A new report is either good news or bad news, depending on whether you just raise crops or just raise livestock. But for many producers who do both, the latest report from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri is certainly a dose of both good and bad news. Earlier this month, we told you how FAPRI reported prices for corn and soybeans were dropping, and strong demand and easing feed prices are helping livestock producers. While this latest report doesn’t address the livestock situation directly, it does say how corn and soybean prices are expected to drop even more than first expected as this year’s harvest is expected to be bigger than first expected.
– 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.