Archive: 2021 Illinois Farm Economics Summit

Corn and soybean prices currently sit at historically high levels.  A crucial question for 2022 is how long should we expect the good times to last?  In this webinar, we discuss the 2022 supply and demand outlook for corn and soybeans.  Two key factors are highlighted: trade with China and acreage supply response.

The economic situation on Illinois grain farms has brightened with higher grain prices, resulting in relatively high incomes for 2021. Prices in 2022 could continue to be above the long-run average, but costs will increase substantially. If prices remain above average, incomes in 2022 likely will be near average. However, the higher 2022 costs require much higher corn and soybean prices to reach break-even.

Covid control measures have led to supply chain issues that appear to be worsening for the 2022 production year. General price inflation also is occurring. As a result, all input costs will be considerably higher in 2022 as compared to 2021. We will discuss recent increases in costs and assess their impacts on the upcoming production year. Much of the focus will be on fertilizer decisions.

Farmland market prices have risen dramatically over the past 12-18 months, and cash rents for 2022 experienced upward pressure as well.  Factors affecting farmland markets and rental rates will be discussed including prospects for future income, impacts of continuing low interest rates, monetary policy changes, inflation updates, and export driven demand.  Expanding investor interest in the asset class, new technologies for managing farmland investments, and historically low capital costs have all supported farmland valuations as well, but uncertainty around each of these drivers is also elevated.

While no major changes have been made to crop insurance or commodity programs for 2022, major legislation has been moving through Congress this fall that will have impacts on agriculture.  The Infrastructure Investment and Jobs Act includes funding for a range of investments that will impact agriculture and rural communities.  The Build Back Better framework’s focus on climate change includes support for clean energy, conservation, and climate smart agriculture.  This policy update will focus discussion on the current state of support for agriculture and the potential impacts new legislation might introduce.