Grain prices to drop but stay higher than average

Wheat, soybean and corn prices are expected to drop in 2022-23 but will remain well above their historic averages, according to the United States Department of Agriculture.

It is forecasting a season-average farm price of $6.80 per bushel for wheat, down 50 cents per bu. from 2021-22 levels.

That is due to an 83 million bu. increase in ending stocks for the crop caused by higher seeded acres and an anticipated return to average yields.

Farmers are expected to plant 48 million acres of wheat, up from 46.7 million acres last year. That projection comprises 34.4 million acres of winter wheat and 13.6 million acres of spring wheat.

Michael McConnell, agricultural economist with the USDA’s Markets and Trade Economics division, did not have an estimate for durum but the historic range is 1.3 to 2.4 million acres.

“Given the competition for acres and the market conditions, we would likely expect durum to be on the upper end of that historic range,” he said during a presentation at the 98th annual Agriculture Outlook Forum.

Wheat demand is forecast to rise but not as much as supply.

“We’re expecting increased price competition both in the export and feed markets,” said McConnell.

Exports will be up 40 million bu. but still below the five-year average as U.S. export prices will be uncompetitive in several markets.

Domestic feed demand is expected to fall 10 million tonnes as wheat surrenders market share back to corn.

The average soybean price is forecast at $12.75 per bu., down 25 cents from the current year but still $2.55 per bu. above the historic average.

South America’s production problems should result in strong demand for U.S. soybeans, bolstering prices for the crop.

The USDA is forecasting a 100 million bu. increase in soybean exports, which will more than offset the 55 million bu. hike in production.

American farmers are forecast to plant 88 million acres of the crop, a slight increase over last year’s 87.2 million acres.

Endings stocks are forecast to fall 20 million bu. due to the strong export program and a 35 million bu. increase in domestic crush to meet the burgeoning renewable diesel demand.

Growers are forecast to plant 92 million acres of corn, down from last year’s crop of 93.4 million acres.

But production is expected to climb by 135 million bu. due to a return to normal yields.

A 75 million bu. drop in exports will be offset by a 75 million bu. increase in corn for ethanol use.

Ending stocks will climb 415 million bu., which is bad news for prices with the average farm price falling to $5 per bu. in 2022-23, a 45-cent decline from this year’s anticipated average.

“It’s important to note that $5 is still high by historical standards,” said McConnell.

He acknowledged that sky-high fertilizer prices may have an impact on corn acres but added that planting decisions are based on margins rather than costs and margins are still very attractive for corn.

The Western Producer

Tags: wheat, yields, durum, corn, USDA, prices, soybean, Production