By MICHELE F. MIHALJEVICH

Indiana Correspondent

WEST LAFAYETTE, Ind. — With large inventories of corn, soybeans and wheat reported in the United States, farmers shouldn’t be expecting a big jump in prices, according to veteran Purdue University agricultural economist Chris Hurt.

“What we should be thinking about in terms of price objectives is probably fairly modest gains,” he said. “Inventories are high. Keep your upside price objectives fairly modest. There’s nothing wrong with hoping for a big gain, which could happen if we have a major weather disruption.

“But for a lot of our production this year, I think we should be thinking more modestly.”

Wheat stocks are projected by the USDA to go down this year, but the nation still has a “huge, burdensome” supply, Hurt noted. Corn and soybean inventories have risen steadily over the last few years.

Worldwide, wheat inventories continue to rise but he’s seeing some positives for corn and soybeans, which are both showing declines in world numbers. Recent record yields in the United States and South America led to a rise in inventory, but more normal yields expected this year will help in lowering inventory, he said.

Exports may be a negative for corn, Hurt added. The USDA has projected next year’s exports will be 1.9 billion bushels, down from this year’s 2.3 billion.

“With the huge crop in Brazil, we’re really going to compete with that crop this fall as we’re shipping and selling corn,” he explained. “That’s the struggle for corn. It’s not the feed usage, it’s not the ethanol usage; it’s the exports. Can we get some more exports with the big South American crop?”

USDA has projected corn prices of $2.80-$3.60 a bushel for next year’s crop.

“As we move through the marketing year, one of the things the trade is going to look at pretty closely is those weekly export numbers,” said James Mintert, director of Purdue’s Center for Commercial Agriculture. “(The trade) will track those relative to expectations, track them relative to last year, and look to see if there is room for optimism as we move through the course of the marketing year.”

Hurt and Mintert spoke Oct. 13 during the center’s 2017 Fall Crop Outlook webinar.

For soybeans, the USDA expects 49.5 bushels per acre for this year’s crop, down from last year’s 52 bushels. Soybean yields have been above-trend for four years, Hurt said.

“(The 2017 yield) is still well above trend and this will start, in the ag community, talk about ‘have we made some major breakthrough in soybean genetics or is this just a weather event?’” he noted.

The USDA’s projection of a 4.4 billion-bushel soybean crop is more than the usage base, he said. “We’re going to build carryovers pretty heavily. We’ve got to be cautious on beans. Inventories are going to be large.”

USDA expects soybean exports to be 2.3 billion bushels, up from 2.2 billion last year. The agency has estimated soybean prices of $8.35-$10.05 per bushel for the 2018 crop.

The cost of production – fertilizer, seed, pesticides and cash rents – for rotation corn in Indiana has been on the decline since 2013, Mintert said. “Part of that (decline) comes out of a gradual reduction in cash rents, and we’re projecting another modest decline in cash rents for 2018. A good chunk of that has come out of declines in fertilizer prices, especially nitrogen.”

Production costs for rotation soybeans have gone up the last couple of years, after showing declines from 2013-16, Mintert said. “A big chunk of that is in the pesticide arena,” he explained. “That’s been driven by the increased costs of managing resistant weeds. That’s really changed the dynamics of how we manage a soybean crop in the Midwest.

“We’re looking at production costs that are a little bit higher than they were back in 2012-13. We’re struggling to reduce production costs on a per-bushel basis in soybeans based on those average yield numbers.”