U. S. farmers can expect a record corn crop, another huge soybean harvest and strong demand for their exports, which should combine to boost incomes for the farm sector this year, the U. S. Agriculture Department said in its latest forecast Feb. 18.
At its annual outlook conference, USDA raised its forecast for farm exports in fiscal 2010 to $100 billion from the $98 billion it estimated in November and $96.6 billion in 2009, as world demand begins to recover from recession.
“Record crops both home and abroad have further weakened price prospects for grain and oilseeds,” USDA chief economist Joseph Glauber told the conference. “But because of strong domestic and (world) demand, prospects still remain high relative to historic lows.”
Oilseed exports will lead the recovery based on strong Chinese demand, said Jim Miller, USDA’s undersecretary charged with trade issues.
Traders took the new estimates in stride, saying the forecasts were just an early projection and more in line with industry forecasts.
“The corn and soybean acreage numbers are definitely not bearish,” said Jerry Gidel, an analyst with North America Risk Management Inc. “Most estimates were at or above these numbers, so I would say they’re slightly bullish.”
MORE CORN AND BEANS
U. S. farmers will plant 89.0 million acres of corn this year, up from USDA’s previous forecast of 88 million acres, along with 77.0 million acres of soybeans, up from a prior forecast of 76.5 million acres, based on U. S. Agriculture Department planting projections released Thursday.
If the forecasts hold, farmers will harvest a record 13.2 billion bushels of corn, eclipsing the record set in 2009, and 3.26 billion bushels of soybeans, the second-largest crop ever, trailing only the 3.36 billion bushels of 2009.
“The great thing about American agriculture is how extraordinarily productive it is, so it wouldn’t surprise me if we have another great crop,” U. S Agriculture Secretary Tom Vilsack told Reuters Insider.
USDA projected wheat sowings at 53.8 million acres during 2010, down from its previous estimate of 55.0 million.
More good news for growers: farm expenses should stay steady, as increases in fuel costs will be offset by lower fertilizer prices. In previous years, farmers faced skyrocketing energy and fertilizer prices.
MEAT TRADE SPATS
Despite the rosy forecast for world demand, U. S. farm exports face technical and other barriers, U. S. Trade Representative Ron Kirk said at the conference.
Russia effectively banned U. S. poultry last month over concerns about the routine use of a chlorine rinse in U. S. plants, used to kill bacteria that can cause food poisoning.
“Right now, it’s a challenge. I’ll be honest,” he told reporters, noting U. S. political leaders are engaging their Russian counterparts at high levels.
“This is a huge negative hit. This is about a billion-dollar hit to our pork and poultry producers,” Kirk said.
Russia has also banned imports of U. S. pork from most processing plants, but U. S. Agriculture Secretary Tom Vilsack said that issue is close to resolution.
Traders also saw steep barriers to increased exports.
“They are taking the exports up,” said Don Roose, an analyst with U. S. Commodities. “I guess I would say we will take (the export forecast) with a grain of salt. But I think it certainly says that is the direction we need to go.”
Glauber said the rapid increase in the ethanol sector will slow in 2010, with the industry pressured by 15-billion-gallon cap. But ethanol sector to remain profitable due to lower grain prices and higher fuel prices.