What is in this article?:
- U.S. farm economy poised to decline
- Yield jump coming
The U.S. agriculture industry needs a farm bill and a safety net with target prices. “Market changes likely in 2015 or 2016 indicate the need for a safety net. We will need target prices to deal with the downturn.”
Farmers might need to get a bit defensive with marketing strategies in the next few years as bull grain markets begin to disappear.
Several issues are pushing corn and other grains and oilseed prices down, said Jim Wiesemeyer, senior vice president, farm and trade policy, Informa Economics, during the second annual Southwest Ag Issues Summit in Oklahoma City.
A stagnant ethanol market, large corn ending stocks and weak economic growth in the United States and worldwide, among other issues, are putting the U.S. ag industry in a situation that has not been the norm for several years.
Normal weather and increased corn productions will mean lower prices, Wiesemeyer said. “How low it goes will depend on carryover buildup.” Even if the current corn crop misses production estimates, the carryover will be 1.4 billion to 1.6 billion bushels for the 2013 crop. “That’s not bullish.”
The commodity outlook includes:
- Record world grain and oilseed production projected for 2013, including rice, wheat, corn and soybeans in response to higher prices and improved yield.
- U.S. corn and soybean crops to increase, but not as much as earlier expectations. U.S. wheat and rice decline.
- Export gains expected from U.S. wheat, corn and soybeans.
- Despite strong consumption increases, world ending stocks will grow and prices will fall.
- Except for corn, U.S. balance sheet will be relatively tight in 2013-14 but substantial changes likely for 2014 and out.
Globally, corn production jumped 11 percent to a new record. Soybean production is also up by 5 percent with the United States the biggest producer, taking top spot from Brazil. “But Brazil and Argentine production combined is still larger than U.S. production by far.”
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Wheat sees a “slight decline in global ending stocks.” But with corn prices likely declining, some wheat that has been going to the feed market will be replaced by corn, Wiesemeyer said. “But a wheat price decline was moderated by a large market share during the summer. And weather issues keep the wheat market fuzzy.”
Also, wheat trade is increasing as China increases imports, pushing world trade near the 2011 high.
The corn and soybean market could be affected by frost on what is expected to be a late harvest.