The outlook for commodity prices has worsened since last fall due to large harvests that fattened stockpiles around the world, said USDA chief economist Robert Johansson at the annual Outlook Forum. “Further price reductions are expected for the 2016/17 marketing year for corn, soybeans, wheat and cotton. At the levels now projected by USDA, season-average prices for this year’s corn, soybean and wheat crops would be the lowest in a decade, back at the starting days of the agricultural boom that ended in 2013.
When farmers take this year’s crops to market, corn is projected to fetch $3.45 a bushel, soybeans $8.50 a bushel and wheat $4.20 a bushel. The corn and soybean prices are 15 cents a bushel lower and wheat is 20 cents lower than USDA projected in December. Corn, wheat and soybeans are the most widely grown crops in the country and are expected to cover 223 million acres this year. “Lower commodity prices are expected to idle some land which had been brought into production as commodity prices rose through 2012,” said Johansson.
USDA projected plantings of 90 million acres of corn, 82.5 million acres of soybeans and 51 million acres of wheat. Compared to 2015, corn area would rise by 2 million acres, soybeans would hold steady and wheat fall by 3.6 million acres.
Those projections would translate to 13.8-13.9 billion bushels of corn, the second-largest on record; 3.8 billion bushels of soybeans, third-largest crop on record; and nearly 2 billion bushels of wheat, based on USDA’s projected yields and abandonment rates. USDA was scheduled to project crop size today. USDA says corn and soybean supplies will be record-high after the fall harvest.
Plantings of the eight major U.S. field crops – corn, wheat, soybeans, cotton, rice, sorghum, barley and oats – is projected at 249.1 million acres, down by 2.5 million acres from 2015. “Sorghum area in particular is expected to fall, declining by 14 percent from last year,” said USDA. Farmers planted 8.5 million acres of sorghum last year to meet demand, now on the wane, from China.
USDA projected cotton plantings of 9.4 million acres, up nearly 10 percent from 2015, “as a result of a return in 2016 to more normal planting conditions.” The projected season-average price of 58 cents per pound would be the lowest in seven years but would offer better returns for growers than corn, soybeans and sorghum. The National Cotton Council survey of growers points to 9.1 million acres as growers face a third year of low market prices and high production costs.