Bismarck,ND : Farmers, lenders prepare for localized corn crash on June, Sunday 18th 2017

Spring wheat has seen a price rally, but a large amount of corn in storage could cause a local price collapse.

These were among the highs and lows agricultural market experts told agricultural lenders to expect this year. The presentation was part of an annual week-long agricultural lender training sponsored by the Independent Community Banks of North Dakota.

“The focus this year is definitely on the turning market,” said Wendy Ruud, ICBND's vice president.

The two-year training is put on for new and young agricultural lenders, many of whom have not been through hard times in the industry. The training will help them communicate with their farm customers — how to have the hard conversations, handling the emotions involved and knowing when to say things aren’t going to work.

New to the program is an agricultural banking simulator, which will give the 36 attendees a number of scenarios with which to work.

North Dakota State University crop economist Frayne Olson said producers and their lenders should be prepared for “a wall of corn” — 200 million bushels — being stored on North Dakota farms after “phenomenal yields” last year. Many farmers are sitting on the grain, hoping for a price rally. If it does hit, the markets will flood and the cash price is likely going to crash.

“This is going to be a North Dakota problem,” Olson said. “Local cash prices are going to suffer, and I’m really worried about that.”

According to U.S. Department of Agriculture estimates, total U.S. supply for the upcoming harvest could be around 16.4 billion bushels. Better numbers will be available after the acreage planted is updated from earlier estimates at the end of the month. Yield estimates will be revised at the end of August.

The soybean market started out promising but a massive soybean crop in South America, coming on the heels of a record soybean crop in the U.S. last year and ahead of 7 percent higher U.S. acres planted this year, has tanked prices.

Olson said those who did some forward pricing, locking in contracts when the price was up, will likely do well, though having high enough yield in the current drought conditions could cause some contract fulfillment issues.

The continued increase in plantings is following the market signals.

“The world wants more soybeans,” Olson said.


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Farmers, lenders prepare for localized corn crash