Things are looking up for farmers in Minnesota as harvest gets underway, thanks to a mix of increased demand from China and the misfortune of farmers in other states.
Corn and soybean prices are both up by about a fifth since early August and the hog rally has been even more pronounced.
"These prices, with these yields, should make things look financially much better than they did back during the summer, because it looked kind of bleak, really," said Rick Anderson, risk manager for Goodhue, Minn.-based Ag Partners, which operates several grain elevators in southeast Minnesota and southwest Wisconsin. "When you combine that with some of the government aid that they've received and are projected to receive, that will help of course, too."
The biggest reason corn and soybean prices have rallied is that China is purchasing more of them from the U.S. in recent weeks. Tuesday marked the 13th straight business day in which China bought U.S. soybeans.
"Their economy is rebounding from the pandemic is what we're told, and more importantly their swine herd is rebounding from the African swine fever," Anderson said.
Chinese demand for soybeans, in large part to feed hogs, makes the country the largest customer of U.S. soybean producers.
Minnesota's corn and soybean crops are also well ahead of last year, and many farmers expect good yields. Meanwhile, Iowa's crops were hit by drought and a severe storm called a derecho that flattened fields from Fort Dodge to Cedar Rapids in early August.
"The derecho that moved across a big swath of Iowa, that kind of grabbed everyone's attention," Anderson said.
When farmers in other states lose part of their crop, Minnesota farmers get better prices for their crop.
"What we thought was going to be a really big crop has gotten smaller," Anderson said.
The Minnesota corn crop is 23 days ahead of last year and 10 days ahead of the five-year average, according to the U.S. Department of Agriculture. The soybean crop is 16 days ahead of last year and eight days ahead of the average.
In another bright spot for farmers, President Donald Trump announced last week that the federal government will spend another $13 billion on assistance to farms, in addition to the $19 billion in coronavirus relief announced in April.
Bryan Klabunde, who raises corn and soybeans near Waubun, Minn., said the price rallies offer a much-needed morale boost.
"Harvest is full speed ahead right now and it's been a while since we've had any market movement in a positive direction," Klabunde said. "It's nice to see. It's a positive thing that we needed."
Farmers need to use the rally to lock in prices, Klabunde said, and not get too mesmerized with the idea that prices will continue to rise. Waiting for prices to keep rising could end up biting them, he said.
And corn prices are still hovering near or below break-even prices for many farmers.
"If farmers take advantage of the rally, that's a good thing. And hopefully we do," Klabunde said. "It's not a life-changing rally. It's not a pay-back-all-the-bills rally. It's a rally to get markets back to what should have been a basic bottom for the last 12 months."