Forming Corn and Soybean Price Expectations for 2016-17

In the farmdoc daily article of April 6, 2016 we offered a new specification for the relationship between the marketing year ending stocks-to-use ratio and the marketing year average farm price for corn and soybeans. Forecasting the marketing year average price using the new stocks-to-use and price model is a two-step process. The stocks-to-use ratio must be projected first and then the appropriate scenario for demand has to be specified. Here, we illustrate that two-step process for the 2016-17 marketing year using two alternative balance sheet projections for corn and soybeans. Based on this analysis, we draw broader conclusions about the likelihood and drivers of lower and higher prices.