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AFBF: Corn, soybean and cotton prices likely to stay lowCorn and soybean producers will likely have to wait until the first of the new year for any rally in prices while cotton producers may continue to struggle with low prices, according to Terry Francl, senior economist with the American Farm Bureau Federation. The Agriculture Department's World Agricultural Supply and Demand Estimates, released Nov. 10, projects the 2008-2009 season average farm price for corn at $4.00 per bushel to $4.80 per bushel, compared to $4.25 per bushel to $5.25 per bushel in October. "This decline has been driven by the decline in oil prices and concerns about the financial and equity markets," Francl said. The U.S. season-average soybean price for 2008-2009 is projected at $9.10 to $10.60 per bushel, down 45 cents on both ends of the range reflecting lower cash and futures prices, according to the WASDE report. "Crude oil prices will continue to be a critical factor impacting both corn and soybean prices," Francl said. "Consequently, the post-harvest seasonal price rally may be somewhat moderate this year. However, as the new year approaches, more competitive bidding for 2009 acreage is expected to boost crop prices." As the bidding intensifies, Francl sees corn prices trading in the $5 to $6 per- bushel range, while soybean prices should trade in the $11 per bushel to $13 per- bushel range. The AFBF economist also paints a subdued outlook for the ethanol market in the months ahead. The WASDE November report pegs corn used for ethanol production at 4 billion bushels in 2008-2009. "Although an increasing renewable fuel standard will bolster demand, ethanol plants are going to continue to struggle until crude oil and gasoline prices recover." As for the cotton industry, Francl sees another difficult year ahead. "Cotton farmers are really struggling with low prices. This is a very difficult time to be in the cotton business," Francl said. The November WASDE report pegs the average farm price for cotton at 45 cents to 55 cents per pound, down from 51 cents to 62 cents per pound in October. "I only see limited upward potential for cotton prices due to declining world demand," Francl said. "One bright spot is that U.S. cotton export estimates are maintained at 13 million bales because U.S. cotton has become more competitive in recent weeks. If we are able to maintain this export momentum going into early 2009, it may spark a resurgence in cotton prices back to the 60 cent to 70 cent range." 12/1/08 Date: 11/21/08 Advertisement
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