Corn, soybean and wheat farmers searching for a little positive news in the markets might see a glimmer of hope for this year in the new baseline numbers released by the Food & Agricultural Policy Research Institute at the University of Missouri.
FAPRI estimates corn prices will average $3.75 per bushel for the 2016-17 crop. That’s 30 cents more than the projection released by USDA at the Ag Outlook Forum late last month.
Still, FAPRI concurs with USDA in its 10-year forecast that the average corn price will remain below $4 a bushel through 2025.
“If the 2016 growing season is generally favorable, FAPRI’s average corn price estimate of $3.75 may be a little high,” said DTN Analyst Todd Hultman. “I would expect a good weather scenario to keep prices near this season’s $3.60 average.”
FAPRI also projected soybean prices would average $8.73 per bushel for 2016-17, which is 23 cents higher than the USDA soybean price projection of $8.50 per bushel.
“FAPRI’s average soybean price forecast of $8.73 a bushel is a repeat of this season’s $8.75 average and is probably a good forecast for a good weather scenario,” Hultman said. “Of course, many are anticipating this year’s transition from El Nino to La Nina and DTN’s Senior Ag Meteorologist Bryce Anderson has offered early estimates of roughly 3-bushel-yield reductions for both, corn and soybeans in 2016 with chances for a hotter summer.”
For wheat, FAPRI projects the 2016-17 average will be $4.97 per bushel, 77 cents more than the USDA projection of $4.20 per bushel.
FAPRI projects upland cotton prices will continue to decline, falling from an average of 59.2 cents per pound in the 2015-16 marketing year to 56.9 cents per pound for the 2016-17 crop.
While making long-term projections on prices, acreage and income, FAPRI noted that weather or other factors can change the dynamics in crops or livestock in any given year.
“Weather and the plight of the U.S. dollar ahead add to the uncertainty of grain prices ahead in 2016,” Hultman said.
FAPRI projects corn acreage will be 89.7 million acres planted this spring, which is 300,000 acres less than the USDA forecast of 90 million acres.
For soybeans, FAPRI projects 83 million acres planted this year, which is 500,000 acres more than than USDA’s projection of 82.5 million acres.
FAPRI also projects 51.7 million acres of wheat planted for 2016-17, which is 700,000 acres more than USDA’s projection of 51 million acres.
FAPRI projects farmers will plant 9.4 million acres of upland cotton, up 1 million acres from a year ago.
NET FARM INCOME
National net farm income peaked in 2013 at $123 billion, but prices have fallen dramatically while input expenses have only declined slightly. FAPRI projects net farm income nationally will remain relatively stagnant and stay below $60 billion through 2019.
FAPRI also projects real estate values will tick down about $62 an acre each year and lose about $250 in value per acre by 2019.
Farm safety-net programs won’t necessarily be a saving grace as the price guarantees under the Agricultural Risk Coverage (ARC) program will decline each year as well. ARC payments projected to top more than $6.4 billion for the 2015-16 crop will decline to below $1.9 billion by the 2018-19 crop. Price Loss Coverage (PLC) payments will increase to more than $2 billion per year because of lower commodity prices, but fewer farmers have acreage enrolled in PLC to collect payments.
The FAPRI report also includes more detailed forecasts on livestock and dairy prices. The full report can be viewed at http://www.fapri.missouri.edu/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
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