Corn and soybean prices remained steady Friday after the U.S. Department of Agriculture released the 2017 crop production report.
While soybean production for 2017 was up over last year’s production, it was not as high as forecasters initially thought, said Virgil Schmitt, agronomist with the Iowa State University Extension in Muscatine, said Friday.
“Those numbers retrenched a little bit and production was a little lower than the market anticipated,” Schmitt said. “Despite having a larger soybean crop this year, we didn’t hit what everybody was thinking.”
Forecasters were expecting a soybean crop of 4.425 billion bushels. But according to the USDA report filed Friday, farmers produced 4.392 billion bushels.
Locally, cash prices for soybeans rose Friday. At River Gulf in Bettendorf on Thursday, nearby soybean prices were at $9.13 per bushel. On Friday, the price at River Gulf for nearby soybeans was $9.24 per bushel.
“It’s all supply and demand,” Schmitt said. “When supply goes down, prices go up.”
In 2016, U.S. farmers produced 4.296 billion bushels of soybeans, according to the USDA report.
Iowa farmers produced 562 million bushels of soybeans for 2017, down from the record 566 million bushels produced in 2016.
Illinois farmers hit a record in soybean production for 2017, producing 612 million bushels. That beat the 593 million bushels Illinois farmers produced in 2016.
Corn prices retreated somewhat as production was a bit higher than anticipated.
Schmitt said that the market was expecting 2017 corn production at 14.578 billion bushels. But America’s farmers produced 14.604 billion bushels.
At River Gulf on Thursday, nearby corn was at $3.31 per bushel. On Friday it was at $3.28 per bushel.
Iowa farmers produced 2.6 billion bushels of corn in 2017, down from 2.74 billion bushels in 2016.
Illinois farmers produced 2.2 billion bushels of corn, down from 2.255 billion bushels in 2016.
Schmitt said he is surprised corn didn’t fall farther as it gets more pressure from wheat as an energy grain.
“Our corn is an energy grain but it’s not the only one,” Schmitt said. “Wheat is one also.”
Wheat farmers in the U.S. produced 1.74 billion bushels in 2017, down from 2.308 billion bushels in 2016. However, the World Agricultural Supply and Demand Estimates issued Friday indicated rising global production and an rising acreage expectations.
March soft red winter wheat dropped 12.75 cents on the Chicago Mercantile Exchange on Friday to end the day at $4.205 per bushel.
With wheat so cheap, it can be purchased cheaper than corn to produce the same amount of energy, Schmitt said.
“Considering corn’s main competitor got whacked, I’m not sure why corn has hung in there as well as it has,” Schmitt added.
Taylor Ridge farmer Tom Mueller said that South America appears to be having a decent year in corn and soybean production. What is needed for American farmers is more trade.
“We hope we can keep our exports going real strong,” Mueller said. “Corn is cheap so people should be buying it.”
One of the quickest ways to help shrink the size of the corn stocks stored in the bins is to increase ethanol exports, he said.
“We’re making some inroads into Japan, and we’ve been talking with India,” Mueller said. “India would be a huge market.
“We’re also selling a lot of ethanol to our neighbors, Mexico and Canada,” he added. “Canada is getting ready to push more biofuels up there. They’ve been going with a 2 percent ethanol blend, but they can run with 10 percent.”
The U.S. also is trying to convince Mexico about the benefits of biofuels, especially in cities with high air pollution and smog. “We’re telling them we’ve been using a biofuels blend in our cities and it’s helped our cities a lot,” Mueller said.
Schmitt said that India is an emerging market for proteins, such as meat and poultry, both of which are corn fed.
“We see it all the time, countries that begin growing and incomes go up, they switch from grain-based diets to more meat-based diets,” he said. “India is one where that is happening. Vietnam is another. It they’re importing meat then we need to produce more meat and more meat production means more grain for feed.
“We’re looking at slow, steady growth in the meat export industry,” Schmitt said. So there may be better prices coming for farmers in 2019 and 2020.
But a look at the U.S. Drought Monitor shows something that Mueller, or any farmer for that matter, does not want to see.
From Utah and Arizona east through Texas and Louisiana all the way up the east coast, and from Texas to the Dakotas, moderate drought seems to have taken hold. There already are numerous areas in severe to extreme drought. And there are large swaths of areas that are abnormally dry.
“Mother Nature has a way of taking care of surpluses,” Mueller said.
It doesn’t matter how good prices are if a farmer has no product to sell, he said.
“I don’t want to have to deal with 20 inches of snow, but I’ll gladly take a couple of good thunderstorms in March after the ground thaws,” Mueller said.