The prices for grains, oilseeds, cotton, milk and hogs are down sharply from record levels set in recent years. An update to the Food and Agricultural Policy Research Institute’s (FAPRI) long-term baseline report says no quick price recovery is expected.
Given all of the assumptions of the analysis, here are a few highlights of the results:
· Projected corn prices remain near the 2014/15 level of $3.70 per bushel for another two years, and only exceed $4 per bushel in 2018/19. U.S. corn acreage increases to more than 90 million acres in 2016 at the expense of other crops.
· Large global oilseed supplies contribute to a reduction in projected soybean prices, which fall to $9.12 per bushel in 2015/16 and remain near that level in 2016/17.
· Projected wheat prices also decline, to $5.10 per bushel for the 2015/16 crop, as U.S. stocks rise to the highest levels since 2010.
· A smaller U.S. crop contributes to a modest increase in cotton prices in 2015/16 to 65 cents per pound, but larger Chinese stock levels continue to weigh on global markets.
· Ethanol production prospects depend, in part, on EPA decisions about how to implement the Renewable Fuel Standard (RFS). Lower oil prices increase gasoline consumption and the use of ethanol in 10-percent blends, but discourage higher-level blends and ethanol exports.
· Increased production and a stronger dollar have contributed to sharply lower U.S. hog and milk prices in 2015. Projected prices for both remain far below the record levels of 2014.
· As U.S. cattle numbers and beef production expand, cattle prices decline from record levels. Projected fed cattle prices decline from $157 per hundredweight in 2015 to $122 by 2020.
· As retail prices for meat, milk and other products moderate, projected consumer food price inflation drops to 1.9 percent in 2015 and 1.3 percent in 2016.