DEWEY — Farmers adjusting to the lowest corn prices in three years can expect more of the same next year, a University of Illinois agricultural economist said Wednesday.
Darrel Good, professor emeritus in the UI Department of Agricultural and Consumer Economics, said corn prices could dip well below $4.50 a bushel in 2014.
Farmers will be "fortunate if corn prices rally enough to cover storage costs this year," he told about 65 people attending the Dewey Bank's annual farm breakfast at the Dewey Community Church.
Smaller-than-expected corn crops in 2010, 2011 and 2012 helped propel corn to record-high prices the last three years, sometimes topping $7 a bushel.
But several factors — including a production rebound this year — combined to drive prices down sharply during the late summer and fall.
Good said this year's U.S. corn crop is expected to be the largest ever, though the release of data that might support that has been delayed by the government shutdown. New reports are expected out Friday.
"It would appear the crop is big — big enough to build inventories, despite an improvement in consumption," he said.
Corn production abroad is up too, thanks to the price spike of the last three years.
"Production outside the U.S. is 50 percent larger than six years ago," Good said.
"That increased production will not go away," he predicted, basing that on what has happened in the past when prices went down.
Not only are corn supplies plentiful, but demand for it is weak from some quarters.
Corn exports are at a 42-year low, he said, as a result of the high price of U.S. corn and the limited supplies of recent years.
Plus, ethanol production, which ramped up over the last seven years, has reached a plateau. Good said he doesn't see much growth for ethanol ahead.
That should concern farmers because rapid escalation in ethanol production "accounted for a lot of the increase in corn prices" the last few years.
There are a few bright spots for demand. China has re-emerged as a major buyer of grain, and the cattle industry is starting to recover, boosting demand for feed. The poultry industry is expanding a bit, Good said, and there's a modest increase in pork production.
Some analysts think farmers will switch acreage from corn to soybeans next year as a result of the drop in corn prices.
But Good said he is "not confident we'll see a cutback in corn acreage in 2014" and predicts a "record corn crop exceeding that of this year."
He said corn prices are likely to return to the "long-term average price ... of about $4.50 a bushel," which he called "the norm" since 2007.
"We've spent three years well above the norm," Good said, and during parts of 2014, the price is likely to dip below $4.50.
Good said he expects $11 a bushel to be "kind of a normal price for soybeans" going forward. Soybean production is likely to increase in 2014, but "it may or may not be a record crop," he said.
Soybean inventories are tighter than corn inventories, he added, and China is buying soybeans — perhaps an indication that bigger sales are coming.