Corn and soybean prices are at the lowest levels in years. That's not likely to be reversed in 2016.

Three years of good crops worldwide have flooded markets with large inventories. Argentina and Brazil are now big producers of both crops and Ukraine is becoming a major corn exporter after years of recovering from the ag fiasco of communism.

While worldwide feed usage is high, production is higher. Yields have risen due to rapid improvements in genetically-modified seed and broader adoption abroad.

Argentina's president has vowed to remove export taxes on corn and wheat and lower the value of the Argentina peso. That would make Argentine exports more affordable.

BACK TO GRAIN DULDRUMS: Rising global corn and soybean production will suppress U.S. price and ease concentrate costs for livestock and poultry producers.

Looking ahead
USDA's latest world supply and demand estimate puts the U.S. share of 2015 world corn crop exports at 38.3%. Brazil will have 21%; Argentina, 13.4%; and Ukraine, 12.6%. That's an astonishing change in the international market. In 2009, U.S. exports were 65% of the total international trade.

Soybeans, too, are weak on large inventories. Current stocks-to-use ratios and carryout are the highest since the 2006-07 crop year. The 2015 national soybean yield estimate of 48.3 bushels per acre broke the 2014 yield record of 47.5 bushels.

With a very strong U.S. dollar, our prices must competitive than that of Brazil and Argentina. There's nothing about the international situation to make the dollar weaker compared to the currencies of other exporters. So, to move the product, prices must remain low.

Brazil, which has the advantage of double-cropping beans on huge fields with large-machine efficiency, holds 44% of world soybean exports. The U.S. has 36% of world exports while Argentina is third at 8%.

Rebuilding of the U.S. beef cattle herd will be an important corn and soybean market factor. Given the longer beef herd cycle, it takes longer to rebuild cattle inventories after being decimated by extremely high feed prices and extreme drought in the Southwest..

With beef prices much higher than pork and chicken, per capita beef consumption dropped. Now, with lower feed prices and a recovering economy, beef production is on the rise. That means more corn and soybean meal will be used for animal feed, keeping those prices higher than they would be otherwise.

Also watch what happens to the U.S. renewable fuel standard. EPA recently released the new requirements specifying that renewable fuel must make up 10.10% of our gasoline supply – mostly ethanol produced from corn.

When the law was initially passed, the expectation was that cellulosic ethanol would soon replace corn ethanol. That didn't happen. Cellulosic ethanol now must constitute 0.13% of gasoline. Similarly biodiesel is 1.6% of total fuel usage. So it means no change in corn usage to make ethanol, and very little change in biodiesel production from soybeans.

Dunn is a Penn State University agricultural economist.