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Livestock and dairy producers were at the epicenter of the financial hardship and mental stress that
resulted from the coronavirus outbreak. Daily updates on closures of meat processing plants due to
COVID-19 outbreaks became a regular occurrence in late April and early May. For several weeks the
U.S. meat processing industry was only operating at 50-60 percent of capacity. This resulted in the
necessity to euthanize hundreds of thousands of market hogs in the past few weeks. The economic
recovery from this devastating setback, which could take years, is likely to be slow and challenging.
The ethanol industry was also severely challenged by the COVID outbreak. Due to travel restrictions and
significantly lower gasoline consumption in the U.S., some ethanol plants reduced or suspended
production for a period of time in 2020. Profit margins and demand for ethanol have been slow to
recover. About 5.4 billion bushels of corn per year is utilized for ethanol production, which represents
35-40 percent of the typical annual U.S. corn production. December corn futures on the Chicago Board
of Trade (CBOT), which are the underlying contract for 2020 harvest prices for corn, declined from near
$4.00 per bushel in early February to near $3.20 per bushel by July, before recovering late in the year.
Local cash soybean prices in Southern Minnesota rose from below $8.50 per bushel in mid-August to
current levels near $11.00 per bushel. Once local soybean prices reached $9.00 per bushel, which was
the highest level in a couple of years, farmers began selling their soybeans at harvest or right after
harvest. A majority of the soybeans in many areas were sold at a local price of $9.00-$10.00 per bushel,
rather than the current $10.50-$11.00 per bushel range. The local cash price for corn in many areas has
been in the $3.75 to $4.00 per bushel range in recent weeks; however, similar to soybeans, some farmers
started pricing their 2020 corn crop near $3.50 per bushel as opposed to current price levels.
3. Variable weather results in a wide range of crop yields.
“Mother nature” was again a big story in agriculture in 2020. The August 10 derecho storm with winds
over 100 mph severely damaged crops in a widespread area across the middle of Iowa, as well as
portions of Nebraska, Illinois and Indiana. In the hardest hit areas, crops were a total loss, while other
portions of the region had significant yield reductions. In addition, the storm caused considerable
structural damage to farm grain handling systems, livestock buildings, and commercial ag facilities.
Portions of Iowa, Nebraska, South Dakota, and Southwest Minnesota got extremely dry late in the 2020
growing season, which also reduced the excellent yield potential that crops had earlier in the growing
season. Parts of south central Minnesota were impacted by excess rainfall during 2 or 3 high rainfall
events in late June and July, which caused considerable drown-out damage in some fields.
On the other hand, growers in some areas of Southern and Western Minnesota, as well as in northeast
Iowa, the eastern Dakota’s, and portions of Wisconsin, had 2020 crop yields that were among the best
ever. USDA is projecting Minnesota to have a record statewide average corn yield of 202 bushels per
acre in 2020, which exceeds the previous record yield of 194 bushels per acre in 2017. By comparison,
the 2020 corn yield estimate for Iowa is 184 bushels per acre, which is the same as Wisconsin. Illinois is
projected at 195 bushels per acre, Indiana at 189 bushels per acre, Nebraska at 185 bushels per acre, and
South Dakota at 165 bushels per acre.
If you would like to receive a free copy of Kent Thiesse’s “FOCUS ON AG” column via e-mail on a
weekly basis, just send an e-mail to: kent.thiesse@minnstarbank.com
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Note --- For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone --- (507) 381-7960);
E-mail --- kent.thiesse@minnstarbank.com) Web Site --- http://www.minnstarbank.com/