Less corn and wheat acres, more beans and cotton
The anticipation that builds in the days leading up to spring is almost too much to contain. To kick-start the season’s fever, USDA hosts the Agricultural Outlook Forum each February to release the numbers that paint a bigger picture.
Despite record grain production in 2013, agriculture enters a new growing season with a "pretty tight" stock situation, said Joseph Glauber, USDA chief economist, at the Outlook Forum.
"If problems arise this year," he said, referring to a potential production shortfall due to inclement weather or other pressures, "we could see price spikes like we did in 2010 and 2011."
Otherwise, the forecast Glauber presented calls for continued price declines this marketing year. Corn prices are predicted to fall from $4.50 to $3.90, soybeans from $12.70 to $9.65, and wheat from $6.80 to $5.30. Cotton prices will not be spared, falling to a projected 68¢ in 2014/15 from this year’s estimated 76¢ per pound.
At the event, Glauber noted that USDA raised its expectation for 2014 corn prices from its 10-year forecast, which was released just days before the Outlook Forum. The reason for the update: The farm bill focuses on base acres rather than planted acres.
USDA’s forecast calls for a 60¢ per bushel decline in corn prices for the year, which would drop them to their lowest level since 2009/10.
Lower prices are likely to translate into lower plantings for the eight major row crops this year, according to USDA. Crop mixes will change, especially on Midwest farms. "Stronger soybean prices relative to corn should support soybean plantings this year," Glauber added.
USDA is calling for 3.5% drop in corn plantings to 92 million acres and a 3.9% increase in soybean acres to 79 million acres. Wheat plantings will be down 1.2%, while all types of cotton will rise by 10.5%.
"Some people might say that’s a pessimistic outlook," Glauber said, "but we still have very positive dynamics in the market."
Exports are one bright spot. USDA estimates agricultural exports will reach a record $142.6 billion, up more than $5 billion from August. "Imports are up, too, but the trade balance is very healthy," he said.
Forecasts for the livestock industry are more optimistic than the crop sector. Lower feed prices should continue to bolster margins in 2014.
Dairy margins are expected to stay above $8 per cwt. this year. "Dairy product prices have been at or near record levels due, in part, to strong demand for U.S. products, especially cheese and butter," Glauber said.