GOSHEN — Things are going to change for Indiana agriculture.
High corn prices will go away, but the tradeoff will be a massive crop this year. That was one of the points made Friday morning, Sept. 13, in a webinar by Corinne Alexander, Purdue agricultural economist.
“The 2012 drought is one of the worst droughts on record,” Alexander said. “What that resulted in was very high prices.”
This year, though, “We are going to have a massive crop and ample corn,” dropping corn prices to somewhere between $4.40 and $5.20 per bushel, she said. The U.S. Department of Agriculture projects a 13.8 billion-bushel crop in the U.S. off 97 million acres, Alexander said.
We’re also poised to have a large soybean crop this year, estimated at 3.15 billion bushels in the U.S. “This would be the fourth largest soybean crop on record” and up from last year, though down from the record 3.5 billion bushels of 2009, Alexander said.
Soybean prices are expected to be somewhere between $11.50 and $13.50, Alexander said.
“We are in a world where we know that supply of these crops are going to catch up with demand. Looks like this is the year for corn, probably next year for soybeans,” she said.
The good news for grain growers is the costs to plant next year’s crop will be lower. Overall input costs for the corn crop should be about 91 percent of 2013’s costs next year, and soybean costs will be 94 percent of this year’s costs.
With the drop in grain prices, it will cost livestock producers less to feed their animals. Pork, chicken and turkey production should all rise 3 percent next year, with egg production expected to go up by 1 percent, Alexander said. Milk production should be up but prices should be stable, she said.
The only reduction in output for 2014 will be in the beef industry, even though U.S. per-capita meat consumption is expected to rise.
“The beef sector is under major pressure,” she said. “The current size of the U.S. cattle herd is back to a size we have not seen since 1952,” thanks to the ongoing drought in the major beef states.
WHAT WILL HAPPEN TO FARMLAND?
After a quick spike in Indiana farmland values, Purdue’s economists generally don’t expect that to continue. “We don’t anticipate farmland values will continue increasing like they have,” following a rise to this year’s average of $7,446 an acre. Next year they expect values to be relatively stable, anywhere from a 2 percent decline to a 7 percent rise.
In the long term, Alexander said, “in general I hear a lot of people pessimistic about farmland values,” and she’s pessimistic, too.
There’s a similar projection for next year’s cash rents, which Purdue’s ag economists expect to come in anywhere from 1 percent below this year’s level to 4 percent above it in 2014. After that, though, prices may drop in 2015 and 2016 as the grain markets equalize.