Corn prices could head higher in 2016 but the outlook for soybeans is less certain, according to a new analysis by Purdue University agricultural economist Chris Hurt.
Writing in the latest issue of the Purdue Agricultural Economics Report, Hurt forecasted a stronger market for corn after early-season flooding in 2015 damaged some Indiana crops.
"Corn prices are expected to increase in the winter and next spring by at least enough to cover on-farm storage costs," Hurt noted. "Eastern Corn Belt basis levels are expected to remain very strong, especially in Indiana where low yields were dominant in the northern two-thirds of the state."
According to Hurt's projections, cash prices for corn could reach the low-$4 range per bushel in coming months at processing plants and perhaps go as high as $4.40 per bushel in summer.
But soybean prices are likely to remain flat or even decline slightly if, as expected, there is a strong harvest in South America and farmers in the U.S. devote more acreage to soybeans next year, he said.
Hurt forecasted cash prices for soybeans to reach as high as $9.40 this winter at processing plants before falling back in spring and summer.
"Greater soybean acreage in 2016 may keep soybean prices depressed, maybe at levels that are not much different from the 2015 crop. Soybean prices are thus expected to stay well below total production costs."
Grain prices could also be held in check by a strong dollar, which makes American products more expensive overseas, he said.
"There are two ways the strong dollar is weakening U.S. grain prices," Hurt explained. "First, a strong dollar means that the currencies of our foreign buyers are weak and have reduced buying power for U.S. farm products. Secondly, the currencies of our export competitors are weak, and this makes their corn, soybeans and wheat more price competitive."