Fundamentally Speaking
Joel Karlin DTN Contributing Analyst

Friday 02/21/14

USDA Ag Outlook Farm Price Projections

Based on higher production and just modest increases in demand, the USDA is looking for higher ending stocks for the main grain and oilseed crops and lower prices for the 2014/15 season vs. this year.

At their annual Ag Outlook sessions taking place this week, the average farm price of corn for next year was pegged at $3.90 per bushel vs. $4.50 this year, soybeans at $9.65 vs. $12.70 this year, and wheat at $5.30 per bushel vs. $6.80 this year.

If these price projections prove accurate, these would be the lowest average farm prices for these three main commodities since the 2009/10 marketing year.

Curious about the accuracy of the USDA farm price predictions, the accompanying graphic shows the percent change in the USDA’s average farm price projection from their February Ag Outlook session to the final figures.

In the early years of the Outlook, the USDA tended to overstate farm prices but in recent years, especially since 2006, the final farm prices have tended to exceed the USDA’s February price projections.

They come closest for wheat with the final price averaging 6.2% over the February figure followed by corn where the final price averages 6.5% above the February projection.

They are off the market more with soybeans with the February projection averaging 15.4% below the final average farm price.

The variability in the USDA price projections are greatest for corn with a standard deviation of 20.6% from 1998-2013 with wheat at 18.7% and soybeans at 17.6%.

The bottom line is while the USDA is projecting average farm prices down 12.3%, 24.0%, and 22.1% respectively for corn, soybeans, and wheat from this year, recent history suggests these projections may be too low.


Posted at 8:04AM CST 02/21/14
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