Supplies of grains are record high, but demand happens to be pretty strong for crops, too. As long as international demand sustains itself, given high prices, producers should enjoy a profit, economists note.

“We’ve seen soybean exports fall back 20 to 30 percent so they’re showing sensitivity to prices,” said Chad Hart, agriculture economist at Iowa State University in Ames.

“China has become the biggest player in grains and livestock; they’re our No. 1 corn and bean customer, No. 2 pork customer and No. 3 beef customer, so anywhere China moves, we’ll feel it directly in that market,” he added. “China really concentrated on us in 2021 and now they’re looking at other trade partners in 2022. When your export markets are highly concentrated in one country or one region, that can become an issue.”

Mark Mueller has been farming for 25 years in Bremer County, raising no-till corn, soybeans, alfalfa, specialty beans, forage rye and corn for silage. As a fourth generation farmer, Mueller serves as the Iowa Corn Growers Association director representing District 3 and is the chair of the exports and the grain trade committee as well as the chair of the political action committee.

Mueller agreed that the international market seems a little bit cloudy with China serving as the big player since signing the Phase 1 trade deal.

“We figure they’ll buy a fair chunk yet in 2022 and then the buying curve will go down,” he said. “No one entity can take the place of China, but we do have Mexico on our doorstep and that’s a good market. There are a few problems with Mexico, but hopefully the NCGA will sort that out.”

A trade delegation from Mexico visited Nebraska and Iowa to meet with growers and state organizations, then headed to Washington, D.C., to chat with policymakers.

“They’re trying to accomplish a lot,” Mueller said.

Canada also is a “fairly stable market” he noted.

“Canada is part of the USMCA and we do have the FAFTA agreement,” Mueller said. “Colombia’s demand was growing well until they began having social unrest the past six months. Vietnam is a fast-growing buyer, top 5, if you include a China.”

Mueller recently traveled to Mexico with a farmer from Illinois to promote grain quality, which he does every couple of years.

“We haven’t traveled for quite a while,” he said. “This was the first trip in a couple of years we’ve made. We’ve gone on numerous trips in the past promoting corn to grain buyers in other countries and we, as Iowa farmers, think that people should be lining up to buy our corn, but we’re competing against South America and the Black Sea region. Brazilian corn is making its way into Mexico, but they should be getting it from Iowa instead.”

At the moment, other countries are able to obtain corn cheaper from other parts of the world due to a strong U.S. dollar, so leaders have to promote good corn at fair prices, Mueller said.

“We have a few things supporting the price of corn and have a perfect storm of good opportunities emerging in Southeast Asia with crop failures elsewhere around the world and a booming ethanol market that really came online 10 or 12 years ago,” he said. “China will buy corn from anybody but the U.S. if they can help it. We’ll be their buyer of last resort.”

The biggest potential growth arena for corn globally happens to be as ethanol.

“China has an air problem, Mexico’s national oil company has pretty much shut down the independents in Mexico,” Mueller said. “Ethanol is fine to use for industrial purposes in India. Dried distillers grains, a byproduct of ethanol, is growing extremely fast as an export and is the fastest growing corn export product.”

Kirk Leeds, Aaron Putze and several Iowa Soybean Association directors paid a visit to South America Jan. 31-Feb. 14 with additional trade missions scheduled if COVID cooperates with their plans.

“The supply/demand charts are, on the whole, leaning bullish for soybeans, especially if corn prices remain strong, thus capturing planted acres this upcoming growing season, and oil demand continues to strengthen as most expect it will, driven largely by renewable diesel production and demand,” Putze said. “South America, Argentina in particular, is having some weather issues impacting production. So are parts of Brazil. While Brazil is still projected to produce a record soybean crop, tonnage is shrinking just a bit due to some prolonged dryness in some prolific soybean producing regions.”

The delegation visited Morena Farms near Campo Novo and actually harvested crops in combines. They visited Brazil’s second largest soybean producer, Bom Futuroa, embarked upon a boat tour of the Amazon River, visited John Deere implement dealer reps, toured a sugar cane ethanol plant and visited with industry leaders.

“Our mission was to engage in conversations with our competitors, as they produce soybeans like we do. But they’re also partners in some sense in the fact that we both have opportunities and the need to meet an international strong global demand. The U.S. cannot meet the global demand alone and neither can Brazil or Argentina alone,” Leeds said.

Intense heat and a lack of rain has reduced yields in South America, and the increase in demand for a particular soy oil as it relates to biodiesel and sustainable aviation fuel. The ISA delegation hopes to travel to southeast Asia, particularly the Philippines and Thailand, in late spring.

“We’re also eyeing Egypt, which is a fast-growing market for U.S. soybeans, due to their consumption of feed for aquaculture,” Leeds said. “We also believe we will continue to see growth in exports of U.S. soybeans around the world, particularly Pakistan and Bangladesh. When the Argentina and Brazil crop comes on and is smaller, China may get back into the U.S. market sooner rather than later.”

What’s moving the soybean markets the most is the oil side of the industry.

“The oil side is really hot,” he said. “There’s a lot of demand for soy oil from our long-term customers on the food side but also increasingly so with renewable diesel. It’ll be a strong driver for demand. You’re seeing major companies figure out how to access and gain control. There’s enough soybean oils and fats to demand the demand for the growth needed for renewable diesel.”

Producers are facing a host of “incredible uncertainties,” Leeds said, but the crop outlook looks good short term.

“Producers are appreciative and recognize prices are better and demand looks good, but from government policy to weather, supply chain disruptions, input costs and electrical vehicles versus liquid fuels, we’re trying to remain optimistic both short-term and long-term,” he said.