Using Futures Prices to Forecast the Season-Average Price and Price Loss Coverage (PLC) Payment Rate for Corn, Soybeans, and Wheat
Errata: On May 16, 2016, the corn data table of the Season-Average Price Data was reposted to correct the listing of the “Midpoint of WASDE projection” to report $3.35 per bushel, instead of $3.85 per bushel.
Farmers and policymakers are interested in season-average forecasts of prices received by farmers for corn, soybeans, and wheat. These forecasts are also needed to compute Price Loss Coverage (PLC) payment rates and Agricultural Risk Coverage (ARC) payments that began in 2014/15 under the 2014 Farm Act. For more information on the new PLC and ARC programs, see Agricultural Act of 2014: Highlights and Implications and USDA's Farm Service Agency (FSA).
This data product provides three Excel spreadsheet models that use futures prices to forecast the U.S. season-average price received by farmers for corn, soybeans, and wheat. The models also compute the PLC payment rates for marketing years 2014/15 and beyond. The models do not compute ARC program payments for marketing years 2014/15 and beyond because those calculations require State-, county-, or farm-level data. Users can view the model forecasts or create their own forecast by inserting different values for futures prices, basis values, or marketing weights. A brief description of the forecast model components, procedures, and data is provided in Documentation.
Previous season-average price forecasts for corn, soybeans, and wheat were also used to compute Counter-Cyclical Payment (CCP) rates for marketing years 2003/04 through 2013/14 (see historical forecasts for these computations). Official USDA CCP rates are available from USDA, FSA. The models did not compute Average Crop Revenue Election (ACRE) program payments for marketing year 2013/14 or earlier because those calculations required State-, county-, or farm-level data.
For each of the three major U.S. field crops, the Excel spreadsheet model computes a forecast for:
- The national-level season-average price received by farmers.
- The implied price loss coverage (PLC) payment rate.
Note: the model forecasts are not official USDA forecasts. See USDA's World Agricultural Supply and Demand Estimates for official USDA season-average price forecasts. Official USDA PLC rates are available from the Farm Service Agency information for official USDA CCP rates.