Iowa Corn Farmers-Leaders Assess This Year's Market Outlook

Even before Iowa farmers received a jump start on planting last week, many within the agricultural industry started placing their bets on what this season may hold. The U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service predicts that U.S. corn growers will plant 93.6 million acres of corn this year, the first increase in corn planted acreage since 2012 and, if predictions are correct, this year’s crop will be the third largest corn acreage since 1944.

Farmers serving on both the Iowa Corn Promotion Board and the Iowa Corn Growers Association see exports as having the greatest potential impact on possibly increasing demand and corn prices for this year.

“Farmers are planting corn hoping for higher gross revenue in 2016 compared with other crops which will translate into a better net per acre,” explained Iowa Corn Growers Association Director Bruce Rohwer, a farmer from O’Brien County. “It remains extremely important that we are finding ways to create demand for U.S. corn exports.”

The USDA Economic Research Service projects that farm sector profitability will decline for the third straight year. This includes:

• Net farm income is forecasted at $54.8 billion in 2016, down 3 percent from 2015. If this holds true, 2016 net farm income would be the lowest since 2002.
• Cash receipts are forecasted 2.5 percent to $9.6 billion in 2016, animal/animal product receipts are predicted to drop 0.9 percent to $1.6 billion.
• Nearly all major animal specialties—including dairy, meat animals, and poultry/eggs— are forecasted to have lower receipts.

“Demand is always unpredictable,” stated Iowa Corn Promotion Board Director Bob Bowman, a farmer from Clinton County. “There is a huge relationship between export demand and the strength of the U.S. dollar. Most farmers are thinking about the supply side. We are projecting a higher carry over than usual. We have some farmers who still have inventory from last season, mainly because of the price.”

The USDA’s World Ag Supply and Demand Estimates Report contained mixed results for April.

• Feed demand was reduced 50 million bushels. Corn usage estimates for ethanol increased 25 million bushels as ethanol production has held near record levels over the first three months of the calendar year.
• Corn ending stocks were raised 25 million bushels and the midpoint of the 2015/16 season-average price range fell 5 cents to $3.55 per bushel.
• World corn production for 2015/16 was increased by 3 million metric tons, with 1 million of that going to increased imports for Mexico and Southeast Asia and 2 million projected to be held in stock. China's feed usage of corn is projected to rise by 2 million metric tons, but that increase is expected to be met by drawing down existing internal stocks.

“The Iowa Corn Promotion Board investments in market development programs which holds promise for creating additional demand for our corn both in the near and long-term,” said Bowman. “Through our work with the U.S. Grain Council we are seeing the market for ethanol exports emerge and continued global demand for distillers grains. We still make significant investments in promoting and expanding the livestock sector because its remains our number one customer. ICPB is working to build demand for corn in all forms.”

From the Iowa Corn Growers Association’s prospective, Rohwer said the organization is looking at both short-term and long-term federal policy solutions to improving market access and boosting U.S. corn sales. “This includes urging Congress to act on the passage of Trans-Pacific Partnership (TPP). This agreement will reduce tariffs and open new markets for American agricultural products including corn, ethanol and export meat products all of which positively impacts corn demand. Continued Congressional support for maintaining the level of funding for Market Access Programs (MAP) and Foreign Market Development (FMD) programs continues to be crucial as they are the muscle of what drives our export programs.”

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The Iowa Corn Promotion Board (ICPB), works to develop and defend markets, fund research, and provide education about corn and corn products.  The Iowa Corn Growers Association (ICGA) is an 8,000-member strong grassroots-driven organization, headquartered in Johnston, Iowa, serving members across the state, and lobbying on agricultural issues on behalf of its farmer members to create opportunities for long-term Iowa corn grower profitability. For more information, visit iowacorn.org.