Good early season planting enabled much of the crop to get in the ground early across Minnesota. The weather scare of a possible drought has been relieved by spring rains so at this point the yield potential is good for the 2015 crop. Ending stocks for the 2014 crops are larger for both corn and soybeans than the previous year and the potential for these to grow at the end of 2015 is possible with the right growing conditions.
Iowa State publishes balance sheet projections for both corn and soybeans and will update these again after the June 30th crop report is released. Current projections for corn with national yield of 165 bushels would have ending carryover declining from 1,835 million bushels at end of 2014-15 crop year to 1,540 million bushels with 89.2 million acres of planted corn. This projects a $4.20 national weighted average price and $4.15 December futures price at harvest, with at 50 cents basis this would translate to $3.65 cash corn at harvest. If national yields are 159 bushels per acre, projections are for $4.85 December futures at harvest or $4.35 cash and if yields are 170 bushels, December Futures would average $3.85 or $3.35 cash. With a 165 bushel national yield ending carryover would be at 5.8 weeks compared to 7.0 weeks for 2014-15 crop year and at low of 3.8 weeks for the 2012-13 crop year.
For soybeans with an average national yield of 44 bushels per acre, on 84.6 million planted acres, the national weighted average price is projected at $8.50. With November futures at harvest of $8.50 with a local 60 cent basis this would be $7.90 cash price. With a national yield of 41 bushels per acre, November futures would be $10.70 or $10.10 cash and if yield is 46 bushels per acre November futures would be $8.25 or $7.65. Carryover at 44 bushels is projected at 5.1 week supply, with 41 bushels 2.3 weeks and with 46 bushels 7.2 weeks. These compare to a low of 1.4 weeks for the 2013-14 crop year. These balance sheets can be found at:
http://www.extension.iastate.edu/agdm/crops/outlook/cornbalancesheet.pdf for corn and at http://www.extension.iastate.edu/agdm/crops/outlook/soybeanbalancesheet.pdf for soybeans.
With these projected prices, it is hard for farmers to put marketing plans together at target prices that will cover their cost of production, which range between $4.50 to $5.00 for corn and $11.00 to $12.00 for soybeans. Forward contract bids for 2015 corn and soybeans are under $3.50 and $9.00 respectively. If prices do not improve, many farmers will experience losses in 2015. The price outlook for 2016 is not much better. October 2015 cash prices are $3.41 for corn and $8.60 for soybeans, while October 2016 cash prices are $3.55 for corn and $8.67 for soybeans.
Lower yields might raise national prices, but will also lower the gross income per acre. The current lower prices could create stronger demand and if the dollar weakens, this could increase export demand, the other option is a weather scare and the drought area has shrunk. With the current outlook farmers will need to look for ways to lower their cost of production for 2016 if current prices continue.