WASHINGTON, Feb. 20, 2014 – The USDA’s top economist said he’s optimist about the long-term outlook for U.S. farmers despite challenges in 2014 posed by the lowest commodity prices in years.
“In the longer term, we see some very favorable times” for the agricultural sector, the economist, Joe Glauber, said today as he opened USDA’s annual outlook forum in Arlington, Virginia.
While the lower prices for corn, soybeans and wheat will pressure profits for row crop producers, livestock and dairy farmers should benefit from lower feed costs, Glauber said.
“Overall, the financial health of the sector has benefited considerably from the high prices enjoyed by producers over the past seven years, which will ease the adjustment to lower prices levels in 2014,” Glauber said.
Corn prices for the crop year starting Sept. 1 will average $3.90 a bushel, down from a record $6.89 two years earlier, Glauber said. He forecast soybean prices to average $9.65 a bushel, down from $12.70 in the current year and $14.40 in the previous year, the highest ever. Wheat prices will fall to $5.30 a bushel, down from $6.80 this year, he said.
Responding to the lower prices, farmers will cut the area planted with corn, the biggest U.S. crop, by 3.5 percent to 92 million acres, he said, in the USDA’s first forecast for 2014 crops. Wheat acres will fall by 1.2 percent to 55.5 million. At the same time, soybean acres will increase 3.9 percent to 79.5 million, and the area planted with cotton will rise to 11.5 million acres, up 10.5 percent, Glauber said.
Acreage enrolled in the Conservation Reserve Program (CRP) will continue to decline, dropping to 26 million, from 26.8 million last year and 34.6 million acres back in 2008, according to the USDA.
All told, the planted area for the major crops, including rice and CRP, will fall by 0.9 percent to 279.8 million acres, down from 282.3 million last year.
U.S. agricultural exports will rise to $142.6 billion, the highest ever, driven by record global demand, Glauber said, with China remaining the biggest customer for American farm products.
Some other highlights from Glauber’s presentation:
-Global ending stocks for 2013-2014 will remain tight, despite record production for most grains and oilseeds. Potential changes in China’s cotton support program may end the buildup of stocks, but uncertainty about how and when inventories will be released hang over the market.
-Cash receipts for vegetables, fruits and nuts will probably fall in 2014 but uncertainty remains because of the potential effects of the drought in California, which produces a third of the country’s vegetables and two-thirds of its fruits and nuts.
-Market prospects for the animal sector will be much better in 2014, with improved feed-price ratios, falling feed prices, high product prices and strong export demand. Broiler exports are expected to rise 1.8 percent to record levels, while overseas pork shipments may rise 3 percent. Only beef exports are seen falling, down 10 percent in 2014 due to high prices reflecting tight supplies.
-Expansion in the red meat sector will remain slow, despite profits. This, after drought in the Southern Plains resulted in large declines in the cattle herd, and as the Porcine Epidemic Diarrhea virus continues to decimate pig litters across the country.
-Milk prices are expected to reach record levels in 2014 with margins seen remaining above $8 per hundredweight for the entire year. Dairy exports, which “have shown remarkable growth for the past five years,” are expected to grow further over the next decade.
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