Most farmers won't begin planting corn for a couple of months, but the debate over where 2013 crop prices are headed has begun.
The opening salvo of the discussion came with last week's release of projections by the Congressional Budget Office as part of its analysis of spending prospects for the year. Though the estimates were prepared late in 2012, they offer the first semi-official glimpse into how the numbers might play out – and offer a chance to compare with USDA data released Monday.
There's plenty to argue with in the CBO forecast, but the bottom line should be sobering, says Farm Futures Senior Editor Bryce Knorr. The CBO projected average cash prices of $4.51 corn and $11 beans, while USDA estimated $4.50 corn and $11.35 soybeans – numbers that are not far-fetched if production returns to normal levels.
For corn, the CBO forecast planted acres at 97 million and harvested acres at 89.5 million. Yields of 161.5 bpa would produce a record crop of 14.45 billion bushels. That would more than double ending stocks to 1.85 billion, according to the office's demand assumptions.
"While the CBO's yield number is higher than I'm using, its acreage estimate could be low," Knorr notes. "My forecast puts ending stocks at 1.43 million, with an average cash price of $4.60."
USDA corn estimates appear close to CBO estimates at 96.9 million planted acres and 87.7 harvested acres.
For soybeans, the CBO projected a crop of 3.3 billion bushels, based on 77 million planted acres and yields of 43.5 bpa. USDA returned 77 million planted acres also, but lower yield numbers with an estimate of 39.3 bpa.
Ending stocks would rise to 281 million in the CBO report. That's 90 million higher than Knorr's forecast, which includes lower old crop carry-in, slightly smaller yields, and a little better demand. Knorr adds that his forecast doesn't show prices staying near current levels after harvest.
"Wheat is the lone bright spot, if you can call it that, from the CBO study," Knorr says. CBO projected a crop of 2.2 billion bushels, a level of production that could be difficult to achieve due to poor conditions on the Plains. Still, the office projected average cash prices at $7, based on carryout of 744 million bushels. USDA's numbers aren't far off, with a price of $7.20 and 704 million bushel carryout.
Knorr's current forecast, based on the latest state crop ratings, puts carryout close to 610 million bushels, with average cash prices of $7.50.
"Of course, these are all statistical guesses right now, but they could be a starting point for 2013 marketing plans," Knorr says.
Find the complete CBO report here. Access USDA's baselines here.