Minnesota corn and soybean farmers had a good year for production, but profits may not follow

Minnesota corn and soybean production dipped slightly in 2017 after two consecutive years of record-breaking harvests, but that's not likely to change the bottom lines of producers very much.

New forecasts from a U.S. Department of Agriculture service estimate that Minnesota corn production will be 1.45 billion bushels, down 6 percent from last year. Based on conditions as of Nov. 1, yields are expected to average 190 bushels per acre, down three bushels from last year.

Slightly lower production is not expected to make a dent in grain prices, however. Several years of bountiful crops in the U.S. and other major producing countries have created a worldwide glut of corn and soybeans that has suppressed prices for most of the past four years.

"Farmers have had thin-to-negative margins over the last few years," said University of Minnesota grain-marketing economist Ed Usset. "This report confirms that we should expect more of the same in the year ahead, because there's just no quick fix out there right now."

Minnesota is ranked fourth in corn production among U.S. states, after Iowa, Illinois and Nebraska, with a 2016 crop value of slightly more than $5 billion.

Usset said that even with a relatively healthy export market for corn and soybeans, the global surplus of grain is not changing significantly enough to increase profits.

"Everybody is pretty much hitting on all cylinders," he said, referring to the major grain-producing nations. "We've got the same bearish cloud hanging over this market."

The USDA National Agricultural Statistics Service's forecast for soybean production in Minnesota followed a similar pattern to corn. The harvest is expected to be down 4 percent from last year at 373 million bushels. The yield is forecast at 46 bushels per acre, six bushels below 2016.

Minnesota is ranked third in soybean production, after Illinois and Iowa, with a crop value of $3.6 billion in 2016.

Dale Nordquist, associate director of the Center for Farm Financial Management at the University of Minnesota Extension, said the reason for the slight decline in corn and soybeans seems to be scattered production problems and hail damage that were just enough to affect some crops in localized areas.

"It was not as consistent a year across the state," he said, comparing weather in 2017 to last year. "But it's still a darn good crop."

Nordquist also does not expect grain prices to change much, if at all.

One positive effect of this year's growing season is that ample harvests, while not making most farmers rich, allows many of them to stay in the game, Nordquist said.

"What it does is it makes it possible for producers to stay afloat for another year in these challenging times," he said.

Overall, corn production in the U.S. is expected to be down 4 percent from last year, primarily because farmers planted corn on 4 percent fewer acres this year compared to 2016.

Some farmers switched to soybeans, which nationally were grown on a record 89.5 million acres and will produce a record 4.4 billion bushels, up 3 percent from last year.

The forecasts may be revised slightly when the final crop production estimates for 2017 are released in mid-January.