Future of corn market bleak

By Jeff Brown and DeLoss Jahnke

Scott Irwin hopes USDA’s prediction that U.S. corn acreage will reach the second-highest level ever is misleading.

The ag department’s recent prospective plantings report found U.S. farmers intend to plant 97 million acres of corn this year. If realized, that could sink market prices even lower than the coronavirus outbreak had already, said the University of Illinois ag economist.

One reason for optimism, though, Irwin pointed out that USDA conducted the surveys for that report prior to many state governments issuing shelter-in-place orders, which caused substantial losses in ethanol demand.

“It really was a different world,” Irwin told the RFD Radio Network. “The markets have really swung in favor of incentives, at least here in the heart of the Corn Belt, toward planting soybeans. So we may get some relief, depending on how much switching we see.”

Farmers still have in storage large amounts of corn from last year. Producing average yields on more acres this year would exacerbate the glut.

“If we have a normal growing season and with the acreage we have and the demand destruction that's on the horizon, we're looking at massive oversupply of corn for the 2021 year,” Irwin added. “(We’re) just basically arguing about how big will it be at this point.”

U of I Farm Management Specialist Gary Schnitkey adjusted the prices he uses to forecast budgets for this year to $3.30 per bushel for corn and $8.40 a bushel for soybeans. Both are considerably lower than last year.

“That makes all of our budgets look very negative,” he said. “Something has to happen along the way. Otherwise, we're going to see some serious financial deterioration on farms.

“Some of those things could be another round of government aid or something along that line, but it has to be larger than the last year.”