FORT WAYNE, Ind. — Prices farmers get for corn and soybeans will likely drop this year, as the most recent USDA report on ending stocks showed higher numbers for both than the market expected, according to two market analysts who spoke during the Fort Wayne Farm Show.

Corn could drop $2 a bushel by this fall, said Jon Cavanaugh, marketing director with Central States Enterprises in New Haven, Ind. “Obviously, weather is the number-one variable,” he explained. “But it’s not looking good. There will be more corn acres, assuming we have normal spring weather. We could see sharply lower prices.”

Cavanaugh, along with David Kohli, market analyst with Allendale Inc.’s Fort Wayne branch, presented a Grain Market Outlook seminar on Jan. 17, the first day of the farm show. Kohli said he looks for corn to stabilize at $5.75-$6 a bushel. Both men expect soybeans in the $8-$9 range later this year.

Earlier this month, the USDA released several reports, including its annual crop production report. The agency estimated corn ending stocks to be 846 million bushels, 13 percent higher than the market was expecting. For soybeans, ending stocks were estimated to be 275 million bushels, 18 percent higher than expected.

On-farm storage has increased so much that it’s difficult for the USDA to accurately survey crops stored there, the men noted.

“I think there are some inaccuracies in the report, and I have real issues with the December stock numbers,” Kohli stated. “It’s hard for the USDA to get a good idea of what’s in farm bins.”

“The USDA report was shockingly bearish,” Cavanaugh added. “The market was expecting a bullish report. They thought final production numbers would go down, but they didn’t. The market is skeptical of the numbers. The huge variance caught the market completely off-guard.”

According to the USDA, demand for corn and soybeans will be down this year over last, which will also contribute to lower prices, Cavanaugh and Kohli said.

Demand for corn is projected to be 12.7 billion bushels, down from last year’s 13.1 billion, the USDA stated. For soybeans, demand is expected to be 3.01 billion bushels, down from 3.3 billion last year.

“Both corn and soybeans have a definite demand problem, which is a carryover from the high prices last year,” Cavanaugh noted. “The biggest variable for the U.S. is what’s going to happen in South America with their soybean crop.

“The next six weeks will make or break their soybeans. If they have a problem, we’d see exports shift back to the U.S. If we have some serious losses in South America, it will turn everything around.”

The USDA estimated corn production last year to be 12.36 billion bushels, down from 12.4 billion in 2010 but up from the December 2011 estimate of 12.31 billion. Soybean production last year was estimated to be 3.06 billion bushels, down from 2010’s 3.3 billion but up from the December estimate of 3.05 billion.

“The trade was anticipating further yield drops,” Kohli noted. “There’s not one bullish thing in the report.”

Supplies of wheat in the United States and worldwide are adequate, the analysts said, though they noted some of the wheat numbers in the USDA report were not as expected.

The agency’s report estimated winter wheat seedings of 41.9 million acres, up from last year’s 40.6 million. Hard red wheat was estimated at 30 million acres, up from last year’s 28.5 million. Soft red wheat was estimated at 8.4 million, down from last year’s 8.56 million.

“Where did they get that number for soft red wheat?” Kohli asked. “I was thinking that number would be much, much lower. There wasn’t much planted around here.”

The wheat market had expected a deeper cut in soft red wheat acreage because of late corn and soybean fall harvest and wet conditions, the analysts noted.