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Global demand and rising costs support projected U.S. crop prices

Friday, February 14, 2014

Although market responses to high crop prices in recent years, both in the United States and in other countries, are projected to lower U.S. crop prices over the next couple of years, in the longer term prices for corn, wheat, and soybeans are projected to remain high relative to historical prices. The continuing influence of several long-term factors—including global growth in population and per capita income, a low-valued U.S. dollar, increasing costs for crude petroleum, and rising biofuel production—underlies these price projections. Corn prices are projected to decline through 2015/16, but then begin increasing in 2016/17 as ending stocks tighten due to growth in feed use, exports, and demand for corn by ethanol producers. Soybean prices are expected to initially fall from recent highs but then rise moderately after 2015/16, reflecting strengthening demand for soybeans and soybean products. Wheat prices are projected to fall through 2016/17, in response to rising wheat stocks and falling corn prices, but strengthen in the longer term due to export growth, moderate gains in food use, and declining stocks. Find this chart and additional analysis in USDA Agricultural Projections to 2023.

Expected falling crop receipts lead decline in 2014 forecast for net farm income

Tuesday, February 11, 2014

USDA’s initial forecast for 2014 net farm income is $34.7 billion lower than current expectations for 2013, but is $8 billion higher than the average of the previous 10 years. Lower crop cash receipts, and, to a lesser degree, a change in the value of crop inventories and reduced government farm payments, drive the expected drop in net farm income. Crop receipts are expected to decrease more than 12 percent in 2014, led by an expected $11-billion decline in corn receipts and a $6-billion decline in soybean receipts. Elimination of direct payments under the Agricultural Act of 2014 and uncertainty about program enrollment during 2014 result in a projected $5.1 billion decline in government payments. On the other hand, total production expenses are forecast to decline $3.9 billion in 2014, which would be only the second decline in the last 10 years. Livestock receipts and value of inventory change also are expected to increase a combined $3.5 billion in 2014, largely due to higher dairy receipts and the potential for expansion of the beef cattle herd for the first time since 2007. This chart is based on the data available in Farm Income and Wealth Statistics, updated February 11, 2014.

Strong projected growth in global poultry meat imports

Tuesday, November 19, 2013

The United States is the world’s second largest poultry meat exporter behind Brazil, with U.S. exports valued at $4.2 billion and accounting for 20 percent of U.S. broiler meat production in 2012. According to USDA’s long-term projections, world import demand for poultry meat is expected to grow 1.56 million tons over the next 10 years. Brazil’s poultry exports—aided by relatively low production costs—are expected to grow 27 percent by 2022, compared with 11 percent projected growth in U.S. exports. Strong growth in poultry imports is projected for much of the world, except for Russia and the European Union. Continued growth is projected in the Africa and the Middle East region—including Sub-Saharan Africa, Saudi Arabia, and Other North Africa and Middle East—which now accounts for more than 40 percent of poultry imports by major importers. In this and other developing regions, rising consumer incomes, population growth, urbanization, and the typically low cost of poultry meat relative to other meats are key drivers of expanding poultry demand. This chart can be found in Assessing Growth in U.S. Broiler and Poultry Meat Exports, LDPM-231-01, released November 8, 2013.

Afghanistan emerges as major importer of wheat flour

Friday, November 15, 2013

Afghanistan is among the world’s largest importers of wheat flour, with imports growing since 2000 because of a recovery in internal demand, and inadequate water supplies that continue to limit domestic wheat production. Afghan flour production—the nation’s largest official agro-industry—faces competition from imported flour, much of it from neighboring Pakistan where wheat producers and flour millers benefit from Government support. Efforts to support Afghanistan’s flour-milling sector by increasing border protections on flour and wheat—if enforceable along the country’s rugged borders—would have uncertain impact on water-constrained wheat production, and impose higher costs on consumers. Unhindered wheat and flour imports, including imports from Pakistan, may support growth in domestic flour consumption, with relatively small losses in farm output. This chart appears in Afghanistan’s Wheat Flour Market: Policies and Prospects.

Developing-country agricultural imports to account for a growing share of consumption

Thursday, August 22, 2013

According to USDA?s baseline projections, developing-country demand for agricultural products is expected to increase faster than production in those countries, leading to continued growth in import demand. Developing countries are projected to account for 92 percent of the total increase in world meat imports, 92 percent of the increase in total grains and oilseeds imports, and nearly all of the increase in world cotton imports. The growth rate for developing-country consumption of total grains and oilseeds is projected to be about 17 percent faster than the rate for production. As a result, the gap between consumption and production will continue to widen, and these countries will become more import dependent. While these trends will create new opportunities for the United States to expand agricultural exports, they also present new challenges to U.S. exporters. Instead of a limited number of large importing countries, the global market now includes more countries with smaller import needs, requiring new marketing strategies by U.S. and other exporters. This chart can be found in Developing Countries Dominate World Demand for Agricultural Products in the August 2013 Amber Waves.

Global meat consumption generally increases with higher incomes

Thursday, August 8, 2013

According to USDA’s baseline projections, developing countries will account for much of the increase in projected growth in global consumption of meats and crops in 2013-22. For meats—including beef, pork, and poultry—developing countries are projected to account for 81 percent of projected growth in global consumption and 92 percent of the total increase in world imports between 2013 and 2022. Rising incomes, along with urbanization and changes in consumer preferences, are key factors in both the historical and projected growth in meat demand and trade. As incomes rise, consumers in low- and middle-income countries not only buy more food but also tend to eat more varied diets, increasing their consumption of meat, dairy products, eggs, vegetable oils, and processed foods. Over the next decade, increases in meat consumption in developing countries are projected to average 2.4 percent annually, compared with 0.9 percent in developed countries. Per capita poultry meat consumption in developing countries is projected to rise 2.8 percent per year during 2013-22, much faster than that of pork (2.2 percent) and beef (1.9 percent). This chart can be found in "Developing Countries Dominate World Demand for Agricultural Products" in the August 2013 Amber Waves.

E10 blend wall forecast to constrain compliance with conventional Renewable Fuel Standard (RFS)

Monday, June 3, 2013

Declining use of gasoline in the United States, combined with market constraints to growth in the blending of biofuel, have resulted in U.S. ethanol use falling short of the Federal Renewable Fuel Standard (RFS), energy legislation that mandates minimum annual levels of biofuel consumption in the United States. Annual U.S. gasoline use has declined from its 142-billion-gallon peak in 2007 to about 133 billion gallons now, reducing the size of the existing U.S. market for ethanol. Nearly all retail gasoline sold in the United States is a 10-percent ethanol blend (E10). The limited ability to expand use of higher ethanol blends creates an effective constraint on total ethanol use at near 10 percent of total gasoline consumption—the E10 blend wall. As a result, ethanol use is falling short of the portion of the RFS mandate that can be met with corn-based ethanol. This gap is expected to widen in the future as gasoline consumption declines further and the RFS mandates higher levels of biofuel consumption. This chart appears in High RIN Prices Signal Constraints to U.S. Ethanol Expansion, Feed Outlook special article, April 2013.

High Renewable Identification Number (RIN) prices signal constraints to U.S. ethanol expansion

Tuesday, May 7, 2013

Renewable Identification Numbers (RINs) are codes assigned to batches of renewable fuel used to administer the federal Renewable Fuel Standard (RFS), which specifies minimum annual levels of U.S. biofuel consumption. Obligated parties under the RFS use RINs to report qualifying biofuel use to the U.S. Environmental Protection Agency to demonstrate compliance with their annual RFS requirements. After many years of relatively low prices for conventional ethanol RINs, those prices have recently risen sharply because RFS ethanol mandates now exceed ethanol use. This result reflects declining gasoline use and technical constraints on blending more than 10 percent ethanol in U.S. gasoline—the so-called E10 blend wall. The gap between ethanol mandates and ethanol use, together with the anticipated depletion of excess RINs from prior years, are driving up RIN prices. Additional factors that may be affecting RIN prices include uncertainties regarding potential regulatory and legislative actions. This chart appears in “High RIN Prices Signal Constraints to U.S. Ethanol Expansion,” in Feed Outlook: April 2013 (pages 18-22).

Developing countries drive projected growth in global grain and oilseed trade

Monday, March 11, 2013

Rising incomes, particularly in developing countries, are projected to provide a foundation for continued gains in world demand and trade for grains, oilseeds, and other agricultural products during 2012-22. Developing countries, where food consumption and feed use are particularly responsive to income growth, are projected to be the main source of growth in import demand for grains and oilseeds. Trade in soybeans and soybean products has risen rapidly since the early 1990s, and continued strong demand, particularly in China and other Asian countries, is expected during the next decade. Growth in global wheat imports also remains concentrated in developing countries, but per capita wheat use has peaked in many countries, leading to more modest projected growth in wheat trade. These projections are based on a conditional, longrun scenario that assumes normal weather, a continuation of current U.S. farm legislation, and specific U.S. and international macroeconomic conditions and U.S. and foreign agricultural and trade policies. This chart is from USDA Agricultural Projections to 2022, OCE-131, February 2013.

U.S. grain and oilseed prices projected to decline, but remain above pre-2007 levels

Tuesday, March 5, 2013

Weather has been an important factor affecting global wheat, corn, and soybean production over the past several years, leading to increases in grain and oilseed prices since 2009/10. Prices for grains and oilseeds are projected to decline in the near term as global production responds to recent high prices. Nonetheless, after these initial price declines, long-term growth in global demand for agricultural products, a depreciating dollar, and continued biofuel demand, particularly in the United States, the EU, Brazil, and Argentina, hold prices for corn, oilseeds, and many other crops above pre-2007 levels. These projections are based on a conditional, longrun scenario that assumes normal weather, a continuation of current U.S. farm legislation, specific U.S. and international macroeconomic conditions, and U.S. and foreign agricultural and trade policies. This chart is from USDA Agricultural Projections to 2022, OCE-131, February 2013.

Grain exports by the Former Soviet Union projected to rise

Monday, February 11, 2013

USDA projects that grain exports by Russia, Ukraine, and Kazakhstan—the major grain exporting regions of the Former Soviet Union—will expand substantially during the coming decade. Gains in grain area are expected to be modest, but higher grain yields are projected to boost Russian grain output by 22 percent and Ukrainian output by 50 percent by 2021. While growth in meat production is expected to continue to increase the demand for feed grain within the region, exportable surpluses of both wheat and corn are projected to rise. By 2021, the combined exports of Russia, Ukraine, and Kazakhstan are projected at 71 million tons, more than 90 percent above the 2006-10 average, with the region’s share of global grain exports rising from 22 percent to 29 percent during the same period. The key reason for the anticipated growth in grain production and exports is further farm-level improvements in the productivity of inputs, led by large new farm operators that have upgraded agricultural technology and management in the region. This chart appears in the ERS report Rising Grain Exports by the Former Soviet Union Region: Causes and Outlook, WHS-13A-01, February 2013.

Southeast Asia's rice surplus projected to continue to expand

Monday, January 14, 2013

The Southeast Asia region is a major supplier of rice to global markets, accounting for about half of the import needs of the rest of the world in 2011. In USDA's most recent projections, Southeast Asia's rice surplus is expected to continue to expand over the next 10 years. Although rice production in the region is projected to grow at a slower rate over the next decade, growth in production is still expected to outpace growth in the region's rice demand. Land constraints are expected to lead to slower growth in both rice area and production, while the diversification of diets away from rice as incomes rise is projected to slow growth in rice consumption in most of the region. Overall, Southeast Asia's net exports of rice are projected to rise from an average of 11.2 million tons during 2009-11 to an average of 14.5 million tons in 2019-21. For this analysis, the Southeast Asia region refers to Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. This chart appears in the ERS report, Southeast Asia's Rice Surplus, RCS-12l-01, December 2012.

U.S. wheat planted area has trended down for many years

Friday, June 17, 2011

The United States is a major wheat-producing country, with output exceeded only by China, the European Union (EU-27), and India. Nationally, wheat ranks third among field crops in both planted acreage and value of production, behind corn and soybeans. Nonetheless, while varying widely during the past half-century, U.S. wheat area has been trending downward after peaking in the early 1980s, and is expected to do so for the foreseeable future. Past annual fluctuations in wheat area can be explained by changes in the Government's farm program, declining consumer demand for wheat products, and more recently, the relative profitability of growing competing crops. Several long-term factors play important roles in the projected downward trend of the U.S. wheat crop area for the remainder of this decade. The profitability of growing wheat relative to other crops, particularly corn and soybeans, is expected to continue declining. Two factors facilitating the planting of alternative crops, such as corn and sorghum, are the increased use of reduced-tillage and continuing genetic improvements, both of which improve yields of these alternative crops. Furthermore, wheat production in the Ukraine, Russia, and Kazakhstan is expected to continue increasing, competing with the U.S. in global markets. This graphic is from the Wheat briefing room, April 2011.

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