Without new demand for corn and soybeans, producers are facing a sideways market plateau that could last 10 years.
Over the next decade, corn could be anchored in a $4.30 to $4.40 trading range and soybeans could be stuck in the same mud at $10.30 to $10.40, says University of Illinois farm management professor Gary Schnitkey.
Market highs over the past two decades can be linked to demand created by alternative fuels, a growing Chinese market and the Ukraine-Russia conflict, notes Schnitkey. But as he looks across the landscape, he doesn’t see a potential market mover on the horizon that could create new permanent demand for corn and soybeans
And there’s other reasons for market pessimism, says Schnitkey, who shared his insights this week with certified crop advisors attending the annual Ontario CCA conference in London, Ont. He says Brazil is sitting on 12 million acres of degraded pasture land that are ripe for corn and soys. There’s also shrinking global population growth, health-related concerns about meat consumption in the developed world; and whether new market demand will emerge from countries and regions such as India, Indonesia or Nigeria to replace shrinking Chinese appetite for corn and soys. And then there’s concern for the existing demand for biofuels as pressure mounts from electric vehicles.
In the face of these challenges, growers are also wresting with higher costs of production, which Schnitkey pegged at $4.60 for corn and $11.o5 for soybean in 2025.
That makes profitability tough and growers will need to do a reset on their farms to manage the price downturn, says Schnitkey. In this report he discusses three strategies to tackle the challenge, including: maximizing profits, not yields; reassessing land rental strategies; and right sizing farm equipment to improve production efficiency. See below.
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