With futures prices below $3.50 per bushel, farmers are finding it more difficult to hit breakeven, or even profit in today's market. But a Bloomberg report notes that corn growers may hold back as much as they can store in an effort to keep futures prices higher.
Corn futures are off 17% this quarter and are nearing a three-year low on expectations that U.S. production could rise as favorable weather boosts yields. December corn has dropped near $3 per bushel on recent trade, the weakest since October 2006, the report notes.
The idea of storing the crop until prices rise isn't new for a lot of farmers, who already own storage or have increased storage in the past two years. Seasonal trends show the lowest price for corn is usually at harvest. Rising crude prices could also bolster ethanol prices, which would put some upward pressure on corn value too.
While the store-and-hold move is a gamble for many, with prices hovering near new lows it's a move many will consider. USDA is pegging the 2009 corn crop at 12.76 billion bushels, but trade guess have that number topping 13 billion bushels by the end of harvest. This will keep downward pressure on prices.