(West Lafayette, IN) - Latest projections by USDA could mean future prices for corn and soybeans approaching the historic levels from close to a decade ago. That’s according farm economists at Purdue University, who caution the outlook for the long term is uncertain, though, because of continued volatility in the market.
The latest USDA World Agricultural Supply and Demand Estimates report for November forecasts a dramatic drop in supply of corn and soybeans and lower production of corn and soybeans than previous estimates. The report also predicts higher demand for corn from rising exports than estimated by USDA last month.
According to the report, the end of the crop year price of corn is estimated at $4.00 per bushel or .40 cents higher from last month’s prediction.
USDA reduced its corn yield estimate by 2.6 bushels per acre because of late summer drought and wind storms largely in the Midwest while increasing its projection for exports by 325 million bushes. Projected ending stocks for corn in November also dropped from 15-percent in October to 11-percent.
Jim Mintert, an agriculture economist at the West Lafayette campus, said the 1.7 billion bushel carryover in corn predicted by USDA is sharply down from the 3.3 billion bushel carryover USDA forecast in June and 500 million bushels less what was carried over in 2018. He also pointed out the current ending stocks estimates for corn is starting to resemble carry over from 2013 and 2014 “when prices were a lot more positive than they have been recently,” he said. Mintert said the average per bushel price of corn was $4.46 in 2013.
“There might be some upscale potential left in this market place as we go forward,” he said. USDA also projected the end of the crop year price for soybeans at $10.40 per bushel. “That gives us the highest price estimate since the 2013 marketing year,” Mintert said.
Estimated soybean production also dropped from last month’s projection by 1.2 bushels per acre to 50.7 bushels per acre largely because of the late summer weather extremes. The latest projection by USDA also placed ending stocks for soybeans at 190 million bushels. Mintert said the carry over in soybeans was just four-percent in terms of total usage. In comparison, he said the carry over in terms of total usage for soybeans was 23-percent in 2018 because of trade disruption and 13-percent last year when a historic wet spring cut significantly into yields. “This suggests that maybe this isn’t over with respect to the rally we’ve seen in soybean prices,” Mintert said.
Despite the projected drop in production, Mintert said the corn and soybean yields predicted are still close to record levels. Nathan Thompson, who’s also an agricultural economist at Purdue University, said the best decision for corn and soybean growers might be selling much, if not, all of this year’s crop right away. He said there doesn’t seem to be much incentive to store and wait for higher prices before selling especially for soybeans. “There’s opportunity to sell soybeans at real profitable levels right now. That certainly needs to be the first thing we’re thinking about,” Thompson said.
Mintert said farmers with enough resources to take the risk of storing their grain might want to hold a little more of their corn than soybeans. “People who can’t afford very much risk probably should take advantage of some prices that are actually pretty profitable. You don’t want to let that escape,” he said.
