Iowa State University Extension grain marketing economist Chad Hart provided a market outlook at last week's Crop Advantage Conference in Mason City.

MASON CITY, Iowa —Chad Hart, Iowa State University Extension grain marketing economist, said 2014 corn and soybean prices will be "back to normal."

He told farmers to think 2005 at the recent Crop Advantage Conference on the North Iowa Area Community College campus.

USDA is projecting season average prices of $4.40 per bushel for corn and $12.50 for soybeans. Futures prices for 2014-15 corn remain at a similar level but beans drop to $10.69. ISU's cost of production estimates are $4.50 for corn and $11 for soybeans ending ample crop margins farmers have enjoyed the past few years.

"In 2013, we finally caught up to the demand we've built up," Hart said. "We have more production than demand and that has driven prices down and will continue to hold prices down. From 2009-10, we had 13 billion bushels of demand, and we barely produced it. In 2013, we proved that we can overproduce for the market. The question for 2014 is will we do it again?"

Hart said that U.S. farmers will produce more corn than the market needs.

"We're back to breakeven for 2014 and 2015," Hart said.

He sees a similar tale for soybeans.

It's hard to believe the country could produce an about 14 billion bushel crop in 2013 when Iowa and Minnesota struggled with wet and then dry weather.

"But when you look south and east, those states had the best crop they've ever had," Hart said. "Their lottery ticket came in, and they're doubling down for this year. They saw they could produce a good crop. You see the same thing in beans."

Hart sees 90 million acres of corn and more than 80 million acres of soybeans being planted in 2014.

"That sets up the potential for record corn and soybean production," Hart said.

The United States isn't alone in ramping up corn production. World production is forecast to be up 12 percent from last year. Corn production is projected to increase by 43 percent in the Ukraine, and many other countries are expanding acres.

World soybean production will be up 6.9 percent, with Brazil growing 8.5 percent more, Argentina,10.5 percent, and the Ukraine, 12.3 percent.

While the USDA is projecting growth in feed demand, Hart isn't as optimistic. Hog and poultry producers are seeing profits and expansion is underway. The cattle industry still is shrinking, and until that turns around, he doesn't expect to see much growth in feed demand. Much of the USDA's increase in feed demand actually is because of larger residual from the big crop and harvested storage losses.

U.S. biofuel demand has stopped growing after meteoric increases in recent years.

Hart doesn't argue with USDA's forecast of 13 billion bushels of corn demand because he thinks the USDA's export numbers are a little low.

"We've seen tremendous rebound in international demand for our crops," Hart said. "We're a third of the way through the marketing year, and we're more than double where we were last year for corn, and we're also ahead of 2011."

Recent weakness in corn exports is because of China rejecting corn loads because of GMO content.

"Those same GMOs were in last year's exports, and they didn't care one whit," Hart said. "This is a price play. China was buying a lot of corn for $5.50. Now, they can buy it for $4."

So far this year, China accounts for 18 percent of U.S. corn export sales and is tied with Japan as the country's second-largest corn exporter behind Mexico. China produced a record corn crop but can't produce enough corn to meet all its needs.

China accounts for 64 percent of U.S. soybean exports. Other buyers, while small by comparison, also are increasing export purchases.

"We're well on our way to record pace with soybean exports," Hart said. "The question is how quickly will the South American crop come in and put a top on the export market? This year, we may be seeing it now. But even if we shut down exports now, we're staring at the third largest soybean exports ever."

Typically, when prices fall like they did in 2013, U.S. crop acreage declines significantly, but strong returns the past few years and record yields in many parts of the country may encourage farmers to keep more acres in crops, Hart said.

"For 2014, farmers need to build a marketing plan with realistic price goals," Hart said. "Hoping for $6 corn and $15 soybeans won't work. Farmers need to get crop insurance, control costs, know their cost of production and take advantage of any price rallies where prices exceed production costs."

What's your reaction?