Crop Insurance Today - 13

pace with increased global production resulting in
another increase is global ending wheat stocks.
Global coarse grain ending stocks are estimated to increase again in 2016 as overall global
production exceeds consumption and a rebound
in the South African crop. Reduced corn production in China contributed to a draw down in their
large ending stocks that have weighed on the market. Increased soybean production help offset increased global oilseed use resulting in an expected
increase in ending stocks of just over 10 percent.
Global cotton production is projected to increase this year to 105.7 million bales, up by nine
percent from 2015, driven mostly by the increase
in U.S. cotton production. In the top producing
countries production is also expected to increase
in 2016/17 despite a crop that is below the fiveyear average in India and a continued decline in
cotton area in China. Global production of cotton continues to exceed consumption; however,
reduction in stock holdings in China are expected to lead to a reduction in ending stocks to 90.5
million bales, the lowest in five years.
Figure 9 depicts the overall movements for
the aggregate indices of prices received by U.S.
farmers for crops and for animals and animal
products monthly since 2000. Global crop production increases, coupled with sluggish demand growth, have led to crop prices following a
downward path. USDA NASS reports cattle and
calf inventories continue to increase for the third
consecutive year in 2016, up two percent by the
start of the 2017 at 93.6 million head.
As the total herd size increased, total commercial cattle slaughter increased. Cattle prices continued to run well below those in the 2012 -2014 period. A run-up in live cattle futures prices during the
final months of 2016 is not expected to continue
into 2017. Prices for poultry and eggs also lagged
previous years, despite increasing in the latter part
of 2016. Dairy prices rebounded in the latter part
of 2016, with the December price index up eight
percent from the same period in 2015.

Figure 10 U.S. Prices and Carryover Stocks as a Share
of Total Use

The supply and demand situation for corn and
soybeans is illustrated in Figure 10. The growth
in U.S. carryover stocks continues. The overall
use of U.S. soybeans, forecasted to increase by
four percent, failed to keep pace with production.
U.S. soybean production in 2016 was forecast to
reach a record, 4.533 billion bushels, up almost
10 percent from 2015. With beginning stocks
of 197 million bushels already on hand, soybean ending stocks would climb to 420 million
bushels, more than double last year's level. For
2016/17, USDA forecasts soybean ending stocks
at a little under 10 percent. Despite increased
carryover, prices are expected to average between
$9.00 and $10.00, up from last year's average of
$8.95, but remain well below the marketing year
average price of $13.00 per bushel just three years
ago. Corn production also increased in 2016, up
11 percent from 2015 to 15.1 billion bushels. Increased forecast for industrial use and exports
put total use for 2016 at 14.620 billion bushels
resulting in an increase in ending stocks to use

ratio to almost 16 percent, up three percent from
2015. Increasing carryover stocks are reflected in
lower expectations for the season average price in
the $3.25 to $3.55 range.
The picture for U.S wheat farmers is similar.
Wheat ending stocks for 2016/17are forecast
to continue their upward trend at 1.159 billion
bushels, up almost 18 percent from last year. The
implied 52 percent stocks to use ratio will continue to weigh on the market, depressing price
expectations.
The U.S. cotton market has had a somewhat
more positive experience. Global stocks are expected to fall to 91 million bales, down six percent from 2015's 102.2 million bales. If correct,
it will mark the second year of declining world
stocks after increasing for five years. China was
responsible for the global stock build up and is
the engine behind the draw down with reduced
support for domestic production and disposal of
some government stocks. U.S. cotton production
in 2016/17 is forecast to be 16.4 million bales,

Table 2 Major Revenue Policy Base Prices1

% CHANGE
CROPS

2010 2011 2012 2013 2014 2015 2016 2017 2015-16 2016-17

Wheat, Winter ($/bu) (KS)
Wheat, Spring ($/bu) (ND)
Corn ($/bu) (IL)
Soybeans ($/bu) (IL)
Upland Cotton ($/lb) (MS)
RICE ($/cwt)

5.42 7.14 8.62 8.78 7.02 6.30 5.20 4.59 -17.5 -11.7
5.43 9.89 7.84 8.44 6.51 5.85 5.13 5.65 -12.3 10.1
3.99 6.01 5.68 5.65 4.62 4.15 3.86 3.96 -7.0 2.6
9.23 13.49 12.55 12.87 11.36 9.37 8.85 10.19 -9.0 15.1
0.72 1.15 0.94 0.81 0.78 0.63 0.62 0.73 -1.6 17.7
14.00 16.10 14.70 15.70 13.90 2 11.90 10.40 2 -12.6

Revenue Protection for 2011-17 and Revenue Assurance for 2010 as of April 15,2017.
2
Due to insufficient futures price data, revenue insurance was not available in 2015.
Source: Various RMA Manager's Bulletins
1

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