Last week’s World Agricultural Supply and Demand Estimates (WASDE) increased the price estimates for 2020/21 marketing year average farm prices. Corn prices are expected to average $4.00/bushel and soybean prices $10.40/bushel, increases of 40 cents and 60 cents respectively from the October estimates.
If realized, it would be the highest marketing year corn price since 2013 and the highest soybean price since 2014 (Figure 1). Reduced crop production estimates, and a forecast jump in corn exports, drive the increased price estimates.
The latest estimate of U.S. corn production is 14.5 billion bushels, down 1 percent from the previous forecast. For Nebraska, production is pegged at 1.818 billion bushels with an average yield of 185 bushels per acre, up 3 bushels per acre from last year, but down 2 bushels from the last estimate. The WASDE also made big changes to U.S. corn exports, increasing expectations by 325 million bushels to 2.6 billion bushels. If the expectations hold true, it would be the largest volume of U.S. corn exported on record. China is behind the raised export expectations. The WASDE raised Chinese imports of corn from 7 MMT to 13 MMT, some of which should come from the U.S.
U.S soybean production is forecast at 4.17 billion bushels, down 2 percent from the previous forecast. Nebraska production is forecast at 299 million bushels and yield is forecast at 58 bushels per acre, down 2 bushels per acre from the previous estimate. Soybean exports were pegged at 2.2 billion bushels, the same as the previous estimate, but up 500 million bushels compared to the previous marketing year.
In mid-May Nebraska cash prices following the COVID-19 outbreak were approximately $2.85/bushel for corn and $7.84/bushel for soybeans. The WASDE price projections represent increases of 40 percent and 33 percent respectively from the mid-May levels. This equates to an increase in the value of the 2020 corn and soybean crops of roughly $2.8 billion. Quite the reversal of fortunes for the state’s corn and soybean producers. Chalk it up as another one of the mysteries of 2020.
Figure 1. Historic Market Year Average Prices
Source: USDA WASDE, Farm Bureau Compilation