Exports help grain prices as supply is higher than demand


Record productivity and demand for livestock and crops has helped keep production strong, according to Iowa State University Extension crop marketing specialist Chad Hart.

While corn production is down about 3.6 million acres from 2016, soybean acres have increased 6.8 million acres. Yields continue to increase on corn from 174.6 bushels per acre in 2016 to 175.4 bushels per acre in 2017. The dramatic increase in soybean production affected yields with a decrease from 52 bushels per acre in 2016 to 49.5 bushels per acre in 2017.

“The early projections for crop production in 2018, show the same pattern for increases in soybean production. Exports are the key to this increase, with 50 percent of the U.S. soybean crop being exported as compared to 12 to 15 percent of the corn crop,” Hart said.

Even with drought in some areas in 2017, increases were seen in corn and soybean yields, as the production was up so much from the previous year. Hart expects to see more soybeans produced than corn in the next few years because of the demands internationally for the grain.

Other countries around the world continue to increase corn and soybean production also. The grain production in the Ukraine has switched from wheat production to corn production, which was price driven. With more grain available for exports and more competition, it has affected prices.

“2018 could be a bit rough for prices, but I expect to see improvements in the next three years,” Hart said.

The tremendous demand for meat worldwide helps the grain industry. More grain will be needed to produce more meat.

Marketing agreements worldwide are important to grain exports. Without the North American Free Trade Agreement, $0.50 would come off current grain prices. Hart said governments are reworking many of the agreements, but the changes are not seen in trade yet.

“We produce to feed the rest of the world and we have to have trade to keep U.S. producers profitable,” Hart said.

Ethanol production continues to help the corn markets. The addition of E15 throughout the country has helped increase ethanol production. In 2017, 1 billion gallons of ethanol was exported mostly to Canada, Mexico and China. Hart expects to see record exports of ethanol in 2018.

Both corn and soybean futures show increases in 2018, but Hart warns Mother Nature will be the real driver for the prices and some areas could see a slow increase.

“With lower margins everything is adjusting down. We are trying to find the balance, but the supply of grains is still larger than demand. Until that is adjusted, prices will likely stay close to what we have seen in 2017,” Hart said. “Corn prices will likely be in the $3.50 per bushel range for 2017 and soybean prices will be around $9.70 per bushel.”


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