Every corn producer would love to know the harvest price for corn prior to harvest. Researchers at the University of Illinois have sought to give corn producers what they want by developing a statistical model to project the 2020 harvest price for corn. What does the model say? The harvest price will be $3.10 per bushel. And that’s a futures price, so the cash price is projected to be lower, perhaps below $3.00 per bushel.
The model uses two variables to predict the harvest price: the national corn yield estimate and the average of May futures prices. Yield and price data from 1985-2019 were used to create the model. Figure 4 shows a range of possible harvest prices given different corn yields. Yields are a key factor in determining prices. Higher yields mean lower prices; lower yields higher prices. The USDA forecast yield was 178.5 bushels per acre at the time the researchers conducted their analysis, which did not change in the USDA projections released Friday. Based on the projected yield, a price of $3.10 was projected by the model. The final column in Figure 4 shows the 90 percent range ($2.91 – $3.29) for a yield of 178.5 bushels. This means it is expected the harvest price will be in this range 90 percent of the time based on historical data. If yields were to drop to 170 bushels per acre, the expected harvest price would increase to $3.39/bushel. On a related note, on Friday the USDA forecast an average farm price of $3.35 per bushel for the marketing year beginning September 1, down 15 cents from the June price projection.
Figure 4. Projected 2020 Corn Harvest Price
Source: Source: Schnitkey, G., K. Swanson, N. Paulson, C. Zulauf and J. Coppess. “Expected Harvest Prices for Corn in 2020.” farmdoc daily (10):109, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, June 16, 2020.