ADVERTISEMENT

ADVERTISEMENT

US soybean, corn prices seen dropping below production costs

SIEM REAP, Cambodia - U.S. new-crop soybean and corn prices are expected to drop as much as $1-$2 per bushel below production costs in the coming months as near-record domestic output adds to bulging world supplies, industry officials said on Thu...

1868118+Corn Field.jpg

 

SIEM REAP, Cambodia - U.S. new-crop soybean and corn prices are expected to drop as much as $1-$2 per bushel below production costs in the coming months as near-record domestic output adds to bulging world supplies, industry officials said on Thursday.

Mounting losses could prompt the country's farmers to try and maximize their yields in order to meet their costs, the officials added, which in turn would further drag on benchmark U.S. futures that are currently mired near multi-month lows.

Chicago new-crop soybean futures will likely drop below $8 a bushel and corn to $3 a bushel, the officials said on the sidelines of an industry meet in Siem Reap. It costs $8-$9 to produce one bushel of soybeans and $4-$5 for a bushel of corn.

"We are going to see a lot of red ink out there," said Jim Call, former chairman of United Soybean Board who farms soybeans in Minnesota. But farmers have no choice but to continue producing more, he added. As much as 97 percent of the farms in the United States are family owned.

ADVERTISEMENT

"Futures are under pressure but we are also seeing the basis falling," said Call. In fact, cash prices for new-crop beans in some areas are already 65 cents below Chicago November futures contract, he added.

Soybean futures hit their lowest since 2009 at $8.55 a bushel this week as rains boosted U.S. output prospects. Higher South American supplies have also dented prices.

Corn, down 5 percent so far this year, is trading at $3.76 per bushel, just 30 cents above its lowest since October.

"We had a record harvest last year and looking at near-record production this year which is after two years of all-time high production in South America," said John Baize, president of consultancy John C. Baize & Associates in Washington.

The U.S. Department of Agriculture has pegged domestic corn and soybean harvests above expectations this year. It forecast corn production at a 13.686 billion bushels, with average yield projected at 168.8 bushels per acre.

The 2015-16 soybean harvest was pegged at 3.916 billion bushels based on an average yield of 46.9 bushels per acre.

"Last year we produced 60 bushels of soybeans an acre and it cost us $10.12 a bushel and going by current prices we will need the yields to go up to 73 bushels per acre," said Jim Miller, vice chairman of the U.S. Soybean Export Council who farms corn and soybeans in Nebraska. "We are not going to get that."

Related Topics: CORNCROPSSOYBEANS
What To Read Next
Commercial farmers in Nebraska, the Dakotas, and Minnesota start using drones for spraying, seeding.
This week on AgweekTV, we hear about North Dakota corporate farming legislation and about WOTUS challenges. Our livestock tour visits a seedstock operation and a rabbit farm. And we hear about new uses for drones.
Kevin and Lynette Thompson brought TNT Simmental Ranch to life in 1985. Now, their daughter, Shanon Erbele, and her husband, Gabriel, are taking over the reins, and their sale is for Feb. 10.
Gevo will be making sustainable aviation fuel in Lake Preston, South Dakota. Summit Carbon Solutions plans to capture carbon emissions from the facility.