WASHINGTON, Sept. 6, 2017 – Economists with the University of Missouri’s Food and Agriculture Policy Institute (FAPRI) lowered projections of corn and soybean prices in their latest 10-year forecast of the farm economy. But the update projects somewhat higher wheat prices than the original March forecast.
FAPRI cut its estimates of the price of corn to $3.40 a bushel for this year’s crop and estimated that prices would average $3.64 and $3.80 for the next two years. The March forecast projected prices of $3.60 for this year and $3.77 in 2018 and $3.76 in 2019.
The Congressional Budget Office, which issued its latest forecast in June, projected corn prices of $3.40 for 2017, $3.59 in 2018 and $3.73 for 2019. CBO’s estimates are the most important because they are used by Congress to estimate, or “score,” the cost of farm bill programs.
The Price Loss Coverage program, which is expected to be the most popular commodity program in the next farm bill, triggers payments when market prices fall below $3.70 for corn, $8.40 for soybeans and $5.50 for wheat.
The FAPRI update lowered its estimates for soybean prices to $9.07 a bushel for this year, down from the March estimate of $9.57, and to $9.82 and $9.76 for 2018 and 2019. FAPRI raised its projected wheat price for 2017 to $4.79, up from the $4.44 estimate in March, and forecast prices of $4.95 for 2018 and $4.99 in 2019.
The latest forecast says that strong domestic and international demand is increasing prices for cattle, hogs, chickens and milk, but a large increase in production in 2018 is likely to lower producer prices. The report estimates that cattle prices will drop from $122.06 per hundredweight this year to $110.99 in 2018. The average price of milk is expected to drop from $17.80 per hundredweight in 2017 to $17.49 in 2018 but that would still be well above the 2016 average, $16.34.
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