History on Farming and Crops
By, Heidi Juedes
Why do farmers farm?
What are the prices on crops?
Crop prices vary day to day and can also vary depending on when they are sold. A grower can enter a contract with a buyer to sell their crops at a specified time in the future. These are called futures. A grower can also sell his crops for a cash price at the current time. According to the Chicago Board of Trade (CBOT, where commodity prices can be found), the current corn price is $3.60/bushel. Soybeans are $8.73/bushel. Above are the 5 year history of corn/soy prices. The graph is in metric tons so I converted the high/low to bushel price for you. We are in an extremely tough market.
How are crop prices decided?
Crop prices are a product of supply and demand. Supply Factors include: Beginning Stocks, Production, and Imports. It’s important to remember that we operate in a global market so large players like Brazil, Russia, India, China have a huge Impact on price. Demand Factors include: Food, Seed, and Residual use, Carryover stocks, and Exports, government programs/Farm Bill. These are things like human consumption, animal feed use, ethanol use, corn/soy seed for farmers to plant, and industrial use in production of paper products/construction materials. Price determination is a very complex system that has a lot of variables. (The weather being one that affects supply!) http://www.ers.usda.gov/media/1761745/tb1878.pdf
Where do farmers find the price of crops?
Farmers can find the price of crops online through CBOT, but more commonly through local elevators. Local grain prices can be found through websites, calling the elevator, or services like DTN. Local grain prices will likely be different than the CBOT because they reflect local markets. Different elevators around the country will pay different prices for grain depending on the demand.
When do dairy cattle go to equity?