By Terry Vinduska, U.S. Grains Council Vice Chairman and Kansas Corn Commission Board Member

Every farmer is optimistic. We wouldn’t be farming if we weren’t. As I look into the new year and how export demand will affect prices, I am, as usual, cautiously optimistic. One disclaimer: As vice chairman of the U.S. Grains Council, some will say I am biased toward the value of exports. I do believe in the value of exports and the importance of exports as we look into next year’s grain price crystal ball.

As a grain producer, I believe we need both a strong domestic demand and a strong export demand to lead us into higher prices. This month, USDA raised its projection for U.S. wheat ending stocks for 2009/2010 by 15 million bushels. At the same time, global wheat supplies for 2009/2010 are projected to be one million tons higher and global wheat trade is projected slightly lower. We can all see that this doesn’t paint a bright picture for 2010 wheat prices. Even though projected U.S. wheat planted acres are down to around 59 million acres from 63 million last year, I’m afraid carry-over and strong world supply will make up for fewer planted acres. Looks like $5 wheat may be close to a top price next year (USDA range is $4.65-$5.05). I sure hope it’s closer to $6, but there’s just a lot of wheat worldwide.

USDA is projecting that corn ending stocks for 2009 will be nearly unchanged from 2008 ending stocks. Corn exports are nearly at the same level as last year but we are currently experiencing a slightly slower pace of shipments. The Ukraine is offering increased competition as a world feed grain supplier and some are projecting that China will be exporting corn in 2010. Global coarse grain supplies are projected to be 3 million tons lower than 2008 supplies. U.S. planting intentions for 2010 are projected to be about the same as 2009 for corn and down almost 1.7 million acres for sorghum. So as we digest all of this information, can we look for strong U.S. prices for feed grains? USDA is projecting $3.25 to $3.85 average prices for corn. I’d lean toward somewhere in the top of that range because I think U.S. exports will strengthen slightly. I just have to comment on the supposed experts who said not too long ago that the United States would be out of corn and the world would be starving for corn due to increased demand of the ethanol plants.

Once again the ability of U.S. production agriculture was underestimated. Weren’t we supposed to have $10 corn today because of lack of supply? And the U.S. housewife could never again afford a box of corn flakes! Guess they were wrong. Like it or not, whether we want to admit it or not, the market does work. And U.S. farmers know how to grow corn. Soybeans experienced a record export pace in December, according to USDA, which leads to higher price projections. Soybean ending stocks for 2009 are projected to be down 15 million bushels from the end of November. 2010 USDA projections for soybeans are for a 2 million acre increase in planted acres and a price range of $8.75-$10.25. I can’t help but think that soybean exports will continue to increase. All things considered, I think we can survive with these price projections if we have normal to above normal yields. I hope USDA is low, we deserve more, but my guess is that they are pretty close.