Chicago Board of Trade Market News
Outlook: USDA held their annual Outlook Forum in the Washington D.C. area this week. USDA’s Acting Chief Economist Robert Johansson presented an overview of projections for the future. The current estimate is that U.S. farmers will plant a total of 89 million acres of corn in the 2015/16 season. Corn ending stocks are expected to decline from 1.83 billion bushels at the end of this season to 1.7 billion bushel at end of the 2015/16 season, assuming trend yield production.
Acreage for sorghum is expected to expand and increased production in the 2015/16 season is due to strong demand from China that has boosted sorghum prices. However, overall acreage for the largest eight major crops in the United States is expected to decline by about 3.3 million acres due to reduced farm margins. USDA is currently predicting that the average farm price of U.S. corn will be around $3.50 per bushel during the 2015/16 crop year, assuming there are no supply or demand shocks to the global market.
USDA’s forecast was rather optimistic by predicting that the U.S. farm community will benefit as falling energy prices will reduce input and transportation costs. Farmers will also benefit from record asset levels. Agricultural land values are predicted to decline by less than one percent during 2015. One reason for such an optimistic prediction seems to be the expectation that USDA farm programs will help cushion declines in farm revenues. Lastly, disruptions to logistics at ports and rail service are expected to be resolved. Efficient transportation and the resolution of old trade disputes, and prospects for new agreements, will created more opportunities to U.S. producers. The United States is expected to remain the world’s largest corn exporter during the next decade; with total U.S. market share increasing from about 40 percent in 2015/16 to about 45 percent by 2024/25.