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Prospects for U.S. agriculture continue to be strong with record income in 2011 and a strong balance sheet.
CRP enrollments down
CRP enrollments are also down again for 2012/13 with total CRP area projected at 30 million acres, 6.8 million acres lower than at its peak enrollment in 2007/08. Corn plantings are estimated at 94 million acres. If realized, this would be the largest plantings since 1944.
Soybeans are projected at 75 million acres, unchanged from 2011, but down 1.6 million from last year’s intentions which were not achieved partly due to excessive moisture during planting, especially in the Upper Midwest.
Wheat acreage is expected to increase 3.6 million acres to 58 million. Winter wheat area at 41.9 million acres, is up 1.3 million from last year. Spring wheat plantings should rebound from last year’s levels when excessive spring and early summer wetness limited seedings.
Lower prices will likely result in a decline in upland cotton area to 13 million acres. Rice plantings will likely increase 2.3 percent to 2.8 million acres. Most of the increase will occur in long-grain rice in the Delta where farmers were prevented from planting substantial intended acreage by early season flooding.
Farm prices for most field crops will be lower, reflecting larger world and domestic supplies. A return to trend yields will likely push corn prices down significantly as stock levels rebuild.
Corn prices are forecast to average $5 per bushel in 2012/13, down almost 20 percent from 2011/12’s record levels.
Cotton prices are expected to decline by more than 10 percent to 80 cents per pound for 2012/13, reflecting larger supplies worldwide.
Rice prices are anticipated to remain strong, in part reflecting strong world demand which will likely boost US rice exports in 2012/13.
The outlook for U.S. livestock, dairy and poultry
Livestock and dairy producers have faced tight margins for most of the past 5 years. Despite higher product prices, little expansion has occurred.
The January 1 cattle inventory was at its lowest level since 1952. Most of the modest hog expansion seen in 2011 has been due to productivity gains rather than increased farrowings.
Feed price ratios have been low for the past 5 years for livestock, dairy and poultry, reflecting high feed costs. Lower prices for corn, wheat and soybeans will help moderate feed prices, particularly when 2012 crops are harvested. Margins are expected to improve somewhat, particularly by the fourth quarter of 2012.
Per capita domestic disappearance for meat and poultry has declined over the past 5 years. Some of the decline is due to higher prices, but consumption has also been affected by the weak economy as well as changing demographics.