A weaker dollar and strong global economic growth over the next 10 years bode well for U.S. agriculture, according to USDA’s Agricultural Long-Term Projections, released in February.
The report, from the office of USDA’s chief economist, said economic growth and population gains will boost demand for good and feed. In addition, biofuel demand will remain an important factor shaping the projections for global use, world trade, and agricultural commodity prices.
The depreciated dollar will continue to be supportive of the outlook for U.S. exports, USDA says.
Crop prices are projected to fall from recent record highs but remain above pre-2007 levels for many crops. Following the near-term decline in prices and planted acreage, strong demand and rising prices are expected to provide economic incentives for increases in plantings beyond 2015.
Acreage enrolled in the Conservation Reserve Program is projected to decline below 28 million acres in 2013-14 before rising back to close to 32 million acres by the end of projection period.
Highlights of the report by crop:
Lower supplies and higher prices resulting from the weather-reduced 2012 U.S. corn crop has led to lower domestic use and exports.
Corn acreage is projected to remain high in the near-term, with normal yields leading to an increase in production and a recovery of corn use.
Although corn-based ethanol production is projected to slow significantly, its continued high levels, along with gains in exports and feed use will keep corn use high.
Following several years of adjusting markets, increasing producer returns are projected to lead to gradually rising corn acreage in a range of 88 million to 92 million acres after 2015.
U.S. corn exports are expected to increase sharply from 2012-13 weather-reduced levels and then rise at a slower pace over the next 10 years in response to strong global demand for feed grains to support growth in meat production.
Export gains are projected strong to China, which account for about 40 percent of the projected overall growth in global corn imports.
After declining from their current high levels, corn prices are projected to begin increasing again by 2015-16 due to growth in feed use, exports and demand for corn by ethanol producers.
Strong wheat prices and expected net returns will boost wheat plantings for 2013. However, relatively weak overall demand growth for wheat is projected to lead to a decline in wheat plantings to 50 million acres by 2022.
U.S. wheat exports are expected to fall to under 950 million bushels annually over the next 10 years, with competition from the Black Sea region, where wheat exports are expected to rise from 22 percent to 30 percent of global trade over the next decade. For the same time period, the U.S. market share is expected to decline from 19 percent to16 percent.
Wheat prices to decline
Wheat prices are expected to decline through 2014-15 reflecting near-term market adjustments. Projected price increases for wheat are more moderate than those for corn, reflecting smaller gains in use.
U.S. soybean plantings are expected to decline from high levels of 2012 early in the projection period, as prices and producer returns fall. Over the rest of the projection period, growth in both domestic use and export demand is expected to lead to increases in prices and returns.
Soybean plantings are expected to increase somewhat before remaining steady toward the end of the projection period.
Strong global demand for soybeans, particularly in China, is projected to boost soybean trade over the projection period.
Competition from South America could lead to a reduction in the U.S. share of global soybean trade from 39 percent in 2013-14 to about 30 percent by 2022-23.
Strengthening demand for soybeans is expect to hold prices high through 2022. Soybean prices are expected to fall from recent highs, but are projected to rise moderately after 2014-15.
Although lower cotton prices following the price run-up of 2010-12 are expected to lead to a reduction in plantings in 2013, cotton plantings are projected to rise through 2015 as prices and returns for competing crops decline over the next several years.
However, with cotton yields and cotton prices rising only moderately, producer returns are expected to decline relative to those of other crops, so upland cotton plantings are projected to decline through the end of 2022.
U.S. mill use of upland cotton is projected to rise moderately while cotton exports initially rise before leveling off after 2016-17. The U.S. share of global cotton trade is expected to decline later in the projection period.
Nonetheless, with a global trade share projected at 32 percent in 2022-23, the United States is expected to remain the world’s largest exporter of cotton.
Competition from other crops will likely keep U.S. rice acreage from increasing in 2013. In the longer-term, rice acres will rise on lower relative prices for competing crops.
U.S. rice imports are projected to expand over the next decade, but at a slower rate than in the past. Asian aromatic varieties are expected to continue to account for the bulk of U.S. purchases.
U.S. rice exports are projected to rebound from a low level in 2013-14 and increase over the next decade.
Continued growth of U.S. rough-rice exports to Latin America (nearly all long-grain rice) is projected to account for most of the overall expansion of U.S. rice exports.
Rice prices are projected to rise after 2014-15.