(West Lafayette, IN) - There are reasons for corn and soybean growers to be optimistic and concerned about prices heading into the New Year.
That’s was the message from agricultural economists at Purdue University during their monthly corn and soybean outlook report on December 15 from the Indiana Farm Equipment and Technology Expo at Westfield.
Jim Mintert, the Director of the Center for Commercial Agriculture at the West Lafayette campus, said the most recent USDA projections are more favorable for corn than soybeans. However, potential factors primarily involving China and South America work to the advantage of growers of both crops in the U.S.
USDA is projecting exports for U.S. corn to be about 250 million bushels lower than 2021, which is a slight reduction. However, if projections hold, total exports are still higher than any year dating back to 2005.
Mintert said commitments and shipments of U.S. corn to all countries in the current marketing year are close to 10-percent lower than 2020, but exports to China are slightly higher than the previous year.
USDA is projecting ending stocks for 2022 to be 10.1-percent, up from 8.3 percent the previous year. Mintert said the projection still means relatively tight supplies, and there’s potential for ending stocks to be lower than the current USDA forecast. He pointed to USDA projecting a slight increase in the use of corn for ethanol production and profit margins at ethanol plants still being strong despite a drop from $1.54 per gallon in late October to $1.12 per gallon in November.
Mintert also said an uptick in the economy would likely mean higher ethanol production and a need for more corn to produce it. He said the latest projections from USDA are not as favorable to soybeans but still provide soybean producers reason for optimism.
The USDA projects a 260 million bushel drop in U.S. soybean exports. However, Mintert said USDA might have underestimated the decline considering there’s been a 27-percent drop in U.S. soybean exports from all countries and a 30-percent decrease in U.S. soybean exports just from China, so far, in the current marketing year.
Mintert said exports of U.S. soybeans, though, could also rise above projections. He said the outcome for corn and soybeans depends mainly on what happens in China and South America.
Mintert said its possible demand next year from China, which is extremely difficult to gauge, could rise above projections.
“I don’t think any of us have a special insight really with respect to what China is going to do. I think that continues to be a source of tremendous uncertainty. So, that’s going to be a wildcard,” he said.
Mintert said the weather in major grain-producing South America plays a role in how much corn and soybeans the continent imports from the U.S. He also pointed out the 7.8-percent ending stocks projected for soybeans in 2022 is lower than corn but still above 5.7-percent from this year.
However, Mintert said he’s concerned that the ending stocks projection by USDA for soybeans will be higher because supply this year is above what was initially predicted several months ago.
He said demand for soybean oil and meal has been very good, though, which could help end stocks if the trend continues.
“On the soybean side, trade is a concern. The exports have been weak. If you’re really going to get optimistic about soybeans, you really want to see a stronger export value. The good news is the crush is looking good both from an oil and a meal standpoint,” Mintert said.