Modest acreage, big price changes
USDA's latest projections for acreage and prices for major commodities show only slight changes in acreage from last year but big declines in prices as the department's economists factor in more normal weather for 2013.
"With the high prices, we're expecting continued strong plantings, particularly for grain and oilseeds," USDA's chief economist, Joe Glauber, said Thursday at the Agricultural Outlook Forum held in Arlington, Virginia.
Right now, USDA expects 96.5 million acres of corn to be planted, a slight decrease of 0.7% from 2012. Soybean acreage and wheat acreage could increase, but only .5% or less, with soybeans at 77.5 million acres and wheat at 56 million acres, he said.
Glauber said USDA expects soybean prices to fall from an average of $14.30 per bushel for the 2012 crop to $10.50 a bushel for 2013. And corn could drop from an average of $7.20 to $4.80 a bushel.
"We're expecting corn prices below $5," he said.
That's based on assumption of a return to normal weather and yields. The department expects "serious abandonment issues" for winter wheat, where about half of the crop is faring badly in drought in the Great Plains.
But conditions in the Corn Belt appear to be improving.
"The eastern Corn Belt is a lot better than what we saw four or five months ago," Glauber said. And weather outlooks suggest improving conditions in Iowa and the western Corn Belt.
Glauber acknowledged that one year ago, the USDA's projections for production and prices were about what they are again for 2013, and no one at USDA pretends they can predict the coming season, either. But economic projections are based on best estimates of what is most likely to happen.
Glauber showed a slide that plotted preseason precipitation and corn yield in Iowa.
"As you can see, there's very little direct correlation here," he said. He reminded the audience that there were some very memorable years where low subsoil moisture preceded drought, especially 1988.