Growers Look Ahead to 2019; Corn and Soybean Price Outlook
Hoosier Ag Today
By: Eric Pfeiffer
As growers wrap up the 2018 harvest, many are already looking forward to the 2019 growing season. Unfortunately, there are still a lot of unanswered questions about next year. Will there be a farm bill? Will we be able to come to an agreement with China and end the trade war? Jackson Takach, Director of Economic Research and Business Innovation at Farmer Mac, doesn’t have the answer to those questions, but he gave his best guess for an outlook of soybean prices for 2019.
“If we can open up trade with China, I see a lot of room for soybean prices to run up; 20% or maybe even as high as 25% increase in soybean prices. Absent a deal with China, I think they’re going to hover right around the $7-$8 range.”
He adds that without the China deal more growers will opt for more corn and wheat acres. His outlook for corn in 2019 is in the $3 average range.
“We’re at $3.25 to $3.50 now for the national average, take a quarter out of that. For wheat prices, certainly in the $4-$5 range. It’s definitely a possibility if more people switch back into wheat, especially the upper plains, so North Dakota and South Dakota. I’ve heard people say, ‘I’m never going soybeans again because they’ve been so traumatized by the pull out of all this trade action in soybeans.’ So, those people go back into wheat, you could see that pressure come back into the wheat market down to $4.”
Takach said one thing you can count on for 2019 is higher operating loan costs.
“For every quarter point that the fed raises, the farmer is going to feel that in their operating line. Probably not so much in their land loan as those tend to be fixed for longer periods of time, but the operating loans are going to be up for renewal every year and that interest rate is going to go up with the announcement of the fed. So, if the fed raises, farmers are going to pay more. It’s going to be passed through almost 100 percent to the farmer.
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