WASHINGTON, Feb. 23, 2017 - Farmers are expected to produce nearly as many acres of soybeans as corn this year as growers respond to a relatively stronger increase in soybean prices, according to the Agriculture Department.
Speaking today at USDA’s annual Agricultural Outlook Forum, the department’s chief economist, Robert Johansson, said farmers will likely plant 88 million acres of soybeans this spring, up from 83.4 million last year. Corn acreage is expected to fall from 94 million last year to 90 million acres in 2017.
Soybean prices are up sharply over the past year in comparison to corn, said Johansson. New-crop corn futures are up about 10 cents a bushel form a year ago, while soybean prices have increased about $1.35 a bushel and are running about 2.6 times higher than corn prices. It has been 20 years since the ratio between the two commodities was this favorable to soybeans, he said.
USDA projects that wheat acreage will fall by 8.3 percent to 46 million acres, while cotton area will expand by14.2 percent to 11.5 million acres. Rice acreage is expected to drop by 17.4 percent to 2.6 million.
Prices for most major crops are expected to edge upward this year. USDA estimates that wheat prices will average $4.30 a bushel, up 11.7 percent; corn, $3.50 a bushel, a 2 percent increase; soybeans, $9.60, a bushel, a 1.1 percent increase; and rice, $10.70 per hundredweight, a 1.9 percent decrease.
Cotton prices are expected to decline by 5.8 percent to 65 cents a pound.
Meanwhile, lower feed costs and improved forage conditions are expected to drive increases in production of beef, pork, chicken and milk this year, Johannson said. Pork, chicken and milk are all expected to set records.
USDA projects that pork production will rise by 4.9 percent to 26.2 billion pounds. Chicken meat production is expected to rise by 2.1 percent to 41.5 billion pounds. Milk output is forecast up 2.3 percent to 217.4 billion pounds.
Beef production is expected to rise 3.1 percent to 26 billion pounds.
Johansson gave a mixed assessment of the farm economy overall. Farmers’ debt-to-asset ratio is expected to average 13.9 percent this year, up from a low of 11.3 percent in 2012, but it will still be well below the peak of 22.2 percent in 1985, he said. “To reach that point today would still take a dramatic increase in debt payments or a loss in farmland value of more than 50 percent,” Johannson said.
One big difference between now and the 1980s: Interest rates are much lower. In 1985, farm interest payments were equal to 60 percent of net farm income. Today that ratio is closer to 20 percent.
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Conditions vary by sector. One in five cotton, wheat, hog and poultry farms are expected to have debt-to-asset ratios this year of more than 40 percent, he said. Younger farmers also are more highly leveraged: Twenty percent of farmers under age 35 are classified as highly leagued and 16 percent as very highly leveraged.
Summing up, Johansson said:
“Over the next several years, the agricultural sector as a whole will continue to adjust to lower prices for most farm commodities, both in the United States and abroad. Domestically, lower commodity prices will likely lead to reduced planting area, which is forecast down about 3.6 million acres for the 2017 major field crops. Essentially, the prices for crops imply overall farm incomes are unlikely to be markedly different from last year, unless unforeseen weather or policy events alter the global supply or demand landscape.”