USDA today released its long-term ag projections through 2023, which includes "assumptions for U.S. and international macroeconomic conditions and projections for major commodities, farm income, and U.S. agricultural trade value." To view all of the data, click here.
USDA provides the following summary: "Over the longer run, steady global economic growth provides a foundation for continuing strong crop demand. Although corn-based ethanol production in the United States has rebounded from 2012’s decline, the pace of further expansion slows. Nonetheless, the combination of world economic growth, a continued low-valued dollar, and some further expansion of global biofuels production supports longer run gains in world consumption and trade of crops. Prices are projected to fall from recent record highs but remain above pre-2007 levels for many crops."
The projections assume an extension of the programs for the 2008 Farm Bill rather than the new programs of the 2014 Farm Bill. The outlook also projects that acreage enrolled in the Conservation Reserve Program (CRP) will decline to 26 million acres in 2014 before rising back close to 32 million acres by the end of the projection period. The 2014 Farm Bill caps CRP acres at 24 million by Fiscal Year 2018.
As the above assumptions illustrate, it is important to remember these are not an official forecast, and therefore, one should not get wrapped up in the details. Following are some of the highlights from the report:
2014-15 Crop Projections
- Corn plantings of 93.5 million acres with a 165.6 bu. per acre yield for a 14.26-billion bu. crop & ending stocks of 2.607 billion bu.
- Soybean plantings of 78 million acres with an average yield of 45.2 bu. per acre for a 3.48-billion bu. crop and ending stocks of 203 billion bu.
- Wheat plantings of 57 million acres with an average yield of 45.8 bu. per acre for a 2.22-billion bu. crop with ending stocks of 642 million bu.
- Cotton plantings of 11 million acres with an average yield of 795 lbs. per acre for a 15.6-million-bale crop and ending stocks of 4.409 million bales.
Farm Price Projections
USA projects the following average prices in 2014-15:
- Corn: $3.65
- Soybeans: $9.75
- Wheat: $4.90 per bu.
- Cotton: 64 cents per lb.
But more important than these unofficial projections are the general trends regarding prices:
- Corn: USDA projects the average price of a bushel of corn will decline through 2015-16. Thereafter, corn prices are expected to begin rising as ending stocks tighten due to increases in feed use, exports and ethanol demand.
- Soybean prices initially fall from recent highs but then rise moderately after 2015-16, reflecting strengthening demand for soybeans and soybean products.
- Wheat prices decline through 2016-17, reflecting rising wheat stocks and falling corn prices. Wheat prices increase through the remainder of the projection period with export growth, moderate gains in food use, and declining stocks. Rising imports and increasing global competition limit price increases for wheat.
- Cotton prices are expected to hold around 62 cents to 64 cents per lb. through 2017-18 and then gradually rise. U.S. mill use of upland cotton is projected to rise moderately while cotton exports increase in the second half of the projections.
Export Projections of Note
- U.S. corn exports increase during the projection period, in response to strong global demand for feed grains to support growth in meat production. Export gains are particularly strong to China. The United States resumes being the world’s largest corn exporter, following the sharp reduction in U.S. corn exports after the 2012 drought, and accounts for an average of about 40% of global corn trade over the projection period. Strong trade competition from Argentina, Brazil, and the FSU as well as the use of corn for ethanol production in the United States combine to hold the U.S. trade share well below its 1970-2000 average of 71%.
- Strong global demand for soybeans, particularly in China, boosts soybean trade over the projection period—China accounts for all of the increase in world soybean imports. Even though U.S. soybean exports are projected to rise, competition from South America leads to a reduction in the U.S. share of global soybean trade from 38% in 2013-14 to about 32% in 2023-24. Brazil continues to be the largest exporter of soybeans.
- U.S. exports of soybean oil and soybean meal also face strong competition from South America. Argentina, in particular, is a competitive exporter of soybean products because its graduated export taxes favor exports of soybean products over soybeans. Increasing biodiesel production in Argentina, however, limits the country’s soybean oil export growth, allowing the U.S. global export share to increase. However, Argentina is projected to account for about half of global soybean meal exports over the next decade. Brazil remains the second largest soybean meal exporter.
- U.S. wheat exports initially fall to 1.025 billion bushels in the initial years of the projections before growing moderately for the remainder of the decade. U.S. wheat trade faces competition from countries of the FSU, whose wheat exports rise from 23% to 29% of global trade over the next decade. EU wheat exports grow from a global market share of 16% to 17% by 2023/24. For the same time period, the U.S. market share declines from 19% to 17%.
- U.S. upland cotton exports are projected to rise from 2013-14’s low level to about 10.5 million bales for several years, before showing moderate additional growth over the remainder of the projections. The United States remains the world’s largest exporter of cotton, although the U.S. share of global cotton trade falls below 23% by the end of the projection period, compared to an average of more than 37% in 2000-2010. China is the world’s largest importer of cotton.
USDA's update notes that the livestock sector continues its slow recovery from high feed costs and drought in the Southern Plains. But USDA also notes, "Improving returns have provided incentives for increased production in the livestock sector. As a result, total U.S. red meat and poultry production is projected to rise over the projection period, as is per capita consumption of red meat and poultry." USDA highlights the following regarding per capita meat consumption:
- Per capita beef consumption declines through 2016, before rising moderately over the remainder of the projection period. The near-term decline reflects reductions in beef production over the next several years. As beef production increases in subsequent years, per capita consumption grows.
- Per capita pork consumption is projected to rise through 2017 as gains in production are large enough to accommodate both increased domestic use as well as rising U.S. pork exports. Per capita consumption tapers off slightly from 2018 onward as pork production gains slow.
- Poultry production increases throughout the projection period. Per capita consumption rises over the next 10 years and, in contrast to red meats, surpasses levels of the past decade.
In terms of nominal U.S. livestock prices, USDA projects beef cattle prices will fall in 2017 and then rise more moderately than in the early years of the projection as beef production rises. Hog and broiler prices are expected to increase slightly over the last half of the projection period as production gains for each of these slows.