Washington | Reuters — U.S. farmers will increase soybean planting by less than expected this spring, and overall acreage of eight major crops is set to decline, the U.S. Department of Agriculture said Thursday in its first formal outlook for U.S. crops.
At its annual Agricultural Outlook conference, the USDA said plantings of the eight major U.S. crops would dip 0.7 per cent to 253.8 million acres in 2014-15, despite expectations that overall acreage would likely rise this year. Cotton and rice plantings will rise, while corn, other feed grains and wheat will decline, as analysts have expected.
Soybean plantings were forecast at a record high 79.5 million acres, up almost four per cent on the year. Many analysts are forecasting more than 80 million acres.
“While increased acres will have near term bearish effect, they were below expectations, and the market may be able to shrug off bearishness readily particularly on the front end,” Sterling Smith, futures specialist at Citigroup, said in a note to clients.
Corn acres are expected to fall 3.5 per cent to 92 million acres, the lowest since 2011-12, USDA said, pointing to a larger swing to soybeans from corn than the USDA suggested last week in a separate set of long-term forecasts for U.S. crops.
USDA also forecast lower prices ahead for most major U.S. crops as the impact of the severe 2012 drought continues to fade.
“Prices for most row crops are expected to fall to the lowest levels since 2009/10,” said Joseph Glauber, USDA’s chief economist. “A return to normal yields… could see soybeans and corn set new production records.”
Wheat, corn and soybean prices have tumbled from the record highs seen in 2012-13, when a severe drought slashed production and pushed supplies to razor-thin levels.
Cotton, rice expand
Cotton plantings were pegged at 11.5 million acres, up 10.5 per cent on the year. That was about two per cent higher than an industry survey released earlier this month.
Rice plantings were forecast to rise by 16.5 per cent to 2.9 million acres, helped by strong prices relative to other crops. At $15.90 per hundredweight, rice prices were forecast to be roughly in line with 2013 levels, in contrast with the declines projected for other crops.
USDA cautioned that stocks of most grains and oilseeds are low relative to levels of the early 2000s, meaning market prices will remain sensitive to any sign of trouble during the growing season.
“Current stocks remain tight, which means prices will continue to be vulnerable to supply shocks,” Glauber said.
USDA earlier this month estimated net cash income for U.S. farmers in fiscal 2014 at $102 billion, down almost 22 per cent on the year but still more than $5 billion above the average of the previous 10 years. Farmland values are forecast to dip as well.
Still, U.S. farmers are in mostly good shape after seven years of high crop prices, Glauber said. Since 2006, more than $1 trillion has been added to U.S. farm equity, largely through increased land values.
“Overall, the financial health of the agriculture sector is strong as it enters a period of lower crop prices,” he said.
Export demand for U.S. agricultural products remains robust, and is forecast at a record $142.6 billion in fiscal 2014, up from an earlier estimate of $137 billion and $140.9 billion in 2013.
“Exports to China are forecast up $3.5 billion to a record $25 billion,” Glauber said. During the October-December period, the first quarter of fiscal 2014, exports to China ran 23 percent above a year earlier.
The USDA will release more extensive outlooks for 2014/15 crops at 7 a.m. EST on Friday.
— Ros Krasny and Julie Ingwersen report for Reuters from Washington, D.C. and Chicago respectively. Additional reporting for Reuters by PJ Huffstutter in Washington and Chris Prentice in New York.