JONESBORO, AR (KAIT) -- Commodity prices rose overseas after a near 900 point jump in the Dow Jones Industrial Average on Tuesday. That's potentially good news for farmers struggling to break even.
Grain prices in the U.S. closed mixed Tuesday after the substantial free-fall in recent weeks. Local farmers said corn, soybean, rice and wheat prices are much lower than in mid-summer.Commodity prices have been at all-time highs for most of the year, but farmers have said they are giving bargains to buyers.
Kevin Hoke, a cotton farmer in Needham, said cotton prices are what they were in the 1940s. According to the Arkansas Farm Bureau, Arkansas ranked 2nd in the nation in cotton production, producing more than 10% of the country's cotton. Arkansas ranked 1st in rice production.
The economic climate in northeast Arkansas has been much better than other states, but the market volatility has made it difficult to predict future prices.
David Hodges, a soybean farmer and member of the Farm Bureau of Craighead County, said this year has been hard.
"This has been one of the most challenging years that I and everybody I talked to can remember in a long, long, long time," said Hodges.
Farmers have had a rough 2008. Heavy flooding in the spring forced them to plant their crops late into the season. A mid-summer drought caused farmers to shell out more cash for irrigation. Hurricanes Ike and Gustav wreaked havoc on crops throughout the south. Nitrogen fertilizer, which cost $250 a year ago, spiked as high as $1,000 this year. The price of diesel fuel was at record breaking levels.
The economic downturn, which started with the housing crisis, is now putting farmers in a bind. In order to make money, they need to sell their product for a profit, but market conditions make that difficult.
It's unclear if the drop in grain prices will bring about cheaper food prices at the grocery store. Financial experts said the cost could go down, but it will be a while before that happens, if at all. Market analysts said it could go down later because suppliers are getting the commodity cheaper from the grower, passing down the savings. However, the economic roller coaster could keep grain prices at bay.