Corn, Soybean, Wheat Prices May Slip in Next Decade (Update1) - Business Week

Corn, Soybean, Wheat Prices May Slip in Next Decade (Update1) - Business Week
February 11, 2010, 04:25 PM EST
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y Alan Bjerga

Feb. 11 (Bloomberg) -- Corn, wheat and soybean prices will decline on average from their peaks during the next decade as new seed technology boosts yields, according to the U.S. Department of Agriculture.

The price paid to farmers for a bushel of corn, the most- valuable U.S. crop, will peak at $3.90 a bushel for grain planted this year and fall to $3.65 by 2018, the USDA said today in an annual 10-year baseline forecast. New seeds from Monsanto Co. and DuPont Co. will help produce 14.6 billion bushels in 2019, 11 percent more than the current season’s record harvest, estimated at 13.2 billion bushels on Feb. 9.

“We’ll see variations to prices much greater than what the baseline says, because baselines tend to follow straight lines,” Daryll Ray, who directs the University of Tennessee’s Agricultural Policy Analysis Center, said in a telephone interview before the forecast was released. “We’re seeing increasing productivity and increasing demand.”

Corn, wheat and soybeans are all down at least 8 percent this year on forecasts for record crops. Last year’s soybean harvest rose to a projected 3.361 billion bushels, the department said Feb. 9. Wheat reserves will reach 981 million bushels this year, the most since 1988.

Price Outlook

Corn’s average price for the year that began on Sept. 1 is estimated at $3.55 a bushel in today’s report. The price was forecast to average $3.70 in the Feb. 9 report, based on more recent data.

Soybeans, which the USDA on Feb. 9 estimated to average $9.45 a bushel for the current crop, may fall to $9 next season and reach $9.25 by 2015, declining to $9.20 by 2020. Wheat will peak at $5 a bushel in the marketing year that begins June 1, dropping to $4.75 by 2016. Upland cotton will rise from 56 cents a pound this marketing year to 64 cents by 2020.

As much as 35 percent of annual corn harvests will be used to make ethanol through the next decade, according to the report. The alternative fuel will consume about 33 percent of the crop in the current marketing year, the USDA said on Feb. 9.

The area planted with corn last year, which the department forecast at 86.5 million acres (35 million hectares) on Feb. 9, will peak at 90 million acres next year and fall to 89 million acres by 2019, the USDA projected.

Planting Estimates

Fields planted with soybeans, which the USDA earlier this week placed at 77.5 million acres in 2009, will fall to 73.5 million acres by 2011 and stabilize at 76 million beginning in 2014, according to the forecast.

Wheat plantings, estimated at 59.1 million acres for 2010, will fall to 53.5 million acres in 2019, the USDA said.

Farmers will plant 9.15 million acres with upland cotton this year, according to the department’s report earlier this week. Fiber acreage will increase to 10.9 million acres by 2018, the USDA said today.

The projections in the baseline forecast are based on data gathered from October through December. The study assumes normal weather and no major pest or disease outbreaks.


--Editors: Ted Bunker, Steve Stroth.

To contact the reporter on this story: Alan Bjerga in Washington at +1-202-624-1857 or abjerga@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at +1-312-617-8952 or sstroth@bloomberg.net.