The Congressional Budget Office just stole USDA’s thunder

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Will you be planting more corn or more soybeans in 2013, compared to 2012?  While that is a personal decision, the Congressional Budget Office projects a few more corn acres and less soybean acreage.  While that agency, which guides Congress on its policy deliberations, may not be high on the radar of commodity traders, its numbers will come from sources similar to that of USDA.  In fact, the CBO may have let the cat out of the bag as far as USDA’s crop projections scheduled for release at the Outlook Forum later this month.

The Congressional Budget Office (CBO) released its 2013 baseline for farm programs, designed to give members of Congress an idea of how much money would be required to operate commodity programs in the coming year, and the following 9 fiscal years.  Those funds are calculated from acreage and yield projections for major program crops, along with supply and demand estimates akin to the monthly data released by USDA.

The data released by the CBO is likely to be close or possibly identical to the projections offered February 19-20 at the Outlook Forum in Washington.

Corn:

CBO is projecting a 19.3% participation in ACRE, up from 16.4% the past two crop years.  Planted acreage is forecast at 97 million, with a yield of 161.5, which would be slightly under a trend yield for 2013.  With total production of 14.454 billion bushels, stocks and imports would raise the supply to 15.121 billion bushels.  Demand would be lead by 5.1 billion bushels used for ethanol and 4.975 billion bushels for feed.  Exports would rebound substantially from the 1.1 billion bushels from the current marketing year to 1.750 billion bushels.  Much of that demand would be based on the average price of $4.51 per bushel for the 2013 crop, pushed down by the help of 1.8 billion bushels in carryout.

Soybeans:

CBO forecasts 19.3% of acreage to be in the ACRE program, up from 15.1% the past two years.  Planted acreage is projected at 77 million with a 43.5 bushel per acre national average yield.  Total production would be 3.306 billion bushels.  With beginning stocks and imports, the supply would be 3.451 billion.  The domestic crush is expected to rise from the current 1.560 billion to 1.635 billion for the new crop.  Exports are forecast at 1.443 billion bushels, up 100 million from the old crop, putting total use at 3.180 billion and carryout at 281 million.  The average price for the marketing year is projected at $11 for soybeans.

Wheat:

CBO expects the current wheat crop to have an average yield of 45.5 bushels per acre from 57 million planted and 48.4 million harvested acres, which would be just fewer than 85% of planted acreage.  Production would total 2.209 billion bushels, and combined with beginning stocks and imports, the total supply would be 3.075 billion bushels.  Food use is projected at 958 million, feed use at 250 million, and exports at 1.050 billion bushels, pushing the carryout to 744 million (32%). That would push the average season price to $7.05 per bushel.

Budget outlays:

CBO projects $6.242 billion will be needed for 2013 crops, up from $5.06 billion in 2012.  That is based on higher outlays for feed grains and wheat, specifically for direct payments.  Those jump from $1.558 billion to $1.982 billion for corn, from $433 million to $560 million for soybeans, and from $865 million to $1.072 billion for wheat.

The CBO also projects higher outlays for conservation, rising from $4.692 billion in 2012 to $5.172 billion in 2013.

Crop Insurance costs

CBO is also forecasting the need for $15.999 billion in outlays for crop insurance indemnity payments for 2012 crops and along $10.139 billion for 2013 crops.  While the loss ratio for 2013 is set at the theoretical $1 in and $1 out for premium payments and indemnity payments, the 2012 budget for crop insurance indicates a loss ratio of 1.45, or $1.45 out for each $1 premium payments.  The CBO projects a total underwriting loss for the 2012 crop season at $12.504 billion.

Summary:

For the 2013 cropping year, the Congressional Budget Office is projecting planted acreage at - corn 97.0 mil., soybeans 77.0 mil., and wheat 57.0 mil.  The CBO yield forecast for 2013 is - corn 161.5, soy 43.5, wheat 45.5 bu/a.  CBO’s forecast for ending stocks (Aug 2014) is - corn 1.852 bil, soy 281 mil, wheat 744 mil bu.  CBO’s Projections for season average prices is - corn $4.51, soy $11.00, wheat $7.05.

Source: Farm Gate blog


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