TOLONO — For what seems like the first time in several years, farmers aren’t complaining about grain prices.
In the last three months, soybean prices have shot up to levels not seen since around 2014.
“It’s been a long time coming, and ag really needed this boost,” said Jeff Fisher, who farms near Tolono. “Corn is about $4 a bushel, and beans are about $11.20 a bushel, and those levels are profitable, unlike the last 51/2 years.”
Prices have been increasing due in part to increased exports to China and dry weather this summer, University of Illinois Agricultural Economist Scott Irwin said at the annual Illinois Farm Economic Summit.
“That combination of dry weather and the wind damage dropped the U.S. corn production estimate from the USDA between August and November by almost 800 million bushels for corn, and around 250 million bushels for soybeans,” Irwin said. “So that’s a cumulative drop of almost 5-6 percent.”
It’s also been dry in South America, he said, “so you put all that together … and you have some pretty explosive conditions for prices.”
With the trade deal with China starting to kick in after years of a trade war, exports for corn and soybeans are up significantly from last year so far this marketing year, Irwin said.
“Right now, total (corn) export commitments are up basically 900 million bushels over last year. And roughly 50 percent of that increase is due to increased exports to China,” he said.
Looking ahead to the 2021-22 marketing year, Irwin forecasted the prices to drop slightly from this year’s highs, with corn averaging $3.80 a bushel and soybeans at $10 a bushel.
“I might be a little optimistic on the (corn) price, but basically unless we get somehow huge crops in South America, dramatic change in policies in China or a monster crop next summer in the U.S., we’re looking at somewhat higher prices, even out into the next marketing year,” Irwin said.
He’s expecting exports to remain relatively high and ethanol usage to increase as people start to travel once the COVID-19 vaccine is widespread.
While gasoline usage has increased from its low point in April, it still remains about 10 percent below average, Irwin said, so “based on that vaccine news, I think we’re going to close that gap really rapidly as we head into the spring.”
With soybean prices doing especially well, Irwin expects more soybean acres will be planted next year: “The market is screaming, basically, that we need more soybean acres next year in the U.S.”
So overall, Irwin said, “the outlook for corn and soybean prices has certainly improved.”
Fisher said the increased prices will be appreciated.
“When prices are depressed, no matter how many bushels you produce off an acre, you have to make money on every acre to pay all your bills and update equipment,” he said.
So the recent price increases have put him in a good mood.
“I’m very enthused,” Fisher said. “I’m happy, and I’m thankful that we’ve seen the market move to the upside.”