Dec. 8, 2020 - Dr. Michael Gunderson, head of agricultural research and strategy for MetLife Investment Management’s Agricultural Finance Group, provided an economic outlook remotely from his home in West Lafayette, IN Dec. 8 during the National Grain and Feed Association’s 2020 Country Elevator Conference, held online.
Some takeaways from his presentation:
- Overall, the ag economy is looking moderately bullish, but the continuing COVID-19 pandemic is providing a lot of uncertainty. New vaccines may help.
- Ethanol demand may return as the pandemic eases.
- U.S. trade policy will change slowly with the new administration, not abruptly.
- Overall, U.S. farmers are doing relatively well in the global market despite some market share loss.
- Business is starting to reinvest in the economy, though it will take well into 2021 for recreation to come back and bring consumer spending with it.
- Disruptions to employment will longer; much of the $1,200 COVID stimulus checks distributed earlier in 2020 went into savings.
- Strong demand and tight stocks-to-use ratios in corn are likely to push prices to nearly $4 a bushel’ reaching $5 a bushel would take some serious production losses.
- Soybean prices currently over $10 a bushel may inspire farmers to plant a record amount of acreage in 2021, well above 91 million acres.
- World meat consumption continues to increase, especially outside of the United States, boosting corn and soybean demand.
- Government checks in 2020 have pushed farm income close to the 2013 peak. Prime corn acreage in Illinois recently reached $14,000 an acre.
Written by Ed Zdrojewski, Grain Journal editor