Crop Insurance Today Second Quarter 2019 - 14

Table 2 Major Revenue Policy Base Prices1
CROPS
2012 2013 2014 2015 2016 2017 2018 2019
Wheat, Winter ($/bu) (KS)
Wheat, Spring ($/bu) (ND)
Corn ($/bu) (IL)
Soybeans ($/bu) (IL)
Upland Cotton ($/lb) (MS)
Rice ($/cwt)

8.62
7.84
5.68
12.55
0.94
14.70

8.78
8.44
5.65
12.87
0.81
15.70

7.02
6.51
4.62
11.36
0.78
13.90

6.30
5.85
4.15
9.37
0.63
2

5.20
5.13
3.86
8.85
0.62
11.90

4.59
5.65
3.96
10.19
0.73
10.40

4.87
6.31
3.96
10.16
0.75
11.90

5.74
5.77
4.00
9.54
0.74
10.80

% CHANGE
2017-18
2018-19

6.1
11.7
0.0
-0.3
2.7
14.4

17.9
-8.6
1.0
-6.1
-1.3
-9.2

Revenue Protection for 2012-19 as of April 16, 2019.
2
Due to insufficient futures price data, revenue insurance was not available in 2015.
Source: RMA Actuarial Information Browser
1

expected that any upward price movement will
remain restrained in the absence of enhanced export opportunities.
Global cotton production is estimated to be
down four percent from the previous year. A
shortage of moisture and early abandonment
beyond second pickings were largely responsible for a decline in Indian production of 435,000
metric tons. Along with the weather-related fall
off in U.S. production of around 550,000 metric
tons, this accounted for almost 94 percent of the
falloff in global production. A small decrease
in consumption in Turkey linked to recent economic problems is responsible for a slight overall decline in global consumption. World ending
stocks in 2018/19 are forecast to decline by almost seven percent due mostly to a substantial
decline in China's stocks.
The 2018/19 U.S. cotton supply and demand
forecasts showed lower consumption and modestly higher ending stocks. The latest U.S. cotton
consumption forecast is the lowest level since
the 1890s, at 3.1 million bales. The latest ending
stocks forecast, 4.4 million bales, is a 100,000bale increase from the current estimate for
2017/18. The season-average farm prices are expected to remain in the midpoint estimate range
of 70 cents per pound.
U.S. soybean ending stocks are expected to
continue to increase for the third year in a row
(Figure 8). Ending stocks of soybeans increased
dramatically again this year, reaching 895 million
bushels, over twice the level of the previous year,
438 million bushels. The current estimate for
soybean ending stocks is the highest ever recorded with a stocks-to-use-ratio of 22 percent. The
impact of decreased export opportunities in the
Chinese market dominates the supply/demand
balance. Currently prices are projected in the
midpoint range of $8.60 per bushel, and any upward movement will likely depend a resolution to
14

SECONDQUARTER2019

the U.S. trade dispute with China or unforeseen
future negative weather effects. The current stock
levels imply any improvement in the soybean
outlook will likely take some time to be resolved.
In contrast to soybeans, the 2018-19 corn supply demand picture is somewhat more favorable.
U.S. corn ending stocks-to-use was forecast to decline for the third straight year, albeit only slightly.
(Figure 8) This is consistent with a falloff in production and modest gains in total use for the year.
Ending stocks are forecast at 2.035 billion bushels,
down almost five percent from the previous year.
However, declines in exports, down 6 six percent,
level feed use, and a two percent decline in ethanol
use combined to result in a stocks-to-use ratio of
14 percent, down 0.5 percent from the previous
year. Prices remain pegged at the mid-point estimate of $3.35 with little upward pressure expected
given increased competition from Brazil, Argentina, and the Ukraine.

The indices for prices paid and received by
livestock and crop producers summarize the situation facing most of U.S. agriculture over the
past few years (Figure 9). From the peak price
period of the mid 2000s, prices received display a
downward trend, while prices paid continue their
upward trajectory. The continuing gap between
receipts and outlays is weighing on the agricultural economy. While individual farmers may be
doing better, on average, measures of financial
wellbeing continue to decline. For example, the
current ratio, a measure of the ratio of current
assets to current liabilities, is down 50 percent
in the past six years from three to 1.5. Another
standard measure of liquidity, the ratio of working capital to gross revenue, is currently at 12 percent, its lowest level since 2009 and down from 25
percent in 2012.
The U.S. crops price index illustrates what is
seen in the movement in major commodity pric-

Weekly Corn Futures Prices
Figure
12. Weekly
Figure 10 December
Contract,
2012-2018Corn Futures Prices

December Contract, 2012-2018

$/Bu.

9.00
8.00
7.00

2012
2013

6.00

2014
2015

5.00

2016
2017

4.00
3.00

2018
1

13 17 21 25 29 33 37 41 45 49
Week

Data as of April 16, 2019
Source: Barchart.com
Data as of April 16, 2019 Source: Barchart.com

http://www.Barchart.com

Crop Insurance Today Second Quarter 2019

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