In addition to the impetus from very lower interest rates, the prices of arable land have been boosted by the increase in agricultural incomes from corn and soybean production in 2020. With the exception of one state, all states had higher corn and soybean production in 2020 than in 2019. While most states were spared extreme weather events in 2020, Iowa did not, so corn and soybean production there declined.
Using data from the U.S. Department of Agriculture (USDA), corn yields fell 0.5 percent in 2020, largely due to lower corn production in Iowa. In contrast, soybean yield increased 5.7 percent. Given that the harvested area for both crops was 6 percent higher than in 2019, corn and soybean production increased 5.2 percent and 12 percent in 2020.
Even so, US ending stocks were severely depleted to meet demand in 2020 when exports rose sharply. The USDA forecast prices of USD 4.20 per bushel for corn and USD 11.15 per bushel for soybeans for the crop year 2020/21 (up 18 percent and 30 percent compared to the previous crop year). Calculated at these prices, the estimated 2020 crop revenue would increase 24 percent for corn and 46 percent for soybeans compared to 2019.
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