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Demand for corn and soybeans continues in 2010Crop farmers continue to increase production to meet demand needs for their corn and soybean crops, according to Chad Hart, Iowa State University agriculture economist. "2007 was a record year for corn producers as far as supply and demand. The record high price for corn also reflected the record year," he told a group at the Integrated Crop Management Conference held in Ames on Dec. 3. "Corn prices for 2007 were $4.20, followed by 2008 prices of $4.06 and, as of Nov. 1, 2009, prices were averaging $3.55." Hart said, with the continual demand for corn for ethanol production, he expects prices to stay strong. Exports and feed demand also support corn production. Farmers have been keeping up with the growing demand with an increase in plant populations, leading to higher production. "The trend has been for more plants per acre to continue for the next few years," said Hart. While 2009 has been a record-setting year for yields, with the U.S. average being 163 bushels per acre, it has also been a challenging year for the harvest. "There are some quality issues this year and low test weights, but the biggest problem has been the slow harvest," he said. "This year has been the slowest harvest all across the country since 1992." The December USDA crop report showed that 8 percent of the corn crop is still in the field in the 18 highest producing states in the country. Soybean crop Hart said 2009 was a record year for soybean production as well, with 77.5 million acres harvested and a U.S. average of 43.3 bushels per acre. The continual demand for soybean exports has helped keep the prices up. "China has been a big help to the soybean market. The demand for soybean oil in China has continued to increase," he said. "Exports hit a record of 1,325 million bushels and ending stocks are very low. Exports could be even higher next year." The 2007 prices for soybeans were at a $10.10 high, followed by $9.97 in 2008, and so far in 2009, have been near $9.50. Harvest on the 2009 soybean crop was the slowest since 1985. While there are still some soybeans out there, Hart said most are harvested. He said some soybeans have also had mold concerns and low test weights. Hart noted information from Iowa State's Charles Hurburgh and Roger Elmore, in which they discussed the similarity between storing grain to storing any other food products. Farmers this fall have been dealing with moisture issues, which also leads to a concern with storage. "As the temperature rises, the moisture content must decrease in order to prevent storage concerns," said Hart. Problems with grain quality will lead to pricing issues as well, according to Hart. "With pressure from other countries in soybean production, we must be sure our crop is properly stored for sale in the future," he said. Future production The Renewable Fuels Standard (RFS) continues to push production as well. "It seems that there will continue to be high demand for grains, especially corn, with producing renewable fuels," he added. Biofuel production is also on the increase, but most production plants are not running in full capacity. Hart said further research is being done to find new ways to produce advanced biofuels from products like sugarcane. While the U.S. is the largest producer of ethanol, it is also the largest importer of ethanol, in order to meet the demand and the RFS. Some changes to the RFS are expected in the future and a higher ethanol blend may be on the way. By 2015, 5 billion bushels of corn will be needed by the ethanol industry in order to meet the standard. This will also continue to push corn pricing. The continual rise in grain prices has also continued a decrease in livestock numbers and a decline in the demand for feed. 2010 outlook Hart thinks 2010 will be another record year, predicting 89 million acres of corn will be planted, up 2.5 million acres from 2009. He expects 76 million acres of soybeans to be planted. "Who is the biggest loser with the increase in corn and soybean acres? Unfortunately, it looks to be the wheat industry, losing a likely 56 million acres," he said. Hart predicts prices will stay strong as well, with soybean prices averaging $9.20 per bushel and corn averaging $3.55 per bushel. Jennifer Bremer can be reached by phone at 515-833-2120, or by e-mail at jbremer@hpj.com.
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