Christopher Doering reported in today’s Des Moines Register that, “Farmers in Iowa and across the Corn Belt struggling to reach profitability this year got some good news from the U.S. Department of Agriculture on Tuesday.
“The USDA said producers are expected to grow a record 14.43 billion bushels of corn, and 3.8 billion bushes of soybeans, which would be the third best crop ever. While the bumper crops are likely to cap the possibility of a large rebound in prices anytime soon, the federal government surprised the market by increasing its estimates for feed usage and exports. Corn and soybean prices soared following the prospect of higher-than-expected demand.”
Mr. Doering added that, “USDA forecast average farm prices for corn and soybeans at $3.35 and $9.10 a bushel, respectively, in 2016. A year ago, cash prices for corn were $3.60 and soybeans $8.85. Iowa was the nation’s biggest producer of both crops in 2015.”
Today’s article noted that, “A prolonged slump in commodity prices has squeezed farm income, forcing some producers to cut spending or turn to their banks for help. Farm income this year is forecast to fall to $54.8 billion, its lowest level since 2002 and down 56 percent from the high of $123.3 billion just three years ago, according to the USDA.”
Jesse Newman reported in today’s Wall Street Journal that, “U.S. crop prices surged Tuesday, extending an unexpected run in agricultural prices that has drawn in big investors like hedge funds.
“The gains promise much needed relief for a farm economy battered by the slump in prices for major row crops over the past three years.
“At the same time, they could mean higher prices for consumers going into the summer.”
Ms. Newman explained that, “The catalyst was a closely watched government report that said rising exports would eat into the glut in farm commodities by next year. The big surprise was a projection that U.S. soybean inventories would fall by a steep 24%.”
“Corn futures rose 3.3% to $3.81 a bushel,” the Journal article said.
And Reuters writer Mark Weinraub reported yesterday that, “May 10 World and U.S. soybean supplies will be tighter than expected for the next two years due to reduced harvests in South America and rising global demand, the U.S. Agriculture Department said on Tuesday.
“The report jolted the soy market, with the most active Chicago Board of Trade futures soybean contract surging 4.5 percent and hitting its highest since August 2014. Soymeal futures rallied to a 16-1/2-month peak.”