Updated FAPRI outlook shows bigger crops, lower prices

By Daniel Enoch

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, SEPT. 18, 2014 - The Food and Agricultural Policy Research Institute (FAPRI) has released a new snapshot updating its five-year outlook for crop prices. The report incorporates USDA data from mid-September that suggest bigger corn and soybean crops than previously estimated - and lower projected prices for many crops.

FAPRI said the updated price projections cover the expected five-year length of the 2014 Farm Bill and are intended to provide additional information that producers can use in making choices about crop insurance. The Institute noted that 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 2014 Farm Bill.  Expected payments under each of the program options are very sensitive to expected crop prices, given the formulas used to calculate ARC and PLC payments.

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Here are some highlights of the updated estimates:

-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 (WASDE)

-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. In the 2016-18 period, corn prices average $4.10 per bushel, soybeans average $10.21 per bushel, and wheat averages $5.78 per bushel.

-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.

Excel tables that show FAPRI's projected U.S. supply and use for corn, soybeans, wheat, upland cotton, rice and sorghum are available at www.fapri.missouri.edu .  FAPRI said plans call for additional updates each month through the end of the ARC-PLC election period.

Each year, FAPRI and collaborating institutions produce a 10-year outlook for U.S. and world agricultural commodity markets, generally released in early March. The five-year update to the 2014 baseline outlook for U.S. commodity markets was released in August.

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