Farmers disappointed at low soybean yields

Since early summer, a drop in soybean prices has reduced the value of this year's crop by more than a billion dollars.

Soybeans are the first crop farmers harvest in the fall, corn will follow later. Soybeans dry down quickly, and when their moisture content is right, farmers start their combines.

Doug Hartwig is with the U.S. Agriculture Department's Minnesota office. He said those conditions arrived this past week.

"Harvest is underway, we have eight percent harvested for the week and that's as of Sunday," Hartwig said. "And last week we were one percent harvested."

But the pace of the harvest is far behind last year, when a third of the crop was already in by this time. Wet, cool conditions this spring delayed the crop and it never caught up.

Craig Kilian manages the grain division of WFS, a farm cooperative in southern Minnesota. He said farmers are finding a wide variation in soybean yields so far in his area. But, Kilian said the average is probably around 43 bushels an acre, 10 to 15 percent below what farmers in his area were hoping for. He said unfavorable late summer weather hurt soybeans as the crop entered its last stages of maturity.

"In our area it was the lack of rain during August and then we had a lot of heat on Labor Day weekend, I think that just took the yield down" Kilian said. "Before that we were really looking good, but it just kind of went backwards in August."

The smaller than expected harvest combined with lower soybean prices will hurt farmers financially. At current prices, the value of the Minnesota soybean crop right now is about $3 billion. Earlier this summer, the crop was worth more than $4 billion. The value of the crop has declined mostly because soybean prices have fallen by a third since June.

Much of the price change was because of improved growing conditions in the midwest. For a time it looked like too much rain would sharply reduce yields. The middle of the summer though was favorable for soybean development.

Some of the soybean price drop is linked to the general fall in all commodity prices, lead by oil. Southern Minnesota commodity broker Chuck Persson said the U.S. credit crisis has also hurt. Yesterday, with Wall Street in turmoil, Persson watched the soybean market close down more than six percent.

"This is mainly due to the financial crisis I think," Persson said. "Fundamentally this market is still very strong. The traders just got the jitters and they're afraid to take any positions. So, until this gets over with I think we'll probably stay pretty negative."

Even with the falling prices and the sometimes disappointing yields, farmers should make a good profit on their soybeans this year.

Next year could be different however.

The cost of planting this year's crop increased by roughly a third over 2007. The price of seed, fertilizer, and weed killers all went up and the cost of buying or renting land rose dramatically. Similar price increases are expected next year.

As farmers harvest this year's soybeans, they're hoping their profits will help them cover some of the cost of planting next year's crop.

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