The Food and Agriculture Policy Research Institute (FAPRI) released its long-term grain and livestock price baseline recently and the key results are similar to those suggested in USDA’s projections to 2023. Crop prices are projected to be much lower than they have been recently, but the FAPRI forecasts have prices a little higher than those in the USDA report.
The corn price falls to $4.42 per bushel in the current crop year, drops to $4.17 next season and averages $4 per bushel during the 2015/16 to 2023/24 period. Corn area declines to 91.3 million acres in 2014, stays close to 91 million acres per year through 2020 and ends up near 90 million acres in the last three years of the forecast.
With very little increase in the amount of corn used for ethanol, total domestic demand for corn stays basically flat through the next decade. But exports increase significantly, according to FAPRI, rising to 2.9 billion bushels by 2023/24, up from 1.447 billion in the current year. Corn ending stocks rise to 2 billion bushels by 2017/18 and 2.2 billion by the end of the period. Corn prices generally stay above the $3.70 per bushel reference price under the PLC farm program.
FAPRI puts 2014 soybean acreage at 78.7 million acres, which turns out to be the highest level through the 10 year forecast period. For the most part, U.S. soybean acreage is between 76 million and 77 million acres. U.S. soybean ending stocks stay pretty tight through the forecast, between 200 million and 250 million bushels. Soybean prices average close to $9.80 per bushel over the next 10 years, well below the current cash price near $14 per bushel. U.S. soybean exports increase by a relatively modest 8 percent from now through 2023/24.
Wheat prices are forecast to be lower during the next decade. Prices average between $5 and $5.50 per bushel. FAPRI puts 2014 wheat acreage at 57 million acres and acreage holds pretty steady near 56.1 million to 56.7 million acres through the forecast. Domestic demand increases by just 3 percent from the 2013/14 forecast to 2023/24 and exports are up even less. But demand is forecast to fall by 100 million bushels in 2014/15, then slowly recover over the next several years. We don’t get back to 2013/14 levels until 2019/20. For most of the forecast FAPRI’s expected farm prices are below the reference price of $5.50 per bushel in the new farm bill.
The beef cow inventory begins to rise this year and it peaks at 30.9 million head in 2018 and 2019. By 2023 the inventory is back to near the 30-million-head level. The total cattle inventory peaks at 91.3 million head in 2019, up 4 percent from the level recorded at the beginning of this year. Cattle prices peak in 2015 and gradually decline in subsequent years.
Net cash farm income falls to just under $110 billion this year, down from more than $130 billion in 2013. Net cash income continues to erode through 2018, falling to $102.6 billion. Then there is a little rebound up to $105.3 billion by the end of the forecast. Government payments average a little less than $10 billion per year over the next decade, but they are only expected to be $6 billion in 2014. Cash expenses go up by about 1 percent per year through the next 10 years.