Corn prices that reached a record $7.99 a bushel last year are headed for a decade-long slump below $4, according to congressional analysts. The reason cited was that U.S. production the world’s top supplier, will catch up with demand.
The report offered by Congressional Budget Office analysts, says average cash price will bottom out at $3.65 per bushel in the 2012/2013 marketing year. It will then rise no higher than $3.94 through 2019. The report is part of a government-wide estimate of federal spending over the next decade.
Long-term, corn prices are expected to remain low even as total use increases 18 percent to 14.719 billion bushels by the end of the next decade, say analysts. They forecast a 23 percent production increase to 14.738 billion bushels. Specifically, they look for that growth to come from a 15 percent gain in yields, which they say will absorb the rising demand for grain exports and ethanol.
Soybean and wheat prices, which also set record highs last year, are expected to decline. CBO analysts project soybeans to average $9 a bushel this year, then fall as low as $8.44 in 2012/2013 before rising to a new peak of $9.04 in 2015/2016. Acreage, which jumped 17 percent to 75.9 million acres this past year, will range between 73.6 and 75.1 million acres over the next 10 years, according to the CBO report.
Average wheat price is forecast to fall to $5.60 from $6.70 during the marketing year that ends May 31, and never rise above that price over the next decade, say CBO analysts. Current wheat production is 2.5 billion bushels, but will range between 2.205 billion bushels and 2.295 billion bushels as yields rise only 2.4 percent. Wheat is the United States' fourth-most-valuable U.S. crop, with a 2007 value of $13.7 billion.
The estimates, which include forecasts for crops that receive government subsidies, are separate from USDA's annual 10-year baseline forecast for farm production and prices. That report, scheduled for release Feb. 12, is used to formulate the White House budget proposal.
Crop subsidies will average about $7.9 billion annually through 2019, according to the CBO report.
The average prices cited are based on marketing years. For corn and soybeans, the year begins Sept. 1; wheat’s year starts on June 1.