Corn, soybean usage down but demand remains
An ag economist says corn and soybeans usage rates are down from last year but not from lack of demand.
Ag Economic Insights co-founder David Widmar tells Brownfield both crops still have near record usage, but tight ending stocks are coming into play.
“In the trade war, we had big stocks, sluggish usage and disappointingly low prices,” he said. “Here today, we have pretty strong usage over the last two marketing years, pretty tight stocks and commodity prices have been very, very high. So, we’ve seen a big tone shift in the marketing outlook.”
Widmar said grain buyers have been willing to participate in the market despite recent strong prices, but that demand could weaken.
“If we continue to see strong prices, the question is how does demand play out, especially in the next 12 to 14 months,” he said. “But a second level here is if we have a big production hiccup on yields, we would expect to see usage happen to cut back and commodity prices being the tool to do that.”
While both crops’ usage rates are down compared to last year, Widmar said year to year changes don’t always accurately reflect the market.
Earlier this week, USDA lowered old crop corn ending stocks and while soybeans remained unchanged, ending stocks are historically tight.