According to the Food and Agricultural Policy Research Institute (FAPRI), net farm income in the U.S. is projected at $95 billion for 2012, down $3 billion from year-ago. In its annual baseline presented today to Congress, extending 10 years, the group says given normal weather, a bigger U.S. corn crop could lead to lower prices this fall.
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FAPRI projects planted corn acres at 93.5 million acres, up from 91.9 million last year, but short of USDA's most recent projection of 94 million. It says a return to a normal yield would result in an average cash price for 2012-13 of $4.81, down from $5.96 for the current year.
Ethanol production is projected to remain at 2011-12 levels after years of rapid growth. "An end of the 45 cents per gallon tax credit, high corn prices and constraints on ethanol used in conventional 10-percent blends contribute to slower growth," it says.
FAPRI projects 2012 planted soybean acres at 75.1 (75 million in 2011) million and expects an average farm price for 2012-13 of $11.37. "Soybeans must remain strong to be competitive with corn for acreage," said Pat Westhoff, director of FAPRI at the University of Missouri-Columbia.
For wheat, FAPRI projects 2012 planted acres at 58.1 million, up from 54.4 million last year. It sees an average farm price of $6.09, down from $7.15 in 2011-12.
Regarding its meats outlook, FAPRI told Congress it expects this sector to reflect the highest inflation in 2012, much like it did last year. It notes that beef cow numbers fell sharply in 2011, despite the highest cow-calf net return since 2005. "While beef export growth since 2005 gained much media attention, the drop in imports in that period almost matched the export gains," Westhoff said. "The relatively weak dollar and tight beef supplies worldwide place the U.S. in position to gain markets for the next decade."
The MU FAPRI baseline assumes normal weather and continuation of current farm polices. While the 2008 farm bill expires this year, analysts assume current law prevails through the 10 years, for comparison of policy alternatives.