Commodity prices took a big jump Wednesday, and farmers are taking advantage. 

Stockton, Iowa, farmer Tyler Geurink said he took advantage of the soybean market and sold some soybeans for $10.03.

On Wednesday, Taylor Ridge, Illinois, farmer Tom Mueller said he pulled the trigger on selling some corn.

“You can never go wrong with making a profit when you can,” Mueller said.

Soybeans for July delivery rose 30¾ cents Wednesday to close on the Chicago Mercantile Exchange at $10.85½ per bushel Wednesday. November futures, when the new soybean crop will be harvested, gained 25 cents to close at $10.54¼ per bushel.

Corn prices followed suit on the Chicago exchange by jumping 7¼ cents a bushel for July corn to close at $4.04¾ per bushel. New crop corn in December closed up 5¾ cents a bushel to close at $4.08½ per bushel.

Questions about Argentina's soybean crop are making its soybean meal exports less competitive while buyers look to the American farmer to fill the need. There also are questions about the corn crop in Brazil, given it has been so dry there. Additionally, a weaker dollar is helping to make buying American more attractive and cheaper.

No one is willing to speculate on how long the rallies will last.

“This is when the skills of marketing expertise payoff,” Wendong Zhang, an economist and extension farm management specialist at Iowa State University, said last week.

No one can guess when this rally in soybeans will come to an end, he said.

“How farmers can adapt to market rallies in lean times is important," he said.

The last time soybeans were more than $10 a bushel consistently was for about 16 days back in late June and part of July 2015. They dropped below the $9 mark in August. It’s a far cry, however, from the $14 and $15 beans farmers were getting in spring and summer of 2014.

Geurink said the market does not look as if it wants to support the bean price for long, “but it’s staying there. Most every indicator says it’s not going to hold, so if you have something to sell, then you’re doing better than last year, so that’s a win.

“I sold some beans a week ago at $10.03 a bushel, and I’m very happy with that. That’s $1.50 a bushel better than what came out of the field last year. You just don’t know how long this will last.”

Geurink said corn needs to be about $4 a bushel for farmers to make a bit of money.

“You can make $3.75 work, but that’s a stretch,” he said.

But Mueller said that although farmers will gamble, they also have to be careful.

“It’s very easy to get greedy,” he said. “I’ve gotten greedy over a penny, and in the process, I’ve lost a dime.

“Yes, a lot of this market now is being driven by what’s happening in Argentina with the soybeans, the corn in Brazil, but it’s also driven a lot by the hedge funds, and we all know that with them, things can turn on a dime,” Mueller said.

Nobody will get rich on the current prices, he added.

“They won’t be buying any new equipment at these prices, but maybe it will keep some guys hanging on for another year,” he said.

Farmland values still falling

Farmland values in the Seventh Federal Reserve District, Chicago, fell 4 percent from a year ago in the first quarter of 2016, the largest year-over-year decline since the third quarter of 2009, Federal Reserve economist David Oppedahl said.

During the first quarter of 2016, land values in the Seventh District, which includes Illinois, Indiana, Iowa, Michigan and Wisconsin, fell 1 percent, he said.

Overall, Oppedahl said, land values still have not fallen as fast as commodity prices fell.

“The amount of farm income in the last decade left some people with a lot of cash with which to purchase farmland,” he said. “That’s led to a slower decline in the value of farmland than many expected. And then you’ve got some investors on the sideline picking what they’re going to buy.”

Zhang said farmland values likely have not hit bottom.

At a recent land values conference, Zhang said, 280 farm managers predicted the average land value in Iowa is likely to fall to $7,776 in November, while last year, the prediction for November 2015 was $8,178. Land values in Iowa in November 2017 are expected to fall to $7,572, he said.

“I think the key driver of declining land values is still the commodity prices,” Zhang said. “Yes, we’re seeing a rally, but no one will guarantee this rally will hold for the long term.”

The U.S. Department of Agriculture continues to predict that corn prices through 2020 will average $4.32 while soybean prices will average $10.78, he said. From then through 2025, those prices will fall somewhat and then stabilize, he added. The days of $7 corn and $15 soybeans are gone.

Zhang agreed that farmers who stashed a lot of cash and are now buying land have helped to cushion the fall in farmland values.

Still, if someone can make money off the land, that will keep the price up, he said.

“In economics, we talk about sources of income streams,” Zhang said, "whether that income is from crop production or beef cattle or dairy cattle or a recreation, such as hunting, it all depends on what composition of income that will determine the land values.”

While land values are expected to continue dropping, this is not a repeat of the farm crisis of the 1980s, Zhang said.

“We’re not going to see a collapse of the farm sector,” he said. “However, those producers who over-expanded, over-borrowed or spent too much on houses or vacations will suffer through this.”

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Average monthly prices received by farmers for soybeans

Month 2011 2012 2013 2014 2015 2016
January $11.60 $11.90 $14.30 $12.90 $10.30 $8.71
February $12.70 $12.20 $14.60 $13.20 $9.91 $8.51
March $12.70 $13. $14.60 $13.70 $9.85 $8.56
April $13.10 $13.80 $14.40 $14.30 $9.69 n/a
May $13.20 $14 $14.90 $14.40 $9.58 n/a
June $13.20 $13.90 $15.10 $14.30 $9.58 n/a
July $13.20 $15.40 $15.30 $13.10 $9.95 n/a
August $13.40 $16.2 $14.10 $12.40 $9.71 n/a
September $12.20 $14.3 $13.30 $10.90 $9.05 n/a
October $11.80 $14.20 $12.50 $9.97 $8.81 n/a
November $11.70 $14.3 $12.70 $10.20 $8.68 n/a
December $11.50 $14.30 $13. $10.30 $8.76 n/a

Average monthly prices received by farmers for corn

Month 2011 2012 2013 2014 2015 2016
January $4.94 $6.07 $6.96 $4.42 $3.82 $3.66
February $5.65 $6.28 $7.04 $4.35 $3.79 $3.57
March $5.53 $6.35 $7.13 $4.52 $3.81 $3.57
April $6.36 $6.34 $6.97 $4.71 $3.75 n/a
May $6.32 $6.34 $6.97 $4.71 $3.64 n/a
June $6.38 $6.37 $6.97 $4.50 $3.59 n/a
July $6.33 $7.14 $6.79 $4.06 $3.80 n/a
August $6.88 $7.63 $6.21 $3.63 $3.68 n/a
September $6.38 $6.89 $5.40 $3.49 $3.68 n/a
October $5.73 $6.78 $4.63 $3.57 $3.67 n/a
November $5.83 $7.01 $4.37 $3.60 $3.60 n/a
December $5.86 $6.87 $4.41 $3.79 $3.65 n/a