By RENAE VANDER SCHAAF

Farm News staff writer

CALUMET – “Last year we had the second largest corn crop we ever had,” said Chad Hart, ISU agricultural economist. “The largest crop was produced the year before.”

But even before harvest started, harvest, however, the demand for corn had flattened out. Across the board, Hart said he has seen all livestock numbers decreasing, which creates a smaller demand for grains.

Corn export demand has also seen a dramatic drop compared to last year’s purchases, due to economic events and a stronger dollar.

Presently the growing market for corn is ethanol. In 2006 the ethanol requirement for corn was two billion bushels, that grew to three billion bushels in 2007. For 2009 the projected usage is plugged-in at 4 billion.

When Hart took his position in August 2008, corn was predicted to average $5.50 in 2009. That has been lessened to $3.75. Again the big wild card is the economy, said Hart.

Soybean yield was a little lower than the previous year, but was still pegged as the fourth largest. Similar to corn, fewer soybeans are being crushed for meal because of the subsiding livestock demand.

The bright side for soybeans is that exports continue to “race out of the country” said Hart. China is buying soybeans, normally they are 35 percent of the market, but presently China is 60 percent. Hart said soybean ending stock numbers are low at 200 million bushels.

Again the prediction of $12.35 for an average 2009 soybean price last August was reduced to $8 to $8.25. Soybean prices will adjust up or down depending on Argentina’s drought.

Last week the Buenos Aires Cereal Exchange, the counterpart of the U.S.’ Chicago Board of Trade, showed a significant drop in production despite an increase in acreage planted. Rains can still bring the soybean yield back some. If they don’t have a crop, the rest of the world comes back to the U.S., hart said.

“China is the most populous country and is the second largest producer of corn,” said Hart. “They don’t produce a lot of soybeans. China passed their own stimulus package and are buying up physical commodities.”

As livestock numbers continue to dwindle, ethanol plants are operating at breakeven, grain prices are well-below break even. Hart does not see any incentive for overall acreage to grow.

“These are turbulent times for marketing,” says Hart. “As it looks now, storing old crop soybeans will not be profitable. Looking at the futures we are seeing July and August drop instead of the bump up we are used to seeing in future prices.”

Corn does show some higher prices looking at nearby futures. But the prices have been working lower. It definitely is a mixed bag, says Hart.

Contact Renae Vander Schaaf by e-mail at renaefarmnews@gmail.com.