FAPRI updates price outlook baseline

Wednesday, September 24, 2014

COLUMBIA, Mo.-- Crop prices have fallen sharply while livestock prices have reached record levels in 2014.

Next year could see some moderation in livestock prices and continued low crop prices.

The August baseline update from the Food and Agricultural Policy Research Institute at the University of Missouri projects record corn and soybean harvests this fall.

FAPRI director Pat Westhoff says those records will continue to pressure crop prices.

Corn prices are under $4 per bushel. Westhoff says with large ending stocks at the end of this year, prices for corn and soybeans will remain under pressure into next year.

"If we continue to plant a lot of corn and soybeans in 2015 as appears very likely, we could have another year of depressed prices," Westhoff says. "We are currently projecting that soybean prices may drop below $10 a bushel for the first time since 2009."

On the flip side, livestock producers are seeing higher prices resulting from strong demand in beef, limited supplies of pork and strong international demand for dairy products.

With lower feed costs, Westhoff expects producers to expand production, which will eventually lower prices.

Westhoff says that consumers have seen an uptick in food price inflation this year, caused mostly by higher meat and dairy prices.

However, with a downturn in live animal prices, consumers should see some moderation on grocery store shelves.

Westhoff says it's possible food price inflation could drop to less than 2 percent in 2015.

Another impact of the lower crop prices is increased production of biofuels.

Westhoff says existing ethanol plants are operating at or near full capacity, and in addition to meeting domestic needs there has been an increase in exports this year.

Westhoff cautions that this is just an update and the actual size of this year's crop isn't known yet.

"There's a lot of uncertainty in these projections," Westhoff says. "If you ask me a few weeks from now what I project, it may be very different from what I tell you today."

The FAPRI August update to the baseline outlook is available at www.fapri.missouri.edu.

A companion report with more details on livestock and consumer prices can be found at amap.missouri.edu.

Contact Jason Vance at 573-882-9731 or VanceJJ@missouri.edu