While farmers saw good commodity prices in 2012 — especially for corn and soybeans — they should avoid getting caught up on the high prices of the past.

“We had a pretty good year, but don’t get caught up on $17 soybeans and $8 corn, because I think those prices are probably behind us. We need to be looking forward,” says Max Runge, Auburn University Extension economist.

Runge discussed the economics of corn production at the recent Central Alabama Corn Production Meeting held in Autaugaville.

“This past spring, after planting intentions were known, there was talk of $4 corn and $10 soybeans,” says Runge.

“The drought hit, and then we started talking about $10 corn and $20 soybeans. That didn’t materialize either. But we saw double-crop soybeans — soybeans after corn — planted in Alabama, in all regions of the state. I heard that some in the Tennessee Valley made 30 bushels per acre, which is a pretty good risk at $15 per bushel.”

The primary issues impacting commodity prices continue to be the economy, South America, seed supply, the farm bill, crop insurance and weather, he says.

Climatologists study droughts from 1890 to today, says Runge, and the shortest drought was 18 months, with the 1930 and 1950 droughts being 51 and 47 months long, respectively.

“So even if we’re in the shortest drought, that still may cover the 2013 crop year. It’s a possibility, as we continue to be extremely dry in east Alabama.”

Drought already is affecting barge traffic on the Mississippi River, says Runge. “They’re already putting less on them, and with fewer tons per barge, reductions are already in place.”

South America is the key player in everything, he adds. “After soybean and corn prices hit their highs, plantings increased in South America. And, for the most part, their weather conditions look pretty good right now.”

Looking at yield estimates from 2012, in February, corn was pegged at about 164 bushels per acre, excluding the 2011 crop.

“In May, they said the average U.S. corn yield was going to be 166 bushels per acre. In July, we started to see the effects of drought, and the estimate went down to 146. This was followed in September by an average estimated yield of 122.8 bushels per acre. According to the yield trend, we should have been at about 166 bushels.”

This had a huge effect on prices last year, says Runge.

“In September of 2012, we got a contract high of $8.31. For our 2013 contract, the high was $6.98. They thought this was going to be a relatively ‘one season’ weather problem, so those record-high prices didn’t equate into this crop year.”

U.S. corn production was down 13 percent in 2012, soybeans were down 2 percent, cotton was up 13 percent, and peanuts were up 77 percent.