Glauber: Challenges Ahead, But Long-term Outlook is Favorable

February 20, 2014 03:12 AM

USDA’s Chief Economist Joe Glauber kicked off the department’s 2014 Ag Outlook Forum by acknowledging that while the year ahead will present change and challenge for agriculture, the longer-term outlook is "very positive for the sector" and agriculture should see very favorable times moving forward.

Playing no small part of this is USDA projections for strong grain consumption to continue. In general, grain consumption is growing at a rate of about 2% a year, thanks to increases in biofuels use, feed demand and exports.

Of note, Glauber said FY 2014 agriculture exports are expected to hit a new record high of $142.6 billion in 2014—in a year when prices are expected to decline notably. This is up $5.6 billion from the November estimate and would be $1.5 billion above the previous record of 2013-14. USDA expects FY 2014 ag imports to total $110 billion for a net trade balance of $32.6 billion, which would be below the FY 2013 surplus of 37.1 billion.

Glauber cited increased dried distillers grains (DDGs) shipments record-setting Chinese demand as major factors for the increase.

Major growth in global trade is expected over the next 10 years, with wheat trade expected to rise 15%, corn more than 30% and soybean trade expected to rise 40%. Based on projected yield growth the U.S. will need to allocate 50 million more acres to these crops to meet demand.

The U.S. will face fierce competition for these markets from areas such as Brazil of the Black Sea region, but income growth from China and other nations are expected to keep export demand solid over the next decade.

While USDA’s full projections for 2014 will not be released until Friday morning, Glauber did provide a peak into USDA’s planted acreage and price projections:


2014 Planted Acreage Projection (million acres)

Change from 2013 Plantings

Price projection for  2014




$3.90 per bu.




$9.65 per bu.




$5.30 per bu.




68 cents per lb.


Prices are expected to decline from recent strong levels due to projected increases in ending stocks, assuming normal weather. Of note, Glauber did note that the fact the new farm bill will make payments based on base acres rather than planted acres will give producers more flexibility and encourage them to look more closely at the soybean to corn price ratios in making decisions going forward.

Glauber said he expects U.S. corn use in ethanol to grow modestly going forward. While ethanol use spiked and then flattened in recent years (as expected), he expects growth ahead thanks to increased ethanol exports. Higher blends of ethanol in gasoline will also come into play with this outlook.

Shifting gears to livestock, Glauber noted that the sector is in much better shape than in recent years when producers dealt with an extended period of low feed price ratios. These have improved in 2013 as feed prices dropped and livestock prices improved. Strong meat exports and expectations for this trend to continue also play into the favorable outlook.

But both the cattle and hog industry are and will continue to face some challenges. Glauber acknowledged the porcine epidemic diarrhea virus (PEDV) has led to a decline in the litter rates—the first such major drop in quite some time. Meanwhile, drought in the Southern Plains remains a major factor that will influence expected increases in production.

USDA expects steer prices in 2014 to average $136.00 per cwt., while hog prices are expected to average around $63.00 per cwt.

Referencing recent USDA data, Glauber said net cash income is expected to decline in 2014, due to a fall in cash receipts for grains and oilseeds as well as the new farm bill. The 2014 Farm Bill eliminates direct payments and payments for new programs will not be available until 2015.

But on other hand, debt as a percent of assets remains very low—the lowest on record, in fact—which Glauber deemed a "dramatic" result of "phenomenal growth" in the agriculture sector.

So while prices this marketing year are expected to decline to levels last seen in 2009-10, seemingly implying a pessimistic outlook, Glauber reiterated that the longer-term outlook for agriculture is quite positive thanks to expected increases in use.

Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer