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CME:

by 5m Editor
1 August 2011, at 1:01pm

US - The intrepid forecasters of the Agricultural and Applied Economics Association’s Extension Section take their best shots at more than just livestock — they forecast a number of data pieces and prices for crops, the agricultural economy and the general economy as well. And let no one think this effort is without consequences!, write Steve Meyer and len Steiner.

The forecasters who are the most accurate for Livestock, Poultry, Crops, Dairy and the General Economy receive handsome certificates that, while not done in Old English calligraphy by master craftsman, do take several minutes each to print on the University of Missouri’s high quality printers. It’s amazing what economists will actually compete for.

The group’s average forecasts for wheat, corn and soybean output, exports, 2011-12 crop year ending stocks and annual average US farm price appear in the top table below.

The group’s wheat forecasts are very close to USDA’s July WASDE predictions.

They are decidedly less optimistic than USDA about the corn supply situation, however, with their average production figure being nearly 300 million bushels lower than USDA’s July WASDE figure of 13.47 billion bushels.

The surveyed economists believe the lower output figure till push exports slightly lower than USDA’s predicted 1.9 billion bushels and have 2011-12 year-end stocks just over 80 million bushels lower than does USDA at this time.

The economists implied stocks-to-use ratio for the 2011-12 crop year is 5.7 — significantly lower than USDA’s current 6.2. And yet the economists’ forecasted average farm price of $6.22 is still well within USDA’s current range of $5.50 to $6.50.

It should be noted that the survey was sent out in early July. We do not know when most of them were submitted by our guess is that they were virtually all submitted AFTER the 12 July Crop Production and WASDE reports were released.

Another item forecasted by the surveyed economists was the futures market prices of various commodities at specific points during the year.

It should be noted that the economists were only asked about crop futures prices. The average responses are shown in the bottom table.

There were nine respondents for corn, wheat and soybeans and 8 respondents for bean oil and meal.

It is no surprise that no one expects futures prices to be low at any time during the year and the forecasts exhibit what appears to be reasonably normal carries.

For comparison, consider that July wheat futures on 29 June of this year closed at $7.40/bu. — compared to a forecast of $7.67 next year.

For corn, that comparison is $6.85 in ‘11 and a forecast of $7.10 in ‘12.

July soybeans closed on 29 June, 2011 at $13.27, nearly one dollar lower than they are expected to close next year on that date.

Higher 2012 soybeans mean higher soybean products — meal was “only” $337.90/ton this year on 29 June and oil was $0.5555/lb.

The meal price forecast for next year is nearly 10 per cent higher than what we saw this past month.

For the farm economy, the survey respondents see national average farmland values finishing the year strong at +4.8 per cent from 2010 and, on average, expect land values to continue rising in 2011 but at a slower rate, 3.1 per cent.

These economists believe that the economy will actually grow at a faster rate in 2012.

The average forecast for real GDP growth in Q3 and Q4 of ‘11 are 2.3 per cent and 2.2 per cent with an annual rate of 2.1 per cent.

Quarterly GDP growth is forecast to range from 2.2 per cent in Q1 2011 to 2.6 per cent in Q4 with the annual rate coming in at 2.5 per cent.

They also expect inflation, as measured by the CPI for all items, to increase slightly from three per cent this year to 3.2 per cent in 2012.

Finally, they expect monthly WTI spot crude oil prices to range from $87.40 to $112.67/bbl over the next 12 months. That range compares to a range of $75 to $110/bbl over the past 12 months.

5m Editor