Demand continues to be strong for Iowa's commodities ac

A look into the future of national and global markets

November 17, 2022 | Kriss Nelson

A viewpoint into the future of national and global markets was the focus of an Iowa Economic Development Authority  (IEDA) webinar “Global Crystal Ball – Fall Grain and Protein Insights” on Wednesday.

Following opening comments by Iowa Secretary of Agriculture Mike Naig, Iowa State University agricultural economists Dr. Chad Hart and Dr. Lee Schulz provided their perspectives on the current and futures market, both agreeing demand is strong for Iowa’s commodities.

Supply and demand

“We have decent supplies given the weather problems we have had and despite some of the economic and geopolitical turmoil we have seen, demand remains fairly robust,” says Hart. “Global consumers have stuck with us. We continue to see record amounts of agricultural exports, which is encouraging.”

Regarding soybean growth, Hart says demand for soybeans in 2023 has grown 50 million bushels (mb) domestically and five mb in exports.

“That is a very strong demand picture as we are looking at the soybean market and that has been the key,” he says. “That demand has remained robust even as crop prices have risen dramatically over the past couple of years.”

Domestic soybean crush has grown 40 mb this year; a growth believed to be linked to biofuel development in the renewable diesel market.

“The expansion of renewable diesel will likely force soybean prices higher to attract more soybean acres,” says Hart.

With the expansion of crush capacity, Hart raises the question of what happens with the soybean meal?

“Hopefully, it means lower protein prices for our livestock industries with more meal available to them,” he says. “We will also be looking for export opportunities.”

Globally, there has been increasing demand for soybeans over the past decade.

“A lot of that is being driven by China, but we continue to see other areas of southeast Asia pick up as well, and that has been very supportive of the soybean market over the past few years and continues as we look forward this year.”


Hart says USDA has set the average season price for 2022 soybeans at close to $14 a bushel.

“Looking forward into 2023, I think prices are strong enough that we may likely see some additional acres move to soybeans,” he says.

Price levels have pulled back from summer highs due to strong concerns about drought and global demand - especially surrounding the fallout of the Russia/Ukraine war.

Future prices for soybeans are maintaining into the teens into the summer of 2024.

“Those futures prices would be strong enough to entice farmers to continue to plant the land toward corn and soybeans,” Hart says. “They are high enough to help cover higher input costs and offer opportunities to producers as they look forward to next year.”

When should farmers be planning to market that crop? Hart says the seasonal pattern of highest prices between Mother’s Day and Father’s Day looks to be trending for 2023 but advises using some price protection.

“If I am going to pick a time, that is the time to price right now,” he says. “However, if you see some bills piling up, we have some good prices where you can make sales and pay those bills now.”

Schulz provided his perspectives on higher meat prices and the impact of higher food prices.

“The forecast for 2023 is we are very much in line, I think, where conditions are at for minimal inflation,” says Schulz. “I think we can expect higher meat prices going forward, but not the big hikes we have seen over the last several years.”

Schulz says there are two primary factors driving meat price inflation: demand-pull inflation and cost-push inflation.

Demand-pull inflation

Demand-pull inflation can be described as when prices increase because of excess demand in the market, for example, too many dollars chasing too few goods. A rise in income, population, etc., are all demand-pull factors.

“We are chasing fewer goods being produced,” he says. “Also, because of some supply chain challenges causing fewer goods available, the dollars in the economy are chasing those goods. We have pulled up prices that way.”

Cost-push inflation

Prices increase because costs rise or supplies fall. Either will boost prices as long as demand remains the same. The rise in price includes inputs such as feed, wages, fuel, etc., are all cost-push factors.

In response to higher meat retail prices, Schulz says a Kansas State Meat Demand Monitor survey asked consumers about their reactions to higher retail meat prices in 2022.

“The good news is when asked what changes you are making, a third of consumers responded they are making no changes. They continue to buy the same amount of meat and pay the higher prices for it,” says Schulz. “That is a signal of strong demand because not only are you eating the same amount, but you are also paying higher prices. That keeps the dollars available for the industry at those relatively large levels.”

Some changes consumers are making that may impact the price-quantity relationship are that 30% of consumers are still buying the same cut in the same package size, etc., just fewer amounts.

“That is a change in quantity demanded,” he says. “Where in response to higher prices, we are going to consume less.”

One response was to buy different meat products are brands.

“Fifteen percent responded they may be trading down from higher price cuts to lower price cuts,” he says.

Twenty-five percent of respondents said they are buying smaller packages.

“Overall, how consumers make those changes will ultimately dictate how strong demand is going forward,” says Schulz.