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Outlook for crops strongest in a decade, economist says

Outlook for crops strongest in a decade, economist says

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Corn and soybean field

There is some reason to believe the present strong demand for both corn and soybeans will continue.

Greg Albers is hoping that 2021 is the year things get back to something resembling normal for the grain market.

“I want to get this COVID thing done,” said Albers, who farms near Independence, Iowa, and is president of the Iowa Corn Promotion Board.

The hope, Albers says, is that gasoline usage pops back up in 2021 and boosts the ethanol market. If that happens and other trends continue, the demand for corn should be strong. That is important, he says, because the difference between old-crop and new-crop grain prices later this year are nearly a dollar.

There is some reason to believe the present strong demand for both corn and soybeans will continue, says Iowa State University Extension ag economist Chad Hart.

Right now the export market is great, Hart says. The feed market is good. Ethanol demand is still weak, although it holds some promise.

The overall demand for corn and soybeans is very strong, Hart says, and with more people getting vaccinated for COVID-19, it is likely that more will also want to travel this summer. Cruises and flights don’t look especially attractive yet, but national parks and car vacations look pretty inviting, he says.

The soybean outlook is somewhat similar to that of corn.

“I think, overall, demand looks pretty good,” said Scott Gerlt, an economist with the American Soybean Association. “The last year was fairly weird, due to COVID.”

Soybeans weren’t hurt as much as corn by changes in transportation, Gerlt says. Industrial, agricultural and semitrailer traffic continued, so the biodiesel market survived fairly well.

The uncertainty surrounding African swine fever in China remains a factor in the soybean market, but the hope is that if China cuts its hog herd and imports fewer beans it will buy U.S. pork, and at least some of those beans would move to domestic animal feed.

At the start of 2020 there were some reasons for cautious optimism in the corn and bean markets, Hart says. The severity of the pandemic chopped off those hopes at the knees and helped reduce demand through the summer. But on about Aug. 1, the market suddenly began to turn.

There were weather problems in numerous grain-producing regions of the world, but the biggest reason for the surge in prices was strong demand. Corn prices at the ethanol plant down the road from Albers’ farm dropped to $2.99 per bushel at the end of July. Today they are in the $6 range.

Of course, many farmers missed out on that rally because they either had no grain to sell due to weather issues or because they had already marketed most of their 2020 crop.

The hope, Albers says, is that they will still be able to take advantage of that market later this year.

The market isn’t likely to suddenly push into a dramatically higher trading range, Hart says, but he adds that where it is at now “is a really good range to be in.”

Weather and exports remain the biggest market concerns, he says. But the supply is tight and the demand remains strong.

But the outlook for grain prices and demand right now are probably the strongest they have been in a decade, Hart says.

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