The crop demand outlook for the 2014/15 marketing year is a mixed bag, according to Patrick Westhoff, director of the Food and Agricultural Policy Research Institute. Westhoff gave attendees of the American Farm Bureau Federation’s 96th Annual Convention and IDEAg Trade Show a glimpse into how this year’s bumper crop and low prices will impact farmers and ranchers as they head into 2015.
On a macro level, China will continue to be a significant source of demand growth, but Westhoff noted that the anticipated gross domestic product increase of the world’s most populous country is waning. “China of course is a huge source of demand growth,” said Westhoff. “The good news is it’s growth, but the bad news is it’s not as fast as it has been. They’re looking at 6.5 percent growth next year.” One area representing more promise for corn and soybeans is feed demand from both the domestic and international livestock sectors. “We’re going to have a lot more animals out there and more need for feed,” he said.
On the other hand, the biofuels sector is expected stagnate, and may perhaps be even weaker. “We’ll have significantly smaller corn yields in 2015/16 caused in part by the low demand for ethanol. Yield numbers will change.” Due to corn prices dropping to levels not seen in years, Westhoff said that farmers will plant less corn in the next two years. More than 90 million acres were planted in 2014 and he projected that only 87.9 million acres will be planted in 2015 and 89.7 million acres in 2016.
Planted acres for other commodities such as wheat, cotton, rice and barley are projected to be about the same for 2015 and 2016, while sorghum planted acres are expected to drop slightly and soybeans will see about a 7.5-million-acre increase in the next two years. Westhoff said large corn and soybean crops will weigh on grain and oilseed prices in the short run, and that although average corn prices remain low by 2007-2012 standards, they are still above pre-2007 levels.
In closing Westhoff remarked, “As always, weather, oil prices and other factors will drive annual swings in prices.”