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FAPRI makes downward adjustment in price forecast

The Food and Agricultural Policy Research Institute has made a downward adjustment in the price projections they issued last month.  The lower prices are based on new USDA estimates suggesting that the 2014 U.S. corn and soybean crops are considerably larger than thought.

FAPRI’s projected corn price drops from $3.89 down to $3.50 per bushel for the crop about to be harvested.  The new crop soybean price projection is now $9.92, down from $10.30 a bushel projected in late August.  Wheat is projected to be $5.91 a bushel.  The new price projections are close to the midpoint of the price ranges reported in the September USDA World Agricultural Supply and Demand Estimates.

The big harvest also contributes to larger beginning stocks and total crop supplies in 2015/16.  The result is that corn and soybean prices for next year’s crop are likewise lower than what was projected in August.  Corn prices average $3.80 per bushel in 2015/16, and soybean prices drop to $9.04 per bushel.

Prices begin a slight recovery in subsequent years of the forecast. Corn prices average $4.10 per bushel, soybeans average $10.21 per bushel, and wheat averages $5.78 per bushel over the period of 2016 to 2018.

These updated projections have an impact on choices that producers will soon have to make regarding the 2014 farm bill.  By sometime this winter, producers will make a one-time election to participate in the Agriculture Risk Coverage (ARC) program or the Price Loss Coverage (PLC) program.  Those decisions will hold through the life of the 2014 farm bill.  Expected payments under each of the program options are sensitive to anticipated crop prices.  The updated price projections cover the expected five-year length of the farm bill and are intended to provide additional information that producers can use in making program choices.

AUDIO: Pat Westhoff (3 min. MP3)