Look for higher prices, expanded acreage and increased export demand for corn and soybeans over the next 10 years.
That's what USDA foresees in its recently published long-term commodity projections. The forecasts cover 1997 through 2007.
According to USDA, corn prices should bottom out at $2.55/bu in '99 and then strengthen to $3.10 by 2007, as tightening market conditions push the stocks-to-use ratio to under 6%.
The average soybean farm price is expected to rise to $7.25/bu by the end of the 10-year period. That's after a low of $5.65 projected for 1999-2000.
Corn acreage should reach 84.5 million by 2007, slightly higher than peak levels during the mid-1970s and early 1980s export boom. Soybean acreage should stay steady at around 70 million through 2007. But both crops are expected to further expand in the fringe Corn Belt areas of the South and Plains states.
USDA projects corn yields to increase 1.7 bu/acre/year, although weather is a weighing factor. Soybean yields should trend up at 0.5 bu/acre annually over the next 10 years. That means the nationwide average yield will increase from 39.4 to 44 bu/acre.
Annual corn production, now a little over 9 billion bushels, will grow steadily, hit a new record after 2002 and surpass 11 billion bushels by 2005. Soybean production will move from its current 2.7 billion bushels to just over 3 billion.
Total corn demand should grow sharply throughout the period. Feed and residual corn uses are expected to increase 550 million bushels, with the largest gains in the earlier years of the 1997-2007 period.
Annual corn exports may increase 1.1 billion bushels, matching the previous record high of 2.4 billion bushels in 2000 and surpassing 3 billion by 2007. That's assuming the U.S. stays the major corn supplier - and that China becomes a major importer.
Food, seed and industrial corn use should grow by 425 million bushels over the 10-year period. Corn used for ethanol should sharply rebound and exceed the '94 peak use by 2000, then expand at a somewhat slower pace.
A rising foreign demand for soybeans will produce an upward trend in U.S. soybean exports, from the current 980 million bushels to 1.1 billion by the 2007-08 marketing year. Increasingly tight supplies and rising prices will slow the annual growth, however.
Soybean oil prices should stay flat for the next four years at around 24.5 cents/lb. Solid foreign demand should pull U.S. oil exports up to 3 billion pounds by 2001-02. Oil prices may climb to about 27 cents/lb by 2007-08, which could restrict exports.
Soybean meal prices will push down in the near term, but will firm as soybean supplies tighten through 2007-08. U.S. soybean meal exports may peak in 1999-2000, but will stay relatively flat afterward because of South American competition.
Ending corn stocks should climb above 1 billion bushels over the next few years but, by 2007, end at less than 700 million.
Soybean ending stocks will also drop by 2007 - 205 million bushels compared to the current 255 million.