Estimated wheat price for next marketing year released

Kansas State University’s estimated wheat price for next year’s Marketing Year Average price is $5.09. This would generate a 2018-19 wheat Price Loss Coverage payment of about 41 cents. This is an early estimate with a “large” error, so we need a few more observations before there can be any confidence in the estimate.

How is it possible that the final MYA soybean price was $9.33 when my local cash market is closer to $7? The MYA price is a weighted average price based on percent of crop sold each month. The final prices and weights are posted in Tables 2, 3, and 4 for corn, grain sorghum and soybeans. If one sums the weights, 70 percent of the soybean crop was sold by January, so these current prices mean very little in the calculation of the MYA prices that determine government payments. These are cash prices and not futures, but they are averaged across the entire USA. Our final estimated corn and soybean prices had no error. K-State’s estimated grain sorghum price was 5 cents too high and will make the PLC payment larger than the final forecast. The final 2017-18 wheat price was published last month. The final wheat price was $4.72 and will generate a PLC payment of 78 cents. Based on USDA’s final MYA published prices, PLC will pay 34 cents on corn, 73 cents on grain sorghum, and zero on soybeans. Soybeans were 93 cents higher than the $8.40 reference price and that eliminates PLC payments on soybeans.

Farmers will need to multiply the payment rate times their farm-level approved FSA yield times 85 percent times their base acres to generate their expected PLC payment for their farm. The PLC payment is subject to payment limits and sequestration cuts.

Farm Service Agency will publish their final approved county yields after they make Agriculture Risk Coverage and PLC payments, in the next couple of weeks. Likely it will require lower 2017 crop yields in order to trigger ARC payments. The price decline alone will likely not trigger ARC payments. The ARC payment is subject to payment limits and sequestration cuts.