Impact of COVID-19 on Agriculture

WASDE Report Offers Farmers Crop Price Increases

News / Newsline October 13, 2020

Credit: United Soybean Board/CC BY 2.0 

The latest forecast from the Department of Agriculture predicts smaller crop sizes and a potential for record soybean exports. Micheal Clements shares how those changes are having a shocking impact on markets.

Clements: The latest World Agriculture Supply and Demand report from the Department of Agriculture brings potential for increases in the price farmers receive for their crops. American Farm Bureau Federation Economist Shelby Myers says USDA lowered old crop ending stocks for corn, changing the landscape of supply and demand.

Myers: The carryover of 1.9 billion bushels of corn and changes to the corn area planted from 97 million acres to 91 million acres also put the new crop year at a different starting line for supply. With corn supply changes and demand changes overall, ending stocks are expected to be about 2.1 billion bushels, and hopes of a larger price rally will really fall on the need for corn demand to pick up its pace.

Clements: For soybeans, 2019/20 ending stocks were lowered to 523 million bushes, and demand was slightly increased.

Myers: Rolling into the 2020/21 marketing year, USDA cut soybean area planted by 700,000 acres and lowered the amount to be harvested. The 2020/21 demand is good news, 2.2 billion bushels for soybean exports that’s currently estimated would be the largest on record if achieved.

Clements: Myers says the report resulted in a market rally for corn and soybeans.

Myers: Unfortunately, the reactionary price bump came later than what would have been ideal for many farmers, especially those who have been marketing the old crop in what ultimately ended up being a tighter than expected supply environment. But the price rally is certainly welcome news. Any potential yield changes that could impact supply favorably, combined with some new hope for demand increases, would help keep these market impacts supported.

Clements: Find a complete analysis on the Market Intel page at fb.org. Micheal Clements, Washington.

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