Economic gale blows into Nebraska cornfields
Lincoln commodities analyst Clay Bradley can’t remember anything similar happening since Jimmy Carter blocked grain exports to the Soviet Union in 1980.
The financial crisis gripping Wall Street spilled over into grain markets Friday. It got much of the blame for the corn price falling the daily limit on the Chicago Board of Trade and for many of the state’s grain elevators, in the middle of harvest, not to post cash bids.
“It’s really the outside markets that are contributing to this,” Bradley said as he tried to take stock of the stock market’s impact on Nebraska’s agricultural economy.
At 76, Rising City farmer Gene Glock has never seen anything like it in 60 years of farming. Always before, when elevators backed away from the market temporarily, it was because of a drought or something unusual inside agriculture.
This time, “part of it is our normal buyers overseas; some of them can’t get money to buy because it’s a worldwide problem,” Glock said.
“In that respect, it’s something totally unique that I hope I never have to face again. But I don’t know if we have a plan to deal with it or not.”
Randy Robison, general manager of Frontier Cooperative in Brainard, was one among many who decided not to buy any corn until he could see if grain volatility would ease Monday.
“There’s too much risk,” Robison said Friday. “We can’t get it covered.”
Things were back to normal, sort of, at the Board of Trade and at Frontier, as a new week began. The cash price of corn ended Monday at $3.70, down 26 cents from the most recent posting of $3.96 last Thursday.
It may be a long time before the word “normal” is used again to describe the stock market. It rose a record 936 points Monday.
But the more immediate concern to corn farmers might be a sustained price slide that had wiped out much of the gain set in motion in 2006 by robust demand from the ethanol and export sectors.
From Oct. 13, 2006, the value of a bushel of corn at Frontier rose from $2.83 to a high of $7.18 on June 27. It dipped below $4 on Oct. 7 and has lost another 30 cents since then.
At other times, Bradley might point to an unexpectedly big harvest or some other agricultural variable as the culprit. But this time he’s talking about consumer spending and unemployment, “as well as just the panic.”
The broader economy has also intruded into the ethanol outlook.
A year ago, Auburn Mayor Bob Engles was promoting a 12-mile-long pipeline to the Missouri River as an important step toward hosting an ethanol plant there.
Now the sense of urgency for that $7 million to $8 million project has diminished and possibilities for a $200 million ethanol outlet have stalled out with the dirt-work stage.
The credit market for ethanol dried up last year, Engles said. “With the recent developments on Wall Street, that certainly hasn’t improved that.”
Water options are still on the table 70 miles southeast of Lincoln, and Auburn’s mayor is still speaking optimistically about ethanol. “We’re ready to go as soon as the industry turns itself around.”
When that might happen varies widely with the faith — or lack of faith — individuals have in ethanol as an energy alternative.
Todd Sneller of the Nebraska Ethanol Board conceded “the most difficult period in recent history to secure new financing for a new ethanol plant.” That’s particularly true if the project team has no other operating ethanol plants.
But Sneller said he can feel good about new plants opening at Wood River and Bridgeport, to a third getting close at Atkinson, and to a federal ethanol mandate that calls for 15 billion grain-based gallons by 2012.
None of that impresses Doug Carper, a veteran of the commodity-trading business in Lincoln and one of the state’s sternest ethanol critics.
Carper sees “the equivalent of the dot.com bust of a decade ago.”
Nebraskans who invested in ethanol plants are either already sorry or they soon will be, he warned.
“The equity is gone. It’s never going to come back.”
Reach Art Hovey at 473-7223 or at ahovey@journalstar.com
The financial crisis gripping Wall Street spilled over into grain markets Friday. It got much of the blame for the corn price falling the daily limit on the Chicago Board of Trade and for many of the state’s grain elevators, in the middle of harvest, not to post cash bids.
“It’s really the outside markets that are contributing to this,” Bradley said as he tried to take stock of the stock market’s impact on Nebraska’s agricultural economy.
At 76, Rising City farmer Gene Glock has never seen anything like it in 60 years of farming. Always before, when elevators backed away from the market temporarily, it was because of a drought or something unusual inside agriculture.
This time, “part of it is our normal buyers overseas; some of them can’t get money to buy because it’s a worldwide problem,” Glock said.
“In that respect, it’s something totally unique that I hope I never have to face again. But I don’t know if we have a plan to deal with it or not.”
Randy Robison, general manager of Frontier Cooperative in Brainard, was one among many who decided not to buy any corn until he could see if grain volatility would ease Monday.
“There’s too much risk,” Robison said Friday. “We can’t get it covered.”
Things were back to normal, sort of, at the Board of Trade and at Frontier, as a new week began. The cash price of corn ended Monday at $3.70, down 26 cents from the most recent posting of $3.96 last Thursday.
It may be a long time before the word “normal” is used again to describe the stock market. It rose a record 936 points Monday.
But the more immediate concern to corn farmers might be a sustained price slide that had wiped out much of the gain set in motion in 2006 by robust demand from the ethanol and export sectors.
From Oct. 13, 2006, the value of a bushel of corn at Frontier rose from $2.83 to a high of $7.18 on June 27. It dipped below $4 on Oct. 7 and has lost another 30 cents since then.
At other times, Bradley might point to an unexpectedly big harvest or some other agricultural variable as the culprit. But this time he’s talking about consumer spending and unemployment, “as well as just the panic.”
The broader economy has also intruded into the ethanol outlook.
A year ago, Auburn Mayor Bob Engles was promoting a 12-mile-long pipeline to the Missouri River as an important step toward hosting an ethanol plant there.
Now the sense of urgency for that $7 million to $8 million project has diminished and possibilities for a $200 million ethanol outlet have stalled out with the dirt-work stage.
The credit market for ethanol dried up last year, Engles said. “With the recent developments on Wall Street, that certainly hasn’t improved that.”
Water options are still on the table 70 miles southeast of Lincoln, and Auburn’s mayor is still speaking optimistically about ethanol. “We’re ready to go as soon as the industry turns itself around.”
When that might happen varies widely with the faith — or lack of faith — individuals have in ethanol as an energy alternative.
Todd Sneller of the Nebraska Ethanol Board conceded “the most difficult period in recent history to secure new financing for a new ethanol plant.” That’s particularly true if the project team has no other operating ethanol plants.
But Sneller said he can feel good about new plants opening at Wood River and Bridgeport, to a third getting close at Atkinson, and to a federal ethanol mandate that calls for 15 billion grain-based gallons by 2012.
None of that impresses Doug Carper, a veteran of the commodity-trading business in Lincoln and one of the state’s sternest ethanol critics.
Carper sees “the equivalent of the dot.com bust of a decade ago.”
Nebraskans who invested in ethanol plants are either already sorry or they soon will be, he warned.
“The equity is gone. It’s never going to come back.”
Reach Art Hovey at 473-7223 or at ahovey@journalstar.com
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