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USDA projection: Higher demand, lower prices in 2022
 
By STEVE BINDER
Illinois Correspondent

WASHINGTON, D.C. — World consumers will demand more beef and pork products, and corn will remain king. But prices farmers and ranchers receive for those goods, with many at record levels in recent years, will wane during the next decade.

Those are some of the key takeaways from the latest long-term projections report issued last week by the USDA. Agency officials regularly update its 10-year projection report, the latest taking the ag industry through the 2022 growing season.

There were few surprises in last week’s report, USDA officials said, but they cautioned the assumptions do not take into account adverse weather conditions, which played havoc with crops during 2012.

“There is no way to accurately predict conditions like we have still, the ongoing drought,” said USDA economist David Stallings. So, the projections assume weather conditions each year close to normal, or what production was over a span going back 25 years, including the 1988 drought.

It also assumes a world population growing at a slightly lower rate, only about 1 percent, for the next 10 years. But that growth, according to the report, is expected mostly in developing countries with rising incomes, resulting in growing demand through 2022 for meat and pork products.

Prices, however, will drop. “Prices are projected to fall from recent record highs but remain above pre-2007 levels for many crops. Following the near-term decline in prices and planted acreage, strong demand and rising prices provide economic incentives for increases in plantings beyond 2015,” according to the report.
The projections predict a steady increase in meat consumption globally, with U.S. exports of beef, for instance, increasing by 30 percent to 8.1 million tons by 2022. That increase doesn’t begin in earnest until after 2015, according to the report, because ranchers have thinned herds in recent years because of drought and high feed costs.

On the crop front, the report predicts:

•Acreage for the top 8 crops – corn, soybeans, wheat, oats, barley, rice, cotton and sorghum – is anticipated at 254 million acres this year and will steadily drop to about 243 million acres in 2022, although improved growing and production methods will lead to higher yields, particularly for corn.

•Corn yields will grow to a record high of about 15.26 billion bushels by 2022, compared to the drought-season production of 10.73 billion bushels last year. The USDA expects the United States to control about 46 percent of the entire corn export market by 2022, something the National Corn Growers Assoc. (NCGA) also expects.
“We don’t think the projections are unrealistic at all, and they show the continued value of the crop,” said Paul Bertels, an NCGA vice president.

After peaking at $7.60 a bushel this year, average corn prices are expected to range between $4-$5 through 2022.

•Soybean prices peaked at $14.90 a bushel this year, and are expected to range between $10.35-$11.35 through 2022. Overall yields are expected to be 3.6 billion bushels in 2022, up slightly from the 3.3 billion expected this year.

•Wheat acreage and yields are expected to decrease, along with crop price. About 2.08 billion bushels annually are expected to be harvested by 2022, down from this year’s prediction of 2.2 billion. Wheat prices peaked at $8.10 a bushel this year, and prices are expected to average between $5.40-$6.20 per bushel through 2022.

To view the entire report, go online to http://1.usa.gov/YSu6DC
2/21/2013