Highest corn and soybean prices since commodity boom, says USDA
U.S. farmers, who harvested some of their largest corn and soybean crops ever last fall, will reap the highest season-average prices for the crops since the heady days of the commodity boom that ended in worldwide surpluses seven years ago, said the government on Tuesday. Commodity prices are on the rise due to tightening global supplies and large purchases by China, the first country to rebound economically from the pandemic.
In a bundle of reports, the USDA said U.S. stockpiles of corn and soybeans, the two most widely planted crops in the country, would shrink to their lowest levels since 2014 when this year’s crops are ready for harvest. At the same time, the average farm-gate price for corn and soybeans this marketing year would be the highest since 2013/14.
Along with wheat, corn and soybeans are the foundation of the U.S. food supply. They are primarily used as ingredients in processed foods, oils, and are fed to the cattle, hogs, and poultry that supply meat and eggs for the American diet.
The corn crop totaled 14.182 billion bushels, the fifth-largest on record and the soybean harvest, at 4.135 billion bushels, was the fourth-largest, said USDA in a final look at 2020 crops. The figures were smaller than expected by traders, so prices zoomed at the Chicago futures markets. Corn for delivery in March rose by the maximum allowed in a day, 25¢ a bushel, to end the day just above $5.17. March soybeans soared by nearly 46¢ to close above $14.18 a bushel.
“They gave us a pretty large reduction in corn production that really tightened up our supply,” said Mark Jekanowski, chairman of the USDA panel that forecasts U.S. commodity consumption, prices, and reserves. The USDA estimate of the corn crop was 325 million bushels smaller than a month ago. Jekanowski spoke to USDA’s radio news service.
Soybean exports were forecast for a record 2.23 billion bushels, returning to the volume common before the trade war with China. Domestic demand for the oilseed would remain high despite a surge in prices, said the USDA. China was projected to expand its imports of soybeans, corn, and cotton this year; it buys two-thirds of the soybeans on the world market.
The 2020 corn crop will sell for an average $4.85 a bushel and soybeans for $11.15 a bushel, compared with the average for $3.56 for corn and $8.57 for soybeans grown in 2019, said the USDA.
Farmers are expected to expand plantings of the eight major U.S. crops — corn, sorghum, barley, oats, wheat, rice, soybeans, and upland cotton — by 6 million acres or so this spring compared with 2020. A USDA survey indicated growers planted 32 million acres of winter wheat for harvest this year, 5% more than last year and the first increase in sowings since 2013.
The USDA forecasts strong economic growth, low interest rates, and low inflation rates this year, a combination that would boost demand for food and ag products, and drive up commodity prices.
Government subsidies provided 39% of farm income in 2020. The ongoing rally in commodity prices began late last summer and created hope of a stronger farm economy.
“And now, we’re stepping into what I hope is going to be…a more productive 2021,” said Beth Ford, chief executive of Land O’Lakes, at a farm meeting on Monday. “Corn prices (are) up, soybeans up, some stronger fundamentals.”