WASHINGTON, Feb. 19, 2015 – U.S. Farmers are expected to cut their planting of most major crops in response to sagging commodity prices, but growers will benefit from falling fuel prices and transportation costs, according to the Agriculture Department.
USDA projects that farmers will plant 89 million acres of corn this spring, 1.8 percent less than the 90.9 million seeded last year.
Growers are expected to plant 83.5 million acres of soybeans, down 0.2 percent form 2014; 55.5 million acres of wheat, down 2.3 percent from 2014; and 9.7 million acres of cotton, down 12.1 percent from last year.
Rice acreage is projected at 2.9 million acres, a 1.3 percent decline from 2014. The projections were released today at the USDA’s annual Outlook Forum in Arlington, Virginia.
USDA expects corn prices to remain flat this year at $3.50 a bushel, but the average soybean price is expected to decline a dollar to $9 a bushel. Wheat prices are expected to average $5.10 a bushel, down from $5.90 in 2014. The average rice price is seen dropping from $14 per hundredweight last year to $13.10 in 2015.
USDA’s chief economist, Robert Johansson, said that despite the broad declines in commodity prices over the past couple of years, the recent drop in energy prices will save farmers on fuel, fertilizer and transportation costs. Rail transportation costs, which spiked in 2014, should return to normal levels, he said.
U.S. farmers’ debt-to-asset ratio, which spiked above 20 percent in the 1980s, is expected to be about half that in 2015, an historically low level. Land values are expected to decline by less than 1 percent overall this year.
“Overall, the forecast for the coming production year is bright,” Johansson said.
USDA is projecting meat and poultry production at a record 95 million pounds in 2015, driven by a 5.5 percent increase in pork production and 3.6 percent rise in poultry. Cattle producers are beginning to expand their herds but beef production is expected to be down slightly.
Milk production also is expected to be at record levels at 211.5 billion pounds.
The average price of steers should be up 4.8 percent due to the continuing tight supplies, but hog prices are expected to be down 26.3 percent on the industry’s expansion coming out of the porcine epidemic diarrhea crisis. Broilers are projected to drop 4.4 percent. Milk prices are forecast to drop 26 percent.
The amount of land held out of production in the Conservation Reserve Program will be down 5.1 percent this year to 24.2 million acres, USDA says.