Farm Credit Canada Economist J-P Gervais

What Will Make USDA Change Grain Price Forecasts?

The USDA and the futures markets don’t seem to agree on where grain prices are headed.

The latest WASDE report suggests corn and wheat prices may weaken while soybean prices stabilize in 2016-17.

Corn and soybean prices are high in the futures markets.

Farm Credit Canada Economist J. P. Gervais believes there are three key factors that will determine whether the USDA revises their price projections to align with the current market.

First is the value of the U-S dollar.

If it falls, demand is likely to increase in response to buyers’ purchasing power.

Second is the possibility that weather could impact production.

Gervais says given the existing volatility in the markets, weather patterns in any globally important production region will impact markets.

And the third factor is demand.

The FCC economist suggests even if the feed demand doesn’t meet the USDA’s projections, the strong ethanol market could make up the shortfall.