The price of corn and soybeans, as well as other commodities, will increase by 2030. In the United States, the production of corn will increase more than that of other grains, while in the world there will be a greater dependency on South America in terms of soy production.
These were the main conclusions reached by poultry economist and consultant Paul Aho of Poultry Perspective during his "World Situation of the Grain Market" keynote address at the first Latin American Poultry Summit (LAPS), within the International Production and Processing Expo (IPPE) in Atlanta, Georgia.
With corn and soybean prices at their lowest points in recent years, Aho considered that the price "will get worse" in the next decade, with the possibility of a drought affecting crops.
Projections for the soybean market
Currently, 80 percent of global soybean production is concentrated in three countries: United States (123 million tons), Brazil (117 million tons) and Argentina (55 million tons), said Aho.
By 2030, the projection is for Argentina, Brazil and Paraguay to increase their soy production by about 33 percent, with a much smaller rise in the United States, according to the economist. "The Southern Cone produces soy at a lower cost than the United States; they are more competitive," said Aho, noting that at this moment, the price of soybeans is lower than normal due to the tariffs imposed by China.
In the case of Brazil, the increase of its production could be significant since "it has more land to grow soybean."
In the short term, soybean production will continue to be abundant at a price of US$340 per ton in Decatur. In the medium term — by 2030 — the price will increase to about US$400 per ton of soybean meal in Decatur.
Projections for the corn market
At present, 76 percent of world corn production is concentrated in the United States (366 million tons), China (257 million tons) and Latin America (218 million tons). In the case of the United States, Aho projected that it would increase its corn production by 20 percent by 2030 or "almost 500 million tons with a year of drought (since 1970 until now, there have been five years of drought)."
Although China does not participate much in the international market, it is the second largest producer of grains and owns more than half of the world's corn reserves, which demonstrates its influence on the price fluctuations. These would be affected if China started using corn as ethanol, as the United States does, because “those reserves are going to disappear. They are going to start exporting corn,” said Aho.
In the short term, Aho said the United States will continue to dominate the production of corn, which will be priced at US$150 per ton in Chicago. In the medium term — by 2030 — the price would increase to US$200 per ton, as it “rises with the commodities cycle."
Basic economic assumptions
Aho's projections were made taking into account an economic world growth of 3.5 percent or higher in developing countries; an increase in protein consumption worldwide; an economic recession and a rise in the prices of commodities, such as energy and grains.
How grain availability may impact poultry production
One of the challenges for poultry and egg producers this year will be the continued availability of grains now that China’s ethanol industry is now functional, which will consume 3 billion bushels of corn as well as other factors, according to Mike Donohue, vice president, Agri Stats, at the 2019 IPPE.
