Historical variability can be used to gain a feel for the range of prices possible in 2013. Currently, the December 2013 futures contract is trading around $6.40/bu. Given the average change between the MYA and futures contracts from 1975 through 2011, the expected 2013 MYA price is $5.95 ($6.40 futures price x ( 1- 7% average decline)).

Given history, there is a range of possible prices. If the largest price declines occur, 2013 MYA prices would be:

  • $4.38 if a year like 1981 occurs
  • $4.79 if a year like 1998 occurs
  • $4.88 if a year like 1999 occurs
  • $4.97 if a year like 2001 occurs

Conversely, if some of the largest price increases occur, 2014 MYA prices would be:

  • $8.29 if a year like 1995 occurs
  • $8.21 if a year like 1988 occurs
  • $7.88 if a year like 2006 occurs
  • $7.74 if a year like 2010 occurs

Historical price changes can also be used to gain a feel for the chances of low prices. Percentage changes suggest that 2012 MYA prices:

  • Will be below $4.50 in 3 out of 37 years, or 8% of the time
  • Will be below $5.00 in 6 out of 37 years, or 16% of the time
  • Will be below $5.50 in 14 out of 37 years or 48% of the time
  • Will be below $6.00 in 22 out of 37 years, or 59% of the time

 

Summary

Historical price changes suggest a wide range of prices is possible in 2013. Prices below $4.50/bu. are possible. Some of these are low and could signal lower net farm incomes. While not likely, prices changes outside of historical changes also are possible.

Read the article at farmdocDaily.