Economists at the University of Missouri have released their March 2017 U.S. Baseline Briefing Book. The bad news – trends indicate more financial pressure on the U.S. farm sector. But there could be a silver lining with a modest recovery of grain prices possible this year.
“The world is an uncertain place, and commodity markets will continue to be volatile,” according to Patrick Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at MU. “We use our models to develop a range of projected market outcomes that takes into account some major sources of uncertainty about future supply and demand conditions.”
Those models project some 500 total outcomes, including some prices, quantities and values that clock in much higher or lower than the averages indicated in the report. Here are a few key findings:
- The Baseline Briefing Book projects corn prices at $3.60 per bushel for the 2017-18 marketing year and $3.71 per bushel from 2018 to 2026.
- MU projects declines in corn and wheat acreage and production after record production in 2016 suppressed prices.
- Strong export demand supports soybean prices averaging $9.57 per bushel in 2017-18.
- Cotton prices will also be lifted by strong export demand.
- Cattle and hog prices should decrease following large domestic supplies.
- Stronger international markets could buoy milk prices in 2017.
Put together, these trends are expected to contribute to lower 2017 net farm income for a fourth consecutive year. Net farm income has declined 48% since its peak in 2013, FAPRI notes.
Westhoff says the Baseline Briefing Book can help farmers, lenders, agribusinesses and others make decisions that will help them during this volatile period.
“Perhaps most importantly, it serves as a point of reference point for policy analysts,” he says. “Congressional staff ask us to look at policy alternatives relative to this set of baseline projections so they can better understand how policy choices may affect farmers, businesses, consumers and taxpayers.”
For more information, visit www.fapri.missouri.edu.