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Even with a strong crop this year, US farmers are suffering
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Following a growing season last year filled with battering rainfall and bitter trade wars, U.S. farmers hoped 2020 would provide them an opportunity to make up some ground. Instead, the situation has grown worse for many as prices remain depressed.
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Despite a wind storm tearing through Midwestern farms last week and drought conditions in isolated areas, a bumper crop of both corn and soybeans is still expected this year.
"Overall, the trade seems to be coming to the conclusion that…there is still going to be an oversupply of corn in the U.S. and the world," said Tomm Pfitzenmaier, an analyst with Des Moines, Iowa-based Summit Commodity Brokerage, in a research note Friday.
That case was bolstered Friday when Pro Farmer, following a weeklong tour of farmland across seven states, assessed the national corn yield at 177.5 bushels per acre, and the national soybean yield at 52.5. That is slightly lower than earlier U.S. Department of Agriculture estimates but higher than 2019's waterlogged crop.
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For many U.S. farmers, the prospect of grain prices staying low is untenable. "It's almost a day-to-day struggle to decide what to do next year," said Doug Sombke, president of the South Dakota Farmers Union and a farmer of 3,000 acres of corn and soybeans in Brown County, S.D.
Mr. Sombke says his local grain elevator is paying $2.87 for a bushel of corn. That is nearly a dollar lower than what he would need to collect to break even. The same is true for his soybeans, for which the elevator is willing to pay roughly $8.50 a bushel.
Prices for corn and soybeans haven't risen since the start of the year, when the signing of the U.S.-China phase-one trade agreement stipulating China would purchase $36.5 billion of agricultural goods from the U.S. gave farmers hope that export demand from China would buoy prices. Instead, most-active corn futures on the Chicago Board of Trade are down 16% since the start of the year, while wheat has fallen nearly 6% and soybeans have shed nearly 5%.
Chinese exports of U.S. corn, soybeans and wheat are 144% higher than they were at this point last year, according to data from the USDA's Foreign Agricultural Service. But the onset of the coronavirus pandemic in the U.S. in March hobbled domestic demand for grains as restaurants and other institutions nationwide shut down.