The USDA released its monthly Crop Production and WASDE reports earlier this month and Kansas State University Extension Agricultural Economist Dan O’Brien has been crunching the numbers to see what they portend for grain prices in 2014.
The reports made no major changes in projected U.S. wheat market supply-and-demand balances for the wheat crop in the 2013/14 marketing year which ends May 31, 2014. O’Brien said competition from world wheat export competitors, however, will impact U.S. wheat exports, total use and ending stocks. These impacts will, in turn, influence prices. He said the countries which will are likely to have the most impact on wheat prices will be Canada, the Black Sea region countries, Australia, the European Union and Agrentina.
The USDA projected there would be some decreases in U.S. corn and soybean ending stocks that are likely to impact markets through the summer of 2014. No major changes were made in projections regarding sorghum, but O’Brien said cross-market effects from corn and soybeans are likely to influence sorghum prices.
In the latest reports, the USDA figure for projected U.S. wheat ending stocks stood at 575 million bushels for marketing year 2013/14. That was up 10 million bushels from the previous report, but it was down 29.7 percent from the MY 2012/13 average. The resultant prices for the 2013/14 crop are expected to be in the $6.65 to $7.15 range. That’s down from the record high of $7.77 per bushel.
In his 2014 “Outlook for Feedgrain, Wheat and Soybean Markets,” O’Brien calculates that there is an 80 percent probability the U.S. will export 1.037 billion bushels of wheat, keeping prices in that $6.65 to $7.15 range. If exports are higher, in the 1.1 billion bushel range, O’Brien projects prices could climb to between $7.25 and $8.25. The probability of that happening, however, is only ten percent.
The USDA pegs 2013 U.S. corn production at 13.989 billion bushels with an ending stocks-to-use ratio of 13.7 percent in 2013/14. That’s down from its projection of 14.6 percent one month ago and up from 7.4 percent for the 2012/13 crop. The resulting average corn prices for the new crop are likely to be in the $4.05 to $4.75 range, O’Brien said. That’s a long way from the record high of $6.89 a year ago.
O’Brien gives a 90 percent probability to a “Likely Yield Production” of 13.667 billion bushels of corn in 2013/14. That should result in a corn price between $4.65 and $5.65.
