The corn fields near Morgan in the southwest part of Minnesota are a healthy dark green color. When farmer Roger Gilland snaps off an ear from a cornstalk, he likes what he sees. The cob is completed covered with tiny rows of kernels.
"Ear length looks about normal," said Gilland. "And starting to fill, there's very little yellow in here, yet, but it is starting. It should be a very good crop."
Gilland says with good weather he figures he may harvest an above average crop this fall.
"It looks to me like 180 bushels to 200," said Gilland. "I would say somewhere in that area."
The USDA estimates Minnesota's farmers will harvest just under 1.2 billion bushels of corn, which would be a record. Nationwide the corn crop is also looking good at 12.3 billion bushels.
That is a surprising figure, considering how bad things looked just six weeks ago, as heavy rains flooded many Midwest fields. But since then the weather's been almost perfect, and the crop has made substantial progress.
As the crop improved, prices have plunged. Corn is down almost 35 percent in just six weeks. As farmers move their crop to market this fall, the first stop for many will be their local country elevator, like the New Vision Coop based in Worthington.
New Vision general manager Frank McDowell says while farmers are not happy with the drop in corn prices, for him the decline has eased the pressure of what's been a nerve-wracking year.
"2008 has been unprecedented on several levels," said McDowell.
Speculators contributed to wild swings in grain prices. Those prices rose rapidly this spring, causing a financial squeeze at New Vision. McDowell says as grain prices rose to record highs in June, the elevator had to come up with more and more money to satisfy the financial requirements of the grain trading markets.
To come up with those funds, the elevator had to borrow from its bank. McDowell says New Vision's banker more than tripled the coop's credit limit to $50 million. Even then, the company almost reached its credit limit.
"I want to say we got about $46 1/2, $47 million of that out," said McDowell. "And that I believe was the high."
McDowell says since the grain markets have dropped, the money flow has reversed. The company's borrowing has dropped by more than half.
From the grain elevator, many of the farm commodities grown in the U.S. enter the food system, either as livestock feed or in various grocery items. So, consumers also have reason for optimism over the improved crop outlook. Along with corn, wheat prices have dropped a third, soybeans about 25 percent. USDA economist Ephraim Leibtag says those changes may slow the growth in grocery prices.
"The recent decline in food commodity costs, especially corn, soybeans and wheat prices definitely take off some of the pressure from retail food prices," said Leibtag.
In the first half of this year, the cost of food prepared in the home rose at an almost nine percent annual rate. Leibtag says even with the price decline, grain prices are still at historically high levels. That may keep prices from falling much, if at all.
Livestock and ethanol producers have also benefited from the lower prices. Many cattle, hog and poultry producers have lost money for much of the last year because of high corn feed prices. Ethanol companies also suffered, losing as much as 50 cents a gallon on their corn based fuel.
It's not clear if grain prices will fall further. After the USDA crop estimate came out, prices for corn and soybeans rose. Many traders believe supplies are still tight and demand remains strong.