disaster in some other part of the Corn Belt or some other country."

Favorable weather in April helped most Minnesota farmers get corn in the ground faster than last year, when a wet spring kept them out of some fields until June and some cornfields were never planted.

But despite all those problems, the 2019 crop yielded the sixth-largest harvest of all time. The U.S. Department of Agriculture now projects a record corn harvest in 2020.

"We have no problem producing the crop," said Brian Thalmann, a farmer near Plato and president of the Minnesota Corn Growers Association. "We've had seven years now of steadily increasing production, and we've never had that before."

Demand can't keep up with supply. Corn futures hovered around $3.15 per bushel last week, nearly a dollar less than a year ago.

 

Farmers came into the spring with a large inventory of corn in storage, and demand for the commodity has been hit on multiple fronts since the onset of coronavirus.

Ethanol plants have shuttered due to decisions by the Trump administration to exempt oil companies from ethanol standards and, more recently, the cratered demand for all types of fuel caused by the coronavirus pandemic. Ethanol production is running at about 70% of capacity, Kluis said.

Meanwhile, the shutdown of restaurants and idling of meatpacking plants that have led to farmers euthanizing chickens and hogs means the need for corn to feed livestock will probably drop about 20%.

"Usually the cure for low prices is low prices, but that's only true if demand improves with lower prices," Kluis said. "Right now we have the worst of all worlds."

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