LIMA — A speaker at Thursday’s 2020 Ag Outlook Day suggested that the outlook for corn and soybean markets is “positive, but concern remains.”
Ben Brown, assistant professor of Professional Practice in Agricultural Risk Management at OSU, said the Phase One Trade Deal with China will increase U.S. exports but still leave farmers wanting for more.
“It’s going to be positive, but it’s still going to leave a shortage of where we need to be to meet our foreign exports the last couple of years,” Brown said in his presentation. “They don’t have to buy all this corn from the United States, this just has to come from somewhere in the world.”
That competition is one reason Brown was wary with his pricing predictions for 2020-2021. His projections reflect that corn farm cash price, the final price farmers will receive for a commodity, will decrease from $3.95 to $3.53 in 2020-2021 while soybeans will fall from $9.10 to $8.54.
By 2020, China had planned to mandate that every vehicle would run on 10% ethanol, as the U.S. does, but that mandate was suspended, stifling U.S. plans for corn used for ethanol.
“The Chinese in 2017 announced that by 2020, every vehicle in China would run on 10% ethanol, the same as here in the United States, but they only had enough production capacity in China to reach 3%,” Brown explained. “Ethanol producers here in the United States and corn marketers, we were looking at that gap licking our chops, but it never caught on with the political spectrum to where three weeks ago in the initial steps of this Phase One Deal, China rolled it completely back.”
For soybean farmers, they may not even see the impact from the deal until October due to competition from South American exports, which increase from April through September. He said Brazil is on track to produce 4.520 billion bushels, raising the question of just how many soybeans China needs by the time U.S. harvest season rolls around.
However, despite Brazil’s success, Brown said he thinks the Phase One Trade Deal with China is what secures its interest in the U.S. market.
“Export numbers, I think they’re going to creep up from where they are right now,” he said. “I have hope that China is going to buy corn off the world market. I think they’ll commit to buying that from the U.S. now that we have the strict Phase One Trade Deal. I’ve got foreign exports up 100 million bushels over where USDA is right now. We’ve had two good weeks right now. The last two weeks corn exports have been really strong.”
Other presenters included Dr. Ian Sheldon on global trade policy, Aaron Wilson on the weather outlook, the Allen County Soil and Water Conservation District on a water quality update, Elizabeth Hawkins on eFields and Jeff Stachler on weed control.
Reach Tara Jones at 567-242-0511.