USDA opened its 97th Ag Outlook Forum on Thursday. During the opening session, USDA Chief Economist Seth Meyer presented USDA’s ag economic and foreign trade outlook. In the last year, Meyer says consumption has exceeded corn and soybean production, tightening stocks and supporting prices.
“But it hasn’t rationed export demand,” said Meyer. “Part of that is an expectation that Chinese demand for things like soybeans is an indication that maybe this hog herd is rebounding in the countries. This is one of the key elements that’s driven prices higher—smaller crops coupled with a spark in export demand.”
Last month, China made some of its largest purchases of U.S. corn in history. Meyer says what drove that purchase was the spread between internal prices and external prices.
“The difference is about $150 a metric ton,” he said. “There is a big price wedge which draws corn into China. We last saw this in 2015. At that time we saw the prices widen, but it wasn’t necessarily because it was needed internally for consumption—it was being used internally for stocks.”
USDA is forecasting 92 million acres of corn and 90 million acres of soybeans will be planted this spring. If that number is met, it would be a record.
“Part of the area we are gaining back in 2021 is an assumption of normal planting weather,” said Meyer. “If one assumes normal planting weather, we’ll gain acres just on that matter, let alone the fact that we have quite strong prices which also incentivize planting.”
Meyer and USDA is forecasting a strong return to trade in 2021 for U.S. ag products.