Whether you're wondering what to plant or how to adjust your marketing plan for the year ahead, you'll want to familiarize yourself with the latest numbers from USDA. Released at the agency's annual Agricultural Outlook Forum in Arlington, Va., these figures provide the framework for USDA's regular data releases and the market's assumptions about ag commodities in the months and years ahead.
Here's what you need to know right now:
90 million: The number of corn acres in 2016, according to USDA's initial estimates. The agency also forecasts 82.5 million acres of soybeans and 51 million acres of wheat. Total planted acreage for top U.S. commodity crops like corn, soybeans, wheat, rice, cotton is expected to fall slightly to 249.1 million acres. How can corn acreage be growing? It's all about the falling cost of inputs, according to USDA Chief Economist Robert Johansson--with predictable pressure on prices. "Corn area is expected to increase by 2 million acres to 90.0 million in 2016 with lower fuel and fertilizer making corn more attractive relative to other crops," he said. "With higher production and larger beginning stocks, corn supplies are projected to be record high. Strong competition from South America will likely limit any increase in exports, and as a result, U.S. corn ending stocks are expected to reach a 12-year high at the close of the 2016/17 marketing year, pushing prices lower."
$3.45: Price for corn in 2016, according to USDA's initial forecasts. Other price forecasts for 2016 are $8.50 for soybeans and $4.20 for wheat. Such trends are forcing farmers to trim costs wherever they possibly can. "We would expect to see farmers renegotiate cash rental agreements, which will, in turn, contribute to a softening of land values," Johansson predicted.
97.4 billion: Pounds of meat (chicken, beef and pork) that will be produced in 2016, which will be a new record, according to USDA's forecast.
211.9 billion: Pounds of milk expected to be produced in 2016, which also represents a record level for U.S. dairy producers.
$1.29 billion: Value of U.S. ag exports in 2014 to the Dominican Republic, a country with a comparable population and economy to Cuba, which had just $286 million in U.S. ag exports that year. "We should be dominating the Cuban market. They import 80% of what they need to feed their people," said Secretary of Agriculture Tom Vilsack. "We are now stymied by an embargo that have certainly outlived its purpose."
5.3%: Annual average economic growth for China over the next 10 years, which is a significant drop from the country's recent highs of almost 10% per year. "This adjustment implies significant economic challenges in the short term," according to USDA's Long-Term Projections report released Thursday, noting that China is the world's largest importer of soybeans and cotton.
$125 billion: Value of U.S. ag exports for fiscal year 2016. While exports are expected to continue to grow, according to USDA economists, this year's forecast marks a $27.3 billion drop from the historically high level of $152.3 billion in fiscal 2014, according to Johansson. "In general, strong competition and reduced demand have contributed to falling U.S. export sales," he said Thursday. "However, much of the reduction in value this year compared to FY2015 is due to lower prices for grain and feed exports. Export volumes are also down for most commodities and groupings, including coarse grains, rice, soybeans, soybean meal, and cotton. However, export volumes of wheat, beef, pork, and broilers are expected to hold their own and could be slightly higher compared to last year."
$51 billion: Amount of net farm income projected in 2016, which represents a 44% drop since 2014. As brutal as that sounds, it could certainly be worse, at least according to Johansson. "High net farm income levels from several years ago helped U.S. producers strengthen their financial base and that is still reflected in the financial outlook, he said. "Heading into spring planting this year, USDA projects a slightly higher debt mostly from operating loans and lower assets from some erosion in land values, resulting in a slight increase in the debt-to-asset level in 2016. While such an increase indicates rising financial pressures, those ratios remain near historic lows."
U.S. Exports Expected to be Down in 2016