The University of Missouri Food and Agricultural Policy Research Institute (FAPRI) says if average weather returns, a record 2013 corn crop would drop prices by around $2 from last year to an average of $5. It projects corn acreage to be near steady with 2012, but for slight expansion of soybean and wheat acreage.
FAPRI sees the corn crop rebounding to 14.370 billion bu. on a national average yield of 161.8 bu. per acre and 2013-14 carryover increasing to 1.638 billion bushels. For soybeans, FAPRI sees output at 3.367 billion bu. on a national average yield of 43.5 bu. per acre and 2013-14 carryover rising to 191 million bushels. The wheat crop is seen at 2.233 billion bu. with carryover of 727 million bu. and the cotton crop falling to 13.21 million bales and carryover tightening to 4.08 million bales.
In its baseline report sent Congress, it states:
- In 2013, corn acreage is projected to remain near the 2012 level. Soybean and wheat acreage expand slightly, while cotton acreage contracts.
- Average weather conditions in 2013 would result in a 2013 corn crop that far exceeds the previous record. This would allow corn use and stocks to rebound and the corn price to fall by about $2 per bushel relative to the record average price for the crop harvested in 2012.
- A rebound in global grain and oilseed supplies also contributes to sharply lower prices for soybeans and wheat for crops harvested in 2013. Cotton prices remain stagnant, in part because of large global cotton stocks.
- In 2014 and beyond, average grain and oilseed prices remain well below the record levels of 2012-13, but well above the prices that prevailed prior to 2007. Corn prices, for example, average a little under $5 per bushel.
- The projected strong recovery in ethanol production in 2013-14 is contingent on enforcement of biofuel use mandates. The value of the certificates used to demonstrate mandate compliance must rise substantially to cover the discount needed to sell fuels containing more than 10 percent ethanol discount needed to sell fuels containing more than 10 percent ethanol.
- Multiple years of drought have limited forage supplies, raised feed prices and reduced cattle numbers. Live cattle prices rise to $129 per hundredweight in 2013 and remain near that level for several years.
- Hog, chicken and milk prices also increase in 2013. If feed prices decline as projected, this would imply increased profitability for livestock and poultry producers.
- Under a continuation of 2008 farm bill provisions, Commodity Credit Corporation (CCC) outlays would average about $9 billion per year over the next decade, of which about $6 billion would be for major commodity programs.
- With record indemnity payments for 2012 crop losses, crop insurance net outlays exceed $13 billion in fiscal year (FY) 2013. Over the FY 2014-22 period, net outlays average a little under $9 billion per year.
- Farm income remains high for the third straight year in 2013. Net farm income, a measure that includes changes in the values of inventories reaches a record $131 billion in 2013 while net cash income reached its record level in the values of inventories, reaches a record $131 billion in 2013, while net cash income reached its record level in 2012. Both net income measures retreat slightly in 2014 in response to lower crop prices and receipts.
- Annual average food price inflation reaches 2.9 percent in 2013, slightly greater than the 2012 pace. Increases in food prices slow in later years to a rate comparable to the general rate of inflation, about 2 percent per year
Link to full report.