Who's Right about Corn Prices?

Abstract

While somewhat dated, the USDA baseline projections suggest that the average farm price of corn will be near $3.50 for the next five years. In contrast, the current futures market points to an average farm price between $4.40 and $4.50 over the next four years. Other price projections are even more extreme than these two examples, particularly on the low side. The USDA projections will be updated at this week’s Agricultural Outlook Forum. The forecast of the average farm price for the 2014-15 marketing year will likely be increased from the projection of $3.65 in the baseline projections due to smaller supply projections. Projected stocks at the start of next year will be smaller than in the baseline projections and the forecast of planted acreage may also be smaller. The smaller supply projection, then, would point to smaller year-ending stocks and a higher average price.