A crop that’s expected to be even bigger than just previously estimated is expected to push prices down even more than previously expected. Earlier this month, we told you how the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri expected corn, soybean and cotton prices to drop from what had been some pretty impressive highs of the past couple of years. Now, FAPRI says those drops will be even larger, as USDA estimates of those crops are now larger.
- Larger corn and soybean crops translate into lower projected 2014/15 prices for many grains and oilseeds. Corn prices drop to $3.50 per bushel, soybeans to $9.92 per bushel and wheat to $5.91. In all three cases, these projected prices are close to the midpoint of the price ranges reported in the September USDA World Agricultural Supply and Demand Estimates.
– Larger crops in 2014/15 also result in larger beginning stocks and total crop supplies in 2015/16. As a result, corn and soybean prices for next year’s crop are lower than projected in August. Corn prices average $3.80 per bushel in 2015/16, and soybean prices drop to $9.04 per bushel.
– Prices recover as markets adjust. Corn prices average $4.10 per bushel, soybeans average $10.21 per bushel, and wheat averages $5.78 per bushel over the 2016‐18 period.
– Upland cotton price projections for 2014/15 are largely unchanged from last month, as USDA estimates suggest offsetting reductions in domestic supplies and global demand. The weaker global demand is assumed to continue, slightly reducing price projections for 2015/16 and beyond relative to previous estimates.
FAPRI says this information is of particular importance as now under the 2014 farm bill, producers must make a one‐time election to participate in the Agriculture Risk Coverage (ARC) or the Price Loss Coverage (PLC) program for the life of the five-year bill, and how much they might get in payments is very reliant to expected crop prices.