The HAT seminar at the Farm Show on Wednesday featured the annual economic outlook from Purdue Ag Economist Chris Hurt. Dr. Hurt had one clear message: plant soybeans. He declared, “Soybeans pay the bills in 2018.” It all comes down to supply and demand. For corn, we have a lot of supply and slow demand. As a result, Dr. Hurt says it will be more profitable in 2018 to grow soybeans than corn, “When we look at the budgets, we see a $60 per acre stronger return on soybeans than corn.”
Hurt said the world market is sending the U.S. farmer a message: they want more soybean protein. He stated, “The growth of the world market for soybeans is about 3% per year, while on corn it is about 1%. Demand is growing faster on soybeans, and that is giving us much better prices for soybeans.” Even in the energy sector, the demand will be for soybeans for biodiesel and sluggish demand for corn for ethanol.
Hurt says producers will need to continue to lower their cost of production in 2018, something they have been doing over the past few years, “We have seen cash rents fall between 9% and 14% from their highs, land values in Indiana are down about 14%, and fertilizer prices have dropped almost 40% from 2010.” Hurt added that producers have been reducing other capital expenses such as machinery and buildings.
The long-range forecast is that by 2019 corn supplies will have fallen and that prices may move back to profitability.
Watch Dr. Hurt’s presentation on the Hoosier Ag Today facebook page. The seminar was made possible by Farm Credit Mid-America