U.S. farmers will likely see price incentives ahead that will reward planting more corn acres at the expense of soybeans in 2010, says Chad Hart, Iowa State University ag economist.
“Current futures prices are signaling the market would like to see more corn acres than beans,” says Hart. “If those price signals continue, I think we’ll see a shift in acres from soybeans to corn.”
Unfortunately, both corn and soybean prices are currently lagging due to record U.S. production in 2009, says Hart. However, with a record South America soybean crop probable for 2010, soybean prices are likely to drop more than corn prices, he adds.
“The good news for U.S. corn growers is that when South America increased their soybean acres this season, their corn acres slipped,” says Hart. “For now, U.S. corn exports are behind the five-year average pace, but things are moving a little bit faster than they were last year.”
Recent futures prices are the basis for Hart’s projections for increased corn prices for 2010. “I think season-average corn prices will end up about $3.50/bu. for the 2009 crop year,” says Hart. “For the 2010 crop year, I think season-average corn prices will improve to about $3.80/bu.”
Current economic indicators also point to “a pretty good outlook for ethanol to be profitable in 2010,” says Hart. “If that’s the case, it could help boost corn prices a bit more.”
On the other hand, current soybean futures prices are signaling lower prices ahead. “When I do the same calculations for soybeans, the price drops 40¢/bu. from 2009 to 2010,” he says. “My projections for season-average soybean prices in 2009 are about $9.20/bu., but only about $8.80/bu. for 2010.”
Challenging spring weather conditions would be another reason farmers might expect a possible corn price increase, points out Hart. “Right now, our soil moisture levels may have us set up for another cold, wet spring and possible sloppy planting conditions,” he says. “If spring weather looks like it will delay planting, we may see another price boost in April or May. So, if you have good, quality corn, it may pay to keep some on hand for a possible price boost.”
Iowa, Wisconsin and southern Minnesota are the three areas most likely to have a wet spring this year, says Drew Lerner, meteorologist and owner, World Weather Inc. Other areas of the Corn Belt might actually have more opportunities for doing fieldwork ahead of planting this year than last year, he adds.
“Currently, the northwestern Corn Belt has a lot of moisture locked up as snow as we head towards spring,” says Lerner. “On the other hand, prevailing El Niño conditions may give us enough warmth for the rest of this winter and in early spring to melt some of that snow sooner than last year and reduce the spring flood potential.”
The outlook for spring temperatures are still mixed, however, says Lerner. “There won’t likely be constant rain this spring, so the big question is how quickly will it warm up?” he says. “If we lose the current El Niño conditions earlier than expected, then we might not see enough heat come in to dry out soils long enough to do timely fieldwork.”
This season’s current weather pattern most closely resembles 1902-1903, points out Lerner. “The parallels between the summer and autumn of 1902 and 2009 were amazing,” he says. “We had similar weather conditions with minimal sun spot activity and an ongoing El Niño event.”
Using1902-1903 weather as a guide, Lerner says he expects 2010 to bring less-frequent summer rainfall to the Corn Belt than last summer. However, summer temperatures will likely be cooler and rainfall patterns should “at least be timely enough to expect a pretty good crop-production year,” he adds. “In comparison, the lower parts of the Midwest and much of the southeast will probably see some summer dryness that might reduce yields somewhat.”
Last year’s excessively wet finish to the Delta and southeastern states crop season was the second consecutive year with excessive precipitation, notes Lerner. He adds that similar two-year wet weather couplets like that are usually followed by a drier finish in the third year.
Thus farmers in this region should expect a dry finish to summer this season. “There will most likely be a dry bias during August through October, especially in the Delta and interior part of the southeastern states,” he says. “It’s possible that we might also see colder weather come in sooner this fall than it did last year.”