4 months ago From Central Illinois Farm Network
The large corn crop is putting a lot of downside pressure on prices
BLOOMINGTON - We all knew the higher corn and soybean prices would give way to more normal price levels some day and that day has come.
"We did end up with a very large corn crop in 2013. We're expecting it to be close to the November forecast," University of Illinois Professor Darrel Good told those attending Friday's Illinois Farm Economics Summit in Bloomington hosted by the U of I at the Doubletree Hotel and Conference Center.
The large corn crop is putting a lot of downside pressure on prices and we are starting to see more corn being produced around the world, according to Good who doesn't expect worldwide production to ease if prices go lower.
"I think the larger crops are here to stay and will provide more competition for the U.S. market."
This year, USDA has penciled in an increase for feed and residual use. With a bigger crop and lower prices, the residual category tends to get bigger. Good reminded the audience that farmers did not plant as many acres in 2013 as intended.
Good expects next year's corn price to be about 50 cents lower. The market is currently offering higher prices for the 2014 crop than the 2013 crop and more competitive new crop soybean prices could take some corn acres away next year.
Unless 2014 production is interrupted, corn prices are not expected to recover.
"The movement in prices is not a surprise. It's what we have been expecting and others have been expecting," added Good.
The 2006-2013 average price for soybeans is $11.52 and some are wondering how much lower soybean prices will go.
"Production has been a little more stable. While we are looking at a large crop this year, it is not a record crop. Soybeans are still kind of on that balance beam. Now we're wondering how good that South American crop will be."
Good estimates next year's soybean prices at $11.50, something he says is not the end of the world but does show the price direction is moving lower.