Ag economists predict another solid year for farmers across the Upper Midwest as corn and soybean futures remain historically high.
This year’s production market has risks but still presents farmers with their best opportunities in a lifetime, said Iowa State Professor of Economics Chad Hart on April 6 during the Wisconsin Bankers Association’s Agriculture Banking Conference. According to S&P Global, corn prices increased 45 percent in 2021 and are likely to be supported this year by strengthening ethanol and export markets.
U.S. Department of Agriculture Chief Economist Seth Meyer said in late February that strong commodity prices for soybeans, wheat, cotton and beef products will push ag exports to $183.5 billion this year, an $11.3 billion jump from 2021. Soybean prices will remain historically high due to strong domestic demand and greater desire for renewable diesel capacity, he added. “In contrast, corn prices are expected to decline slightly with larger corn acres and an expected return to trend yields leading to slightly higher ending stocks,” Meyer said. “Strong global demand will moderate the price decline on what is expected to be a large crop under normal weather assumptions.”
This comes on the heels of the prodigious U.S. corn yield in 2021 — 177 bushels per acre, a record high, according to the Farm Journal. The states of Wisconsin, Iowa and Nebraska set records for bushel per acre yields. Producers reaped the benefits of last year’s strong yield. As reported by the Minneapolis Star Tribune, the median farm profit in Minnesota last year was about $166,000, a near-record high, despite drought and supply-chain challenges.
As the war between Russia and Ukraine continues, key questions on the impact the conflict will have on global commodities markets — in a typical year, the two countries account for more than one-quarter of global wheat exports — remain unanswered. Speaking April 6 during the WBA conference, Farmer Mac Economist Greg Lyons said the conflict will likely last until at least late in the second quarter and poses a number of risks, including to Ukraine’s winter wheat crop; through the alleged intentional flooding and damage to farm machinery and railways done by Russian forces; and the likelihood that Ukraine will not see much economic growth under Russian occupation.
The impact of the war on U.S.-based producers remains unclear: If Ukraine produces more commodities this year than currently expected, commodity prices could fall. If production levels in Ukraine significantly drop this year, as expected, the loss of supply will likely cause increased commodity prices.