USDA’s 2-day outlook meeting in Arlington, Virginia started Thursday and they did release data that includes reduced acres and farm prices this year. The analysts also once again lowered their expectations for U.S. agricultural exports this fiscal year.
USDA Chief Economist Rob Johansson says price declines are just about across the board for spring-planted crops.
“Wheat prices are estimated at $4.20 a bushel, a decline of 16% from the current year,” he said. “Corn prices are projected to fall to $3.45 a bushel, soybean prices are forecast down to $8.50 a bushel, and the all rice price is forecast at $12.90 per hundredweight. Cotton prices are projected at 58 cents a pound.”
And with lower prices, some coming in below the cost of production, Johansson says farmers will take some land out of production.
“U.S. planted acres for the 8 major crops is expected to decline 2.5 million acres to a total of 249.1 million.”
A lot of that will come from wheat. Farmers are expected to cut plantings by over 3 ½ million acres, but there could be 2 million more corn acres and soybeans are expected to be comparable to last year.
With falling commodity prices farm incomes are projected to dip.
“Net farm income is expected to fall 3 percent, or about $1.6 billion from last year.”
The 3% drop is much less than the 40% of 2015.
The need for borrowing money is on the increase.
“Loans are picking up, especially operating loans and people point to risk as costs outstrip revenues for some producers.”
Johansson added farm debt at commercial banks is up about 8% over last year, and the percent of farm debt compared to farm assets is expected to rise, although it remains low at 13.2% in 2016. Loan delinquencies are the lowest in 15 years, and Johansson says the overall financial condition of the farm sector is strong.