‘Big crops, low prices,’ for a long time ahead, says CBO

Farm-gate prices for corn and soybeans, the two most widely grown crops in the United States, are stuck in a rut for years to come, said the CBO on Monday in its long-term budget outlook. Farmers will grow near-record corn crops to generate revenue while slowly working down a soybean stockpile that is expected to approach a billion bushels this summer, the largest inventory ever. Farm income plummeted with the collapse of a seven-year commodity boom in 2013. The USDA forecast of $66.3 billion in income last year was half of the 2013 peak and a reflection of persistently low commodity prices. The CBO outlook, focused on farm subsidy costs, said corn would stay below $4 a bushel for the decade to come and soybeans would not top $9 a bushel until 2023. The last time corn and soybean prices were that low for an extended period was the early to mid 2000s.By contrast, wheat farmers can expect farm-gate prices of $5.10-$5.15 a bushel in coming years, said CBO. Prices would be better than the the aftermath of the commodity collapse but well below the halcyon levels of the boom, when the season-average price for wheat was a record $7.77 a bushel in 2012/13, boosted by drought in the United States and strong global demand for food. Corn and soybeans also set records in 2012/13 of $6.89 a bushel for corn and $14.40 for soybeans.The trade war with China has driven down U.S. soybean prices while ballooning the soy stockpile to four times its usual size, aided by record-large harvests. Formerly, China bought 1 in 3 bushels of U.S. soybeans. Exports volume has been slow to recover.Farmers will plant far more corn than soybeans this year — 93 million acres vs 83.5 million acres — after a virtual tie at 89.1 million acres in 2018, when China was an eager customer. With normal weather and so-called trend-line yields, the corn crop would be 15.1 billion bushels, the second-largest on record, and soybeans would total 4.15 billion bushels, the fourth-largest ever. The 2019 corn crop would sell for an average $3.75 a bushel, compared to $3.60 a bushel for the 2018 crop. Soybeans would fetch an average $8.23 a bushel during the 2019/20 marketing year, compared to $8.60 this marketing year.