Glut of corn, soybeans may depress prices further
URBANA — Farmers have more reason to be concerned about already-low corn and soybean prices, with the release of statistics this week on how much corn and soybeans have been planted — and how large the stocks are of previous crops.
On the bright side, bumper crops — perhaps of record size — are expected for both corn and soybeans, given good weather that's expected to continue.
That means farmers could have plenty of bushels to sell come harvest. But the downside is that the glut of corn and soybeans could push prices even lower.
It's still too soon to predict accurately where corn and soybean prices will be this fall, given the unpredictability of weather, but University of Illinois agricultural economist Darrel Good said that for corn, "conditions now point to an average price near $4 during the crop year ahead." Before the statistics were released, corn had been trading for about $4.45 a bushel.
As for soybeans, Good said circumstances point to "a substantial year-over-year decline in the average price ... from over $13 (a bushel) this year to perhaps $10.50 next year."
In data released by the U.S. Department of Agriculture, farmers reported planting 84.8 million acres of soybeans and 91.6 million acres of corn. That's 8.3 million more acres of soybeans and 3.7 million fewer acres of corn than was planted last year.
But it looks as though they could well get more bushels of corn and soybeans off those acres.
"Early-season weather and crop conditions ... point to a very high U.S. average corn yield, perhaps exceeding the record yield of 164.7 bushels of 2009," Good said. "A continuation of generally favorable weather conditions through July is expected, suggesting that the average yield could be even larger than 165 bushels."
For soybeans, Good said there are expectations for "a record U.S. average soybean yield near 45 bushels." He said conditions point to "a very large soybean harvest and a substantial buildup of stocks (soybeans in storage) during the 2014-15 marketing year."
Following the release of statistics, Good said December corn futures stood about 35 cents below the spring crop insurance price.
"Crop revenue insurance will provide some revenue protection for those with high levels of coverage if prices continue to decline," he said.
Soybean prices also went down, with November futures moving within 20 cents of the spring crop insurance price.
"There appears to be more downside potential for soybean prices," Good warned.