Farmers will sell this year’s record-setting corn and soybean crops for the lowest season-average price in eight years, the government forecast in a new look at crop output and usage. USDA says the corn and soybean crops are marginally larger than it estimated a month ago. Supplies will be the largest in years, holding down prices for the year ahead.
USDA’s forecast of farm-gate prices for the 2014/15 marketing year – $3.40 a bushel for corn, $8.40 a bushel for soybeans and $5.90 a bushel for wheat – will be updated one more time, on Nov 10, before the regulatory window opens on Nov 17 for farmers to tell USDA if they will enroll in the Price Loss Coverage or Agricultural Risk Coverage program. It is a one-time choice through 2018. A handful of online “tools” are available to help farmers calculate likely payments under each option depending on possible prices.
A University of Missouri think tank plans to post on its Web site an updated U.S. crop baseline, with likely plantings, yields, harvests, stocks and season-average prices, each month through the end of the ARC/PLC signup on March 31. The data could help growers decide whether ARC or PLC is best for them. The updates, beginning with this week, are to appear soon after USDA’s crop and WASDE reports and will incorporate the latest estimates of this year’s crops into potential output and prices in the future. For example, when USDA forecast larger corn and soybean crops in September, the Food and Agricultural Policy Research Institute lowered its projected prices for the crops for this marketing year and two succeeding years on its baseline.
PLC, based on reference prices of $3.70 a bushel for corn, $8.40 for soybeans and $5.50 for wheat, can look attractive during periods of low prices. ARC, a shield against revenue losses due to low prices or poor yields, is more likely to generate payments when prices are higher and more volatile. Analysts say growers must take their individual operations into account when making a choice.