Net Cash Income to Improve
Crop plantings in 2010 likely to drift lower.
John Otte
Published: Feb 18, 2010
In 2009 U.S. farmers faced tremendous uncertainty following the global financial collapse in the fall of 2008.
"Last year brought record crop production, both at home and abroad, which further weakened price prospects for grains and oilseeds," Joe Glauber, USDA's Chief Economist told participants at USDA's annual outlook forum in Washington, D.C. Thursday. "Five years ago, such large crops might have resulted in $2 corn, $3 wheat and $5 soybeans, but because of strong domestic and foreign demand, crop prices still remain high relative to historical levels."
Livestock, dairy and poultry producers had a particularly difficult year. Prices for livestock animals and products suffered sharp declines. Despite lower feed costs, returns for many livestock and dairy producers were negative for much of 2009. Producers responded by reducing herd and flock sizes, which led to some improvement in prices by 2009's fourth quarter.
Stronger world gross domestic product growth in the latter half of 2009 has contributed to higher cotton prices as world consumption of textile and apparel rebounds.
Income should rise
USDA's Economic Research Service released its initial estimates of farm income and production expenses for 2010. ERS forecasts net cash income at $76.3 billion, up $5.5 billion from 2009. Crop receipts are forecast at $160.3 billion in 2010, down $6 billion from 2009, but still the third highest on record. Livestock receipts for 2010 are forecast at $130.3 billion, up $11.5 billion (and also the third highest on record).
ERS expects farm expenses to be relatively unchanged in 2010 with declines in fertilizer and feed expenses offset by higher fuel and pesticide costs.
Crop Prospects
ERS expects farmers will plant less land to the major field crops in 2010 as prices continue to ease from their record levels in 2008.
Lower fertilizer prices should boost the net returns outlook for most of the major crops. But the sharp reduction in winter wheat area will not be completely made up by spring plantings.
Total planted area for the eight major crops (wheat, corn, barley, oats, sorghum, soybeans, upland cotton and rice) is expected to decline to 247.3 million acres, down 1.6 million from 2009. The 8-crop total is down 5.7 million acres from the recent high in 2008 as the net returns outlook is much less favorable than two years ago when prices were at or near record highs.
Wheat planted area for 2010 is expected to decline 5.3 million acres to 53.8 million. Winter wheat seeded area at 37.1 million acres is down 6.2 million from 2009 and the lowest since 1913.
The late row crop harvest and wet weather delayed winter wheat plantings in most States last fall. Partly offsetting the decline in winter wheat area is an expected rise in spring wheat plantings in the northern Plains.
Soybean planted area for 2010 is expected to fall nearly 500,000 acres from last year to 77.0 million acres as improved returns for corn and rotational considerations boost corn plantings.
Corn plantings for 2010 are expected to rise 2.5 million acres from last year to 89.0 million, the highest level since 2007.
Cotton and rice area should see increases as higher returns relative to competing crops such as corn and soybeans favor those crops.
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Tagged: wheat, winter wheat, usda, soybeans, cotton
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