Commodity Classic Corn and Soybean Outlook

An agricultural economist says there are many factors that could impact corn and soybean prices in 2021. Michael Langmeier, Purdue University Ag Economics Professor, presented the outlook during the virtual Commodity Classic event. Langmeier explains the outlook for this year.

“There’s a lot of factors that could impact both soybean and corn prices, and one of the big ones is acreage. What is the acreage going to end up being for both corn and soybeans? I mean, most market analysts expect soybean acreage to increase from last year, certainly, but how much of an increase? Both corn and soybeans are very short in terms of stocks to use, and particularly, soybeans is extremely tight stocks to use. And so, rather than just having one of the crops be relatively short from a stocks to use, you have both crops, and so really there’s incentive to increase both acreages.”

However, the largest incentive right now, he says, is probably to increase soybean acres in 2021.

“This is not new necessarily because it’s been the case several of last years, the fact that it looks like at least in the eastern Corn Belt, that soybeans might be more profitable than corn in 2021. They certainly were more profitable than corn and 2020. And if you go back a few years, 2016 2017 and 2018, soybeans were substantially more profitable than corn. And so, because of the very tight stocks to use, there’s such a wide band around possible corn and soybean prices. This makes it really, really, difficult to make these acreage decisions.”

So, what about prices for corn and soybean in 2021? Langmeier says the ranges are wide.

“The midpoint corn futures price for the December contract is about $4.55, but there’s a 25 percent chance effect could be below $3.85, there’s a 25 percent chance it could be above $5.50, that’s a very large range. The same is true with soybeans and the midpoint price is $12 per bushel. But there’s a 25 percent chance that it could be below $10.50, and there’s a 25 percent chance could be above $13.50. so just a lot of uncertainty related to both of those.”

While it may be hard to make a decision on what to plant in 2021, Langmeier says there is two important decisions to consider.

“Prospects for net returns for corn, soybeans and wheat, are pretty good for 2021, and so that makes making crop insurance decisions even more important. Make sure you have a decent revenue guarantee. This is not the year to reduce your coverage and one of the reasons I mentioned that is premiums are up substantially this year because of the higher prices and the high volatility. You get a lot to lose this year. But another thing that’s extremely important is developing a marketing plan. With a good marketing plan, you can try to protect the price to some extent and try to set a floor or reduce the downside risk.”