Korves expects soybean prices to hover in the $11 to $12 per bushel range in the next few years. Couple that with the expected reduction in corn prices, and he says the profit potential of the two crops will be fairly similar.
Korves, who formerly was an economist for the American Farm Bureau Federation, says the expected reduction in corn price is mainly due to ethanol production leveling off in future years. Ethanol was the main reason corn prices shot up dramatically. Increased corn yields and corn production in southern states and North Dakota and countries like the Ukraine are also playing a role, he says.
Strong soybean exports along with increased use in the U.S. will help boost soybean profitability
Pro-Exporter Network predicts U.S. soybean exports will increase by 41 million bushels during the 2013-14 marketing year to 1.375 billion bushels. Soybean crush will jump by 45 million bushels to 1.675 billion bushels. "This is a good opportunity for soybeans," Korves says. "We have pushed up corn acres and corn prices in recent years and we've run into a price problem. Now, more profitability is returning to soybeans."
Grant Kimberley, ISA director of market development, recently returned from an ISA-led trade mission to China. He says the world's most populous nation "will continue to buy more soybeans, corn and pork." Kimberley farms with his father in central Iowa and is optimistic that Iowa can grow more soybeans.
John Anderson, deputy chief economist for the American Farm Bureau, says retail demand for meat is "OK" despite prices for almost every species at or near record levels. He says pork and poultry production is expected to increase 2% to 3% in the near future. According to USDA, there were 20.4 million hogs and pigs in Iowa as of June 1 and 52.5 million layers in May. "This should be a positive for soymeal demand," notes Anderson. "High production of hogs and poultry will be a positive for the soybean market over the next several years."