Grain Outlook Dims Some but Still Bright
Published: Friday, September 17, 2021
Corn and soybean growers could see a drop in net income next year, but things still look good for them financially.
That was the assessment from economists at Purdue University in response to the latest USDA crop estimate this month.
USDA is forecasting yields for corn and soybeans this year to be the second highest ever in the nation from a recent slight improvement in drought- like conditions in major producing states like Minnesota, North Dakota and South Dakota.
According to USDA, ending stocks especially for soybeans are still projected to be relatively tight because of demand from other countries like China predicted to remain strong.
Lower than normal supplies will help maintain this year's sharp rise in grain prices, which experts believe could soften a bit heading into next year.
"Things don't look too bad," said Jim Mintert, a farm economist and director for the Center of Commerical Agriculture at the West Lafayette campus.
Michael Langemeier, a farm economist and associate director for the Center of Commercial Agriculture, said net farm income in 2021 for farmers in west central Indiana, for example, averaged $218 per acre.
That's not quite as high as 2012, when the farm economy nationwide was approaching the tail end of a several-year boom.
However, Langemeier said the net farm income levels were still much higher than the per-acre average of $125 in that part of the state in 2020.
He said $125 of net income per acre is still good and well above the levels of 2014 and 2015, when the farm economy bottomed out.
Langemeier said putting a dent in net farm income projections is inflation this year, particularly in areas like fertilizer and cash rent.
As a result, the break-even point for farmers has climbed by an astounding 10 percent.
"That doesn't happen very often," he said.
USDA, compared to the previous month, also lowered its projected end-of-the marketing year price of corn from $5.75 per bushel to $5.45 per bushel.
Projected end-of-the marketing year price of soybeans was also reduced by USDA from $13.70 per bushel to $12.90 per bushel.
Langemeier said profit margins for corn especially have gone up, but there's still enough money to be made from soybeans to cause some difficulty among farmers in deciding which crop to plant next year.
"Soybeans are doing a good job hanging in there in terms of competing for acres in 2022," he said.
Mintert said a major question that remains unanswered is how much longer China will continue to be a large importer of grain from the U.S.
He said China bought more corn in 2021 than the previous year from the U.S. but purchased faver soybeans from here.
Mintert said soybean exports have dropped by 35 percent from last year, with China representing about 60 percent of that decline.
"That just illustrates how important Chinese demand for U.S. soybeans is," he said.
USDA also slightly raised its yield projections for corn and soybeans.
The largest projected increase by state for soybeans was 9.3 percent in Minnesota because of drought conditions easing somewhat.
Mintert said USDA is predicting soybean yields in Indiana to set a record at 60 bushels per acre but questioned if that projection will turn out to be accurate because of drought-like conditions in some parts of the state.
"It's been pretty dry in Indiana. That 60 could be a little optimistic," he said.
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