Corn, wheat and soybean prices soared to record season-average prices during the 2012 drought and plummeted in following years under the weight of mammoth harvests. The USDA says low prices will continue for years, a reflection of slow U.S. and world economic growth and large food supplies. The U.S. economy is expected to grow 3 percent in 2016, with the growth rate slowing to 2.4 percent in 2020. The global growth rate is expected to run at 3.1 percent during that period.
Low commodity prices will weigh on the financial health of the farm sector. The USDA will flesh out its projections in February for its annual Outlook Forum. In late November, it forecast that net cash farm income, a measure of solvency, would fall 28 percent this year due to low and declining prices for crops and livestock. It would be the second year in a row of falling farm income.
In it first projection of crops in 2016 and beyond, the agency said the season-average corn price would not rise above $3.70 a bushel until 2024. Soybean prices are not expected to top $9 a bushel until 2020. And wheat would stay below $4.75 a bushel until 2021.
Record-setting corn crops are projected in coming years, keeping the corn stockpile at high levels. The current large wheat and soybean stockpiles would diminish but not enough to drive up prices.
Looking at 2016, the USDA projected farmers will expand corn planting 2 percent and reduce soybeans acreage 1.4 percent. The resulting harvest would be 13.9 billion bushels of corn, the second-largest crop ever, and 3.785 billion bushels of soybeans next year. Analysts said they expected an upturn in corn acreage, which has fallen for three years in a row, and less land planted to soybeans after back-to-back record-setting crops.
The 2016 corn crop would be 2-percent larger than this year’s 13.7 billion bushels, the third-largest crop on record, and the soybean harvest would be 5-percent smaller than the record 3.9 billion bushels of this year but still rank as the third-largest, if the USDA’s projections prove true.
The wheat crop was projected at just over 2 billion bushels, marginally larger than this year’s crop and in line with the three-year average. With an upturn in plantings, the upland cotton crop was projected for 13.6 million bales, up 6 percent from this year.
Corn, soybeans, wheat and cotton are the four most widely planted crops in the country.