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Demand for corn and soybeans improving

Economist Darrel Good says demand for U.S. corn and soybeans is improving.

The professor emeritus at the University of Illinois tells Brownfield struggles in South America are one of the primary reasons why.

“In the second-crop areas of northern Brazil, probably 50 to 60 percent of the production region has had a fairly drought.  While the southern part of that production region has had decent rainfall.”

He says the full magnitude of the losses in Brazil aren’t yet known, but it’s clear the size of the corn crop has been reduced substantially.

Meanwhile, flooding in Argentina may reduce soybean production by as much as 100 million bushels when added to losses in Brazil.

Good also notes an improving outlook for domestic demand from USDA for both corn and soybeans.

“Increasing livestock numbers support feed use for both corn and soybean meal.  Increased gasoline consumption supports ethanol demand.  So all-in-all, we’re seeing prospects at least of improved demand in both the export and domestic market.”

In addition to demand, Good says production problems in the U.S. this growing season could allow corn and soybean prices to move even higher.