Farm Horizons
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Feb. 8, 2016
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Page 22
Ample supply suppressing corn,
soybean prices
By Gabe Licht
As of Jan. 28, corn and soybean prices stood at $3.25
per bushel and $8.33 per bushel, respectively, according
to the United States Department of Agriculture.
Those prices compare to peak monthly average prices
of $7.54 per bushel of corn and $16.60 per bushel of soybeans in August of 2012.
“Corn, soybean, and wheat prices are all off in Minnesota and everywhere in the country,” said Ed Usset, a
grain marketing specialist with the University of Minnesota Center for Farm Financial Management. “. . . The
fact is things started coming unglued in 2014.”
Usset looked back at the past decade to provide a historical context.
“We had a wonderful period in the latter half of the
2000s, right up to 2013,” Usset said. “Demand was growing very fast.”
Usset tells his students they need to know three words
to understand what was driving that growth.
“One is ethanol,” Usset said. “The problem is it leveled
off five years ago. The other two words are Chinese imports. China is importing soybeans. That has been grow-
ing for 15 to 20 years. It’s still growing despite what we
read about China.”
In 2016, China will import as many soybeans as the
entire US produced 20 years ago.
“How can they do that? Over that same period, South
America – namely Brazil, Argentina, and Paraguay – are
increasing soybean production and are s big or bigger
than the US and have filled that void.”
Ethanol and exports to China created a slightly demand-driven market.
“It came to an end a couple years ago,” Usset said. “We
did have three years in a row – 2010 to 2012 – that were
substandard for corn, soybeans, and wheat crops. 2012
was one of the toughest droughts we’ve had in the last
century. We had demand in the background and supply
was missing the mark.
“Starting in 2013, 2014, and again last year, demand
has slowed,” Usset continued. “It hasn’t fallen, but it has
slowed. Supply caught up. 2014 and 2015 were wonderful
crops in general. We set records in Minnesota in 2015.
The country set records in 2014. With back-to-back wonderful years, supply finally caught up to demand.”
Advances in biotechnology have helped increase
yields.
“Increased technology is continuing the trend of the
green revolution,” Usset said. “If you chart yields, you’ll
note yields are increasing. Not every year, but in general,
you can use a ruler and see an uptrend. Biotechnology is
Farming is your livelihood, and its our
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