Crops > Outlook & Prices > Outlook & Prices
January 2022
Summarizing the 2021 crop year
The first big USDA reports of the calendar year always summarize the previous growing season and outline the demand picture for the rest of the marketing year. That summary for 2021 confirmed the large crops harvested this past fall, despite the weather challenges. The usage projections show some weakness in international sales, but strength in domestic utilization. Prices remain on course to provide the best returns corn and soybeans have captured since 2013. Overall, from the crop perspective, 2021 turned out to be a great year.
While the ongoing drought raised concerns this summer, crop yields were outstanding. For corn, the national average yield was 177 bushels per acre, a record and roughly a 5.5 bushel jump from 2020. Several states also registered record corn yields, especially in the eastern Corn Belt (Figure 1). Iowa corn yielded a record 205 bushels per acre. Drought impacts did show up in the corn yields from the Dakotas and Minnesota, but those losses did little to temper national corn production.
The pattern for soybean yields was similar (Figure 2). Although the national average yield was not a record, it was still a strong production year for soybeans. For every state east of the Mississippi that USDA tracks for soybeans, the state average yield was a record. Iowa and Nebraska also joined the record list, with Iowa’s soybean crop averaging 62 bushels per acre. But as with corn, the drought significantly limited soybean yields in the Dakotas and Minnesota.
For the 2020 marketing year, corn usage exceeded production, leading to increasing prices. For 2021, production jumped by roughly a billion bushels, while usage only grew by 14 million bushels. However, corn prices continued to improve. Based on the final field surveys this fall, USDA increased corn plantings by 100,000 acres. Combined with the yield data in Figure 1, that led to a 53 million bushel increase in estimated production, compared to last month’s estimate. So corn supplies continued to grow. Estimated corn usage also got a boost, but it was much smaller. Corn usage for ethanol was increased by 75 million bushels, as ethanol is competitively priced versus gasoline. Food, seed, and other industrial usage of corn was bumped up by 5 million bushels as the corn sweetener market has strengthened recently. However, corn export projections were reduced by 75 million bushels. As of early January, corn export sales are down approximately 9% compared to last year at this time. Most of the loss in sales is coming from sales to smaller markets and unknown destinations. Partially offsetting those losses are increased sales to Canada and Mexico, as the drought extended into those countries and diminished their feed crop production. Looking across the corn balance sheet, the January adjustments were relatively small. Thus, USDA maintained its 2021-22 season-average price estimate at $5.45 per bushel.
The soybean data again tells a similar story to corn. For the 2020 marketing year, usage exceeded production and prices rose. For 2021, production grew, usage slipped, but prices remained robust. The 0.2 bushel per acre increase in yield added 10 million bushels in production, raising the total to 4.435 billion bushels. The market once again had plenty of soybeans with which to work. The usage adjustments for the 2021 projections are small, changing by only a million bushels. Domestic crush was held steady at 2.19 billion bushels, roughly 50 million bushels above the number from 2020. The export projection was also unchanged, at 2.05 billion bushels, down 215 million bushels from 2020. The decline in the projection is based on the current pace of export sales. Compared to last year, soybean sales are off 23.5%. China has pulled back the most, but there are double digit cuts for Mexico, Taiwan, and several other countries. Despite the drop-off in export sales, soybean prices have held, being supported by concerns about crop losses in South America. Based on the price strength, USDA raised its 2021-22 season-average price estimate by 50 cents, to $12.60 per bushel.
In total, the January reports didn’t change the balance sheets much. But they mainly confirmed the earlier estimates from the fall. Supplies are ample. Domestic usage, especially related to biofuels, continues to grow. But international sales are now lagging under the weight of our higher prices and increased competition from the rest of the world. This set-up bodes well for farmers during the early part of 2022, but it also highlights concerns for the second half of the year. If the export slide continues to deepen, crop prices will likely follow, especially if weather conditions cooperate during planting. The prospect of another year where production exceeds usage will eventually erode price support. Profitability is here right now, but remember it is fleeting. With current futures prices for the 2022 crop holding above $5.50 per bushel for corn and $12.75 per bushel for soybeans, there are good opportunities to lock in good prices.
Chad E. Hart, extension economist, 515-294-9911, chart@iastate.edu
