USDA’s chief economist presents his forecast at the agency’s annual Agricultural Outlook Forum.
In a packed hotel ballroom far from the fields of the Midwest, USDA Acting Chief Economist Robert C. Johansson presented the factors that will affect American agriculture in the year ahead.
“Overall, the forecast for the coming year is bright,” said Johnson, speaking at USDA’s Agricultural Outlook Forum in Arlington, Va. “Record production has meant that stock levels are higher and prices are lower, but producers will benefit from record asset levels and from new farm programs intended to cushion declines in farm revenues.”
Of course, if you are a row crop farmer trying to figure out whether prices will be low enough to elect PLC, you might not feel so optimistic.
But as you make your marketing plans for 2015, consider these seven statistics, based on USDA's forecast.
- U.S. agricultural exports are expected to remain strong in 2015, hitting the second-highest level ever at $141.5 billion. That’s lower than 2014, but only because commodity prices have fallen.
- Those prices will remain painfully low in 2015/16, thanks to bumper crop after bumper crop. USDA projects $3.50 for corn, $5.10 for wheat and $9 for soybeans.
- Soybeans continue to be an important crop for U.S. farmers, who could export more than 48 million metric tons of beans in 2015, which Johansson said could be a “record level if realized.”
- We have some competition for the top spot in grain exports. While the U.S. is expected to remain the largest exporter of corn in 2015, that title is at risk for other commodity crops. In soybeans, the U.S. will likely lose out to Brazil in 2016/17. Economists expect American soybeans to lose market share on the global stage, falling to 33% by 2024. In comparison, Brazil is expected to capture 46% of the global soybean market during the same time frame. In wheat, the European Union and Russia are both nipping at America's heels. The U.S. was the top wheat exporter as recently as 2013/14.
- USDA thinks farmers are going to plant fewer acres this year, even in soybeans. “Soybean area is expected to fall modestly from its record area in 2014 to 83.5 million acres, with movement out of soybeans tempered by its lower operating costs and forward marketing opportunities in the past few months,” Johansson said. As expected, corn acres are also expected to drop, with 89 million acres projected for 2015. Winter wheat seedings have already dipped nearly 2 million acres, although growers may offset that through spring wheat crops.
- With $2.7 trillion in farm equity, farmers should be financially stable enough to withstand the downturn in crop prices. “Farm equity is the highest it has been since we began collecting and reporting on profitability in 1960,” said Johansson, who also noted that farmers’ current debt-to-asset ratio of 10.9% is also historically low.
- The U.S. will produce a record 95 million pounds of meat in 2015, thanks to the pork and poultry industries. Milk production will also be historically high, at 211.5 million pounds. But while the margins for cattle will stay strong in 2015, prices for pork, poultry and dairy are likely to soften.