Crop Insurance Today June 2018 - 15

ative to lower increases in consumption.
In the U.S. however, increased cotton production of more than 18 percent coupled with
around a 1 percent increase in total consumption, resulted in almost a doubling of ending
stocks forecast. Most recent estimates place
U.S. ending stocks up from 2.75 million bales
in 2016-17 to 5.3 million bales in 2017-18 for a
29 percent stocks-to-use-ratio, up from 15 percent in the previous year. Despite the downward
pressure generated by larger stocks, U.S. cotton
prices are expected to remain above the previous year, based on strong global demand.
In the U.S., the overall crop price index reflects a continued horizontal slide in prices,
down from the high levels seen in 2012 -14 (Figure 10). Market prices for crops continue to face
headwinds from burdensome stock levels and
lack luster demand, particularly in the grains
and oilseeds sector. At the same time animal
product prices, while up slightly from the previous year, continue to be in much lower territory
than the high levels of the 2012 to 2014 period.
In 2017, U.S. soybean ending stocks were
expected to continue to increase for the second
year in row (Figure 10). Corn ending stocks
were expected to decline from the previous
year's level, consistent with a falloff in production and modest gains in total use for the year.
Ending stocks of soybeans swelled and were
placed at 550 million bushels, almost double the
2016 level of 302 million bushels. The current
estimate for soybean ending stocks is the highest since 2006. At the present level the stocksto-use-ratio for U.S. soybeans would be more
than 13 percent, up more than 70 percent from
the 2016 level of 7.1 percent. Increased domestic use, up 4 percent from the previous year to
2.103 billion bushels, was offset by an estimated 5 percent decline in exports to 2.065 billion
bushels, in a year when production increased for

Figure 13 Prices for 2017 RP and RP-HPE Plans of Insurance

Data ss of April 16,2018
Source: RMA Actural Information Browser

the third consecutive year to 4.392 billion bushels. Concerns over production shortfalls in other producing countries appear to mitigate what
would be a burdensome stock accumulation,
as the estimated season average price remains
pegged at $9.30 per cwt.
The 2017-18 corn supply demand picture included a decline in production, increased total
domestic use, and increased exports. In combination, these factors contribute to an estimated
reduction in ending stocks of about 2.6 percent
and a decline in the stocks-to-use ratio of more
than 5 percent from 15.7 percent in 2016-17 to
14.8 percent for 2017-18. Despite the decline in
ending stocks, the most recent mid-point price
projection remains at $3.35, slightly below the
level of the previous year. Developments in the
Southern Hemisphere crop, particularly in Argentina, could provide some late season price
support and boost expectations for the coming

year.
While down from the peak in 2014, the
animal and animal products index of product
prices reflects an improvement in 2017(Figure
11). On the livestock side, U.S. beef cattle herd
continue to expand for the third straight year,
up 3.5 percent from 2016. Beef production increased by around 5 percent from 2016, and the
average annual price for choice steers remained
stable, up only slightly from the previous period
to $121 per cwt. Feeder steers prices increased
almost 2 percent from 2016 and with an annual average of $145 per cwt. The market for pork
improved in 2017 with higher production and
higher prices, with pork production up by 2.5
percent and hog prices up by an annual average
of 8 percent from $50 per cwt. in 2016 to almost
$54 in 2017. The improved market is attributed
to strong pork demand around the world, increased retail demand in the U.S., and a 7 per-

Table 2 Major Revenue Policy Base Prices1

CROPS

2011 2012 2013 2014 2015 2016 2017
2018

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

% CHANGE
2016-17 2017-18

7.14 8.62 8.78 7.02 6.30 5.20 4.59 4.87 -11.7 6.1
9.89 7.84 8.44 6.51 5.85 5.13 5.65 6.31 10.1 11.7
6.01 5.68 5.65 4.62 4.15 3.86 3.96 3.96 2.6 0.0
13.49 12.55 12.87 11.36 9.73 8.85 10.19 10.16 15.1
-0.3
1.15 0.94 0.81 0.78 0.63 0.62 0.73 0.75 17.7 2.7
16.10 14.70 15.70 13.90 2 11.90 10.40 11.90 -12.6 14.4

Revenue Protection for 2011-18 as of April 16,2018.
Due to insufficient futures price data, revenue insurance was not available in 2015.
Source: RMA Actuarial Information Browser
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