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Grain prices to be good for 2012 crop

DUBUQUE, Iowa - Extension grain marketing specialist Chad Hart says grain prices for the 2012 crop will be off from 2011 but still strong.

Grain prices to be good for 2012 crop
Chad Hart

DUBUQUE, Iowa - Extension grain marketing specialist Chad Hart says grain prices for the 2012 crop will be off from 2011 but still strong.

Hart offered the outlook at the recent Tri-State Agricultural Lender's Seminar in Dubuque.

For the 2011 marketing year, which started Sept. 1, USDA forecasts record season average prices of $6.70 for corn and $13.15 for soybeans. Futures prices are a little less bullish, but still at record levels with corn at $6.33 per bushel and soybeans at $11.85 for average cash prices.

Looking to 2012, futures indicate average cash prices of $5.85 form corn and $11.70 for soybeans.

With crop margins at $250 per acre for corn and $50 per acre for soybeans, Hart expects another shift to more corn. Iowa added 400,000 acres in corn and the United States added 2.5 million to 3 million acres this year.

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"2012 looks like another good year on the crop side, but we are seeing some upward cost pressure for land, fertilizer and seed," Hart said. "It's what tends to happen in a competitive industry."

Worldwide economic recovery is a key for prices in the coming year, Hart said.

"Uncertainty in the general economy has a pull on ag markets," Hart said.

2008 to 2011 brought the nation's four largest corn crops and at the same time high prices.

"We see record production and record demand, and a big chunk of that has been biofuels," Hart said.

It's a similar situation for soybeans - big crops, big demand and no opportunity to build stocks. Export growth, especially from China, has been driving demand. China currently accounts for 60 percent of U.S. soybean exports.

Soybean production is 3 billion bushels for the 2011 marketing year with total use projected at 3.1 billion bushels and exports at 1.375 billion bushels.

"In 2011 we knew we needed a big corn crop and we didn't quite get it," Hart said. "We harvested a national average yield of 148 bushels per acre. In the Dakotas we had flooding and a drought in the South. Both brought down yields."

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Worldwide corn production was up everywhere except fort the United States and Canada.

"That's why we're starting to see corn exports back off," Hart said.

World soybean production was off nearly everywhere.

Wheat prices are off relative to corn prices, and Hart expects to see switching from corn to wheat feeding in the coming months. He doesn't expect to see an increase in feed demand for the coming year because crush margins still show unprofitable periods later in 2012 for hogs, beef and poultry.

Crop insurance guarantees should be similar to this year, $6.01 per bushel for corn and $13.49 for soybeans. Premiums may be a little lower due to USDA rate changes.

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