U.S. Farm Sector Overview
Updated November 3, 2009
In 2009, the Consumer Price Index (CPI) for all food is projected to increase 2.0 to 3.0 percent, compared with a 5.5-percent increase the year before. Lower commodity and energy costs will combine with weaker domestic and global economies to pull inflation down from 2008 levels. Food-at-home prices are forecast to increase 1.0 to 2.0 percent in 2009, while food-away-from-home prices are forecast to increase 3.5 to 4.5 percent. The CPI for all food decreased 0.1 percent from August to September, was unchanged from July to August, and is now 0.2 percent below the September 2008 level. Declines in meat, dairy, and produce prices have pushed the year-over-year change in the food CPI into negative territory for the first time in 42 years.
U.S. agricultural exports fell 1 percent from July to August. The export value of $7.4 billion reflects a slight decline in the value of bulk products and no change in high-value products. For the 11 months of fiscal 2009 to date, export values of $89.3 billion are 16 percent lower than the same period in fiscal 2008. Year-to-date bulk export values declined mostly from lower grain prices and smaller shipments of wheat, rice, corn, and sorghum. Agricultural imports are down 6 percent from July to August, dropping to $5.5 billion. Increases in grain product values roughly offset declines in sugar and related products. For the 11 months of fiscal year 2009, imports of $67.9 billion are running 7 percent below 2008 levels.
Corn. U.S. corn harvested area is forecast at 79.3 million acres, down 713,000 from the September Crop Production report, but with a record projected yield of 164.2 bushels per acre, USDA’s October projection for 2009/10 corn production is 13.02 billion bushels—the second highest on record. Projected total supply is a record 14.7 billion bushels. Total corn use is projected at 13.0 billion bushels, up 965 million from 2008/09. Food, seed, and industrial use is projected to be 504 million bushels higher than the 2008/09 forecast, as rising biofuel mandates are expected to raise corn used for ethanol to 4.2 billion bushels. Feed and residual use in 2009/10 is forecast at 5.4 billion bushels, up 3 percent from 2008/09, and exports are projected to climb 16 percent to 2.15 billion bushels. World corn trade and feeding are expected to recover modestly in 2009/10, and the U.S. is expected to gain market share, partly reflecting lower global supplies of low-cost feed quality wheat. The 2009/10 season-average corn price is projected at $3.05 to $3.65 per bushel, compared with $4.08 per bushel for 2008/09.
Soybeans. U.S. production of soybeans in 2009 is projected at a record 3.25 billion bushels, aided by an expected recovery in yields to 42.4 bushels per acre. U.S. carryover stocks of soybeans decreased to a 5-year low of 138 million bushels, moderating the increase in total supply. Low stocks abroad and a depreciating dollar are expected to boost U.S. soybean exports to a record 1.305 billion bushels in 2009/10, and soybean oil exports are also projected at a record 3.25 billion pounds. Despite a firming of soybean demand in 2009/10, a larger gain in supply raises the forecast of U.S. ending stocks to 230 million bushels. With an improved supply situation, the midpoint of projected market year prices for 2009/10 is $9.00 per bushel—compared with the 2008/09 average of $9.97 per bushel.
Wheat. All wheat production is estimated at 2,220 million bushels in 2009, down 279 million bushels from 2008 due to a 10-percent reduction in area, and yield is 0.5 bushel below last year’s record of 44.9 bushels per acre. Total projected supplies for 2009/10, at 2,987 million bushels, are up 55 million bushels from 2008/09, as higher beginning stocks more than offset lower production and imports. Projected food use is expected to rise slightly (29 million bushels) to 955 million bushels in 2009/10, but exports are projected to drop a second consecutive year to 900 million bushels. Projected ending stocks of 864 million bushels are the highest since 2000/01. The projected 2009/10 farm price range this month is $4.55 to $5.15 per bushel, down from the record $6.78 per bushel for 2008/09. World wheat production is down from last year, but is still the second largest on record. Global stocks are continuing to rebound from the 30-year low in 2007/08, and the 2009/10 figure is forecast to be the highest in 8 years.
Sugar. On September 25, USDA set the fiscal year (FY) 2010 domestic sugar marketing allotment at 9,235,250 short tons, raw value (STRV)—above the minimum 85-percent level of the estimated sugar use for human consumption—while the raw sugar tariff-rate quota (TRQ) of 1,231,497 STRV was equal to the minimum access commitment under World Trade Organization (WTO) rules. For FY 2010, combined beet and cane sugar production is projected to be about 7 percent higher than the previous year. Deliveries of sugar for FY 2010 human consumption are projected at 10.140 million STRV, almost 600,000 STRV lower than FY 2009. USDA expects substantial reductions of imports of direct consumption refined sugar from Mexico. The U.S. sugar stocks-to-use ratio fell to an estimated 34-year low of 11.1 percent in FY 2009, and is projected to decline further to 7.9 percent in FY 2010. Reflecting low stock levels, the low end of the refined beet sugar Midwest price range from Milling and Baking News is 42 cents/pound, up 6.6 cents/lb from July.
Rice. U.S. 2009/10 rough rice production and supplies are both forecast to be 8 percent higher than the previous year, bringing supplies to the highest level since 2005/06 and projected ending stocks to the highest since 1986/87. The 2009/10 season-average farm price is projected at a range of $13.00-$14.00 per hundredweight, compared to $16.80 the previous year. The global production forecast for 2009/10 of 433.7 million tons (milled basis) is down 3 percent from the year-earlier record. The global ending stocks forecast for 2009/10 is 4.8 million tons below last year’s estimate of 90.71 million tons.
Vegetables and Fruits. Fresh-market vegetable acreage (excluding melons and storage onions) is expected to rise 5 percent from a year earlier during the fourth quarter of 2009. The largest increases over a year ago were for cabbage, cucumbers, and head lettuce, while bell peppers and carrots were the most notable decreases. Despite the gain this fall, annual 2009 fresh-market vegetable acreage is projected to be 1 to 2 percent lower than a year earlier. Production of fresh-market asparagus declined 16 percent in 2009 to 601,000 cwt with reduced yields accounting for much of the drop. Fresh-market asparagus imports now satisfy about 90 percent of domestic consumption. USDA’s Farm Service Agency is expected to begin disbursing $15 million in direct payments this fall for market losses attributable to imports for the 2004-07 asparagus crops under the Asparagus Market Loss Program (under Title X of the 2008 Farm Act).
U.S. avocado supplies for the upcoming 2009/10 marketing season (November through October) will likely top the previous record of approximately 1.2 billion pounds achieved in 2008/09, with increases expected from California, Mexico, and Chile—the country’s three main sources for avocados. Preliminary indications from the Hass Avocado Board suggest that production in California for the 2009/10 season will be 60 to 90 percent larger than in 2008/09, and shipments from both Mexico and Chile will set new record highs. NASS forecasts the 2009 California walnut crop at 415,000 tons, down 5 percent from last year’s record crop of 436,000 tons, but still the second largest on record.
Livestock and Dairy. The sluggish economy continues to weigh on beef and cattle sectors, as reduced retail demand works back through wholesale and live cattle markets. Beef production is projected to decline 1.5 percent in 2010 after falling 2.8 percent in 2009. The U.S. dairy herd contracted for the second consecutive year, slightly lowering the 2010 milk production forecast from the previous year. Lower production, combined with stronger-than-expected export prospects, will lead to higher milk and dairy product prices in 2010. The Quarterly Hogs and Pigs report showed inventories of breeding animals more than 3 percent lower year-over-year, suggesting the industry may be responding to persistent negative returns. Prices of live-equivalent 51-52 percent lean hogs are expected to average $39.69 per cwt in 2009, down from $47.84 in 2008. Broiler production continues to be lower than the previous year, with August production down 2 percent and third-quarter 2009 expected to be down 3 percent from a year earlier. After declining in 2009, prices for steers, barrows and gilts, and broilers are expected to stabilize or strengthen moderately in 2010.
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