WEST LAFAYETTE, Ind. – Corn and soybeans are doing much better than they were at this point last year, which was marked by a historically wet spring. Some farmers, especially in Indiana and Kansas, switched at the last minute from corn to soybeans to take advantage of a sudden turn in prices.

Those were among the details shared during a July 13 webinar by Jim Mintert and Michael Langemeier, agricultural economists at Purdue University.

Their outlook for yields based on current USDA projections was strong but they weren’t quite as optimistic as USDA in terms of future grain prices.

A lot of their uncertainty rests on whether exports from China and other foreign nations will rebound 20 percent above last year as forecast by USDA. Ongoing tensions between the United States and China and how swiftly the worldwide economy will recover from coronavirus had a lot to do with them questioning future export projections. 

According to USDA, greater than 70 percent of the corn and soybeans are rated as good to excellent. Mintert said a recent string of more seasonable temperatures and adequate rainfall following a dry spell made a difference in the condition of the crop. It is much healthier than last year and in 2017 at this point in the season. “This is a crop that’s off to a pretty good start,” Mintert said.

USDA is predicting a record corn yield despite the amount of corn planted being 5 million acres less than what farmers anticipated going into the season. The dip was from switching to soybeans after corn prices plummeted when demand for ethanol dropped 50 percent at the start of the COVID-19 pandemic.

Mintert said ethanol demand has made a strong recovery but hasn’t fully rebounded and seems to have hit a ceiling from a world still impacted by coronavirus. Profit margins for ethanol are now in the black after sinking into the red in late March. “It looks like those margins have plateaued,” Mintert said.

USDA is projecting a not quite record year for soybean yields with 83 million acres in the ground, less than the 90 million acres planted in 2017 despite the switch from corn in some of the fields.

However, soybean production projected at 4.13 billion bushels is 16 percent higher than what was harvested during the very challenging 2019 season.

They were more hopeful about soybeans for reasons such as ending stocks projected at 10 percent, down from about 17 percent last year. They also felt soybean prices, despite a recent increase, will drop .50 to about the 2-year average of $8.26 per bushel come fall.

Langemeier said he can’t envision how net farm income, projected at a loss this year, will rise into the black unless there’s a substantial unexpected increase in corn prices or a 10 percent increase in projected yields. 

He also felt corn prices sinking below $3 per bushel was not out of the realm of possibility given the amount of uncertainty right now. December corn futures presently stand at $3.37 per bushel.

According to the Purdue University Ag Barometer, farmers recently are a bit more optimistic about their finances but 42 percent still believe this year will be worse than 2019. “Clearly, there’s a lot of concern out there,” Langemeier said.