Corn futures have dropped sharply lately and now are
close to cost of production.
In July corn futures at the Chicago Board of Trade nearly hit $8 per bushel,
but now have plummeted to almost $4, with the sharpest drop of 30% in the last
December contracts settled around $4.27 last week. Cash prices
in the US average around $3.74 for corn and agronomists calculate the break-even
price at $3.40.
The low prices will become a problem for producers if
they continue into next year, when the break-even price would likely be above
The break-even price varies in different parts of the country
depending on yield potential, analysts said.
The low prices might prevent
expansion of corn plantings, but according to economists farmers are "always
optimistic" and will plant their crops regardless.
The current price drop
is largely caused by extremely high fertilizer costs rather than low corn
In the past, corn prices were low enough that producers knew
there would be government assistance. The USDA website reads that the government
price for corn is currently $1.95 per bushel.
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