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Corn, Soybean, Wheat Price Projections for 2017-18 Marketing Year

It will be March before a 10-year baseline projection of commodity prices is released by the University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI). But members of the American Bankers Association attending the group’s National Agricultural Bankers Conference in Indianapolis got a preview Tuesday.

FAPRI’s director, economist Pat Westhoff, shared a blend of the November USDA supply-demand estimates and his own estimates of usage to project market prices only pennies away from the USDA estimates for this year and slightly higher for corn and lower for soybeans for crops planted next spring.

Westhoff says he’s been doing projections for 30 years and never been exactly right. Economists are quick to point out that projections of current supply and demand for ag products are never predictions. Unforeseen events could push those prices higher—or even lower.

Here are a few key numbers Westhoff shared with bankers early Tuesday morning:

Farm level corn prices will average $3.33/bushel for the 2016-17 marketing year, Westhoff estimates. That’s very close to the midpoint of the price range of $2.95-3.55 per bushel in USDA’s November WASDE (World Agricultural Supply and Demand Estimates). For U.S. corn planted next year, Westhoff puts the average price in the following, 2017-18, marketing year at $3.57 per bushel, close to the upper end of USDA’s price range. One reason is that Westhoff expects fewer corn acres next year, with his projection at 91.3 million planted acres, down from this year’s 94.5 million acres.

“The bottom line is we still have over 2 billion bushels of carryout,” even after planting fewer acres next year and with little change in demand for ethanol and exports, Westhoff said.

Westhoff looks for more soybean acres in 2017 and slightly lower soybean prices in 2017-18. He plugged in 85.8 million planted soybean acres next year, up from the 2016 number of 83.7 million. Soybean prices are seen averaging $9.23 per bushel in 2017-18, down from $9.43 in the current marketing year.

His projections for wheat prices are rock bottom: an average price of $3.78 per bushel in the current marketing year and $4.39 per bushel next year, following two years of sharp reduction in wheat acres.

“There’s too much wheat. That’s all I need to say really,” Westhoff said. The markets are pushing prices down to wheat’s feed value.

Westhoff looked at some of reasons commodity prices are depressed. The main one is basic global supply.

Since 2002, world production of four major crops - corn, wheat, rice and soybeans - has grown by 846 million tons or 48%. Yields have kept pace with the world’s annual population growth rate of 1%.

China’s growing economy and ethanol usage helped drive per-capita use of corn up, Westhoff said, but those two drivers of demand no longer grow rapidly.

“Is there a new engine of growth out there?” Westhoff asked. None of the potential candidates seem to be as promising as China, he said. After his talk, Westhoff told Agriculture.com that the nation some experts see as a potential successor to China’s demand—India—may be able to supply its own food needs by increasing yields of crops grown in India.

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