COLUMBIA, Mo. — The Food and Agricultural Policy Research Institute (FAPRI) at the Univ. of Missouri, in its five-year Baseline Update for US Agricultural Markets released Aug. 28, forecast lower prices for wheat, corn and soybeans in 2019-20 and 2020-21 as trade issues and ample supplies take their toll on US agriculture.
“Excessive spring rains, trade disputes and African Swine Fever (ASF) have disrupted agricultural markets,” FAPRI said. “In spite of reduced 2019 US corn and soybean production prospects, prices for many commodities are under downward pressure because of the many factors that have weakened demand.”
The current outlook was prepared the week of Aug. 19, using the US Dept. of Agriculture’s August Crop Production data. FAPRI noted several assumptions and uncertainties in updating the outlook from April. China’s 25 percent retaliatory tariff on US soybeans and other farm products were assumed to remain in place, and the economy was assumed to evolve with slower economic growth in 2019 and 2020 but no recession.
“Assuming a return to more normal weather conditions in 2020, projected corn and soybean production rebounds,” FAPRI said.
Corn production in 2020 was forecast at 14,979 million bus, up 8 percent from 13,901 million bus as the USDA’s August forecast for 2019. Soybean outturn in 2020 was projected at 4,154 million bus, up 13 percent from 3,680 million bus currently forecast for 2019, which is down 19 percent from 2018.
Soybean prices are expected to be pressured by reduced demand from China due to ASF and the ongoing trade war.
“ASF has sharply reduced hog inventories in China, which implies less demand in China for soybean meal and corn as livestock feed,” FAPRI said. “Also weighing on US soybean exports are China’s tariffs.”
Soybean prices paid to farmers were forecast at $7.94 per bu in 2020-21, compared with $8.43 per bu in 2019-20, $8.50 per bu in 2018-19 and $9.33 per bu in 2017-18. Prices were forecast to recover to $8.20 per bu in 2021-22 and climb to $8.58 per bu by 2024-25.
“As with soybeans, projected US corn prices do not increase in 2019-20, even though estimated production is down by half a billion bus from the previous year,” FAPRI said. “Weak export sales and stagnant ethanol use are contributing factors.”
Corn prices were projected at $3.39 per bu in 2020-21, compared with $3.59 per bu in 2019-20 and $3.60 per bu in 2018-19. Corn prices were projected to increase gradually beginning in 2021-22.
Soybean meal prices were forecast to average $298.58 per ton in 2019-20, down 3.7 percent from $310 per ton this year, and falling further to $283.36 per ton in 2020-21 as production continues to climb along with higher soybean production before rising in 2021-22.
Soybean oil prices in 2019-20 were projected at 30.61c per lb., up 9 percent from 28 cents forecast as the average for the current year. As with soybean meal, the average price was projected to fall further in 2020-21 before recovering in 2021-22.
FAPRI forecast real GDP growth between 1.6 percent and 1.9 percent from 2020 through 2024, compared with 2.6 percent expected in 2019. Consumer Price Index inflation was forecast at 2.2 percent through 2024, rising from 1.9 percent in 2019.
“Markets will continue to evolve as we get more information about the size of the 2019 crop, the state of trade disputes and the health of the general economy,” FAPRI said.