commodity prices

President Biden will announce three steps to encourage American farmers “to boost production, lower food prices, and feed the world” during a visit to a family farm in northern Illinois on Wednesday afternoon, said the White House. Action by the USDA would be a response to Russia’s invasion of Ukraine and to high inflation at home.

The UN index of food prices, already at a record high, rose by 12.5 percent in reaction to Russia's invasion of Ukraine, with world wheat prices soaring nearly 20 percent, said the Food and Agriculture Organization. Wheat prices were so high, said USDA analysts in a separate report, that consumers in sub-Saharan Africa may find it cheaper to eat rice, ordinarily the more expensive staple grain.

The USDA will spend $1 billion on climate-smart pilot projects, Agriculture Secretary Tom Vilsack announced on Monday, delivering on a pledge made last September to help farmers develop a market for sustainably produced commodities. The demonstration projects could change the shape of U.S. farm policy, but the clock already is ticking toward the 2023 farm bill and funding for climate mitigation is not certain.

Record-high expenses and sharply lower federal subsidies will erode farm income in 2022, according to a forecast by the Agriculture Department. Nonetheless, U.S. agriculture would see one of its best years on record, with net farm income 26 percent above its 10-year average.

Prices for common elements of the U.S. diet, from poultry and dairy to fruits and vegetables, are rising at double or triple their usual rate, said the government in forecasting the highest annual food inflation rate in 14 years. The Agriculture Department said food prices would rise an average of 5 percent this year, an abrupt two-point increase from its forecast a month ago.

U.S. food prices will rise by at least 4.2 percent this year, propelled by high energy and commodity prices, said a University of Missouri think tank on Wednesday. The group’s director said the actual figure could be higher still.

The strong agricultural economy, fueled by high commodity prices, has reduced farmers' reliance on farm lenders, despite concerns about rising input costs, according to a Federal Reserve survey of ag bankers. "Higher costs are likely to put upward pressure on demand for credit, but strong farm income and working capital could also supplement financing for some borrowers," said the Kansas City Fed on Thursday.

To mitigate the impact of war in Ukraine on global food supplies, the G7's agriculture ministers called on all nations to keep their trade channels open and to guard against unjustified limits on exports. "We will not tolerate artificially inflated prices that could diminish the availability of food and agricultural products," said the ministers in a statement after a special meeting convened via the internet.

The Russian invasion of Ukraine will have, at most, a muted effect on U.S. food prices, said Agriculture Secretary Tom Vilsack on Thursday. “We have tremendous (domestic) production capacity,” he told reporters attending the USDA’s annual Agricultural Outlook Forum.

Despite the disruptions of the pandemic, U.S. farm income, a broad measure of profits, will be the highest since 2013, thanks to strong corn, soybean, wheat, broiler, cattle, and hog prices this year, said the USDA on Wednesday. "It is primarily a price story," said USDA economist Carrie Litkowski.

The red-hot U.S. recovery from the pandemic, with the fastest economic growth rate since 1984, will moderate to a still-strong 3.5 percent in 2022, said the USDA in its first look at the agricultural economy in the new year. Farm-gate prices for corn, soybeans, wheat and cotton, the four most widely planted crops, were projected to decline as production, suppressed by the pandemic, catches up with demand.

Higher prices for corn, soybeans, hogs, cattle, and broiler chickens — top U.S. ag products — will boost net farm income to $113 billion this year, the highest since 2013, estimated the Agriculture Department on Thursday. Income would be 26 percent higher than the 10-year average, reflecting the economy-wide recovery from the pandemic.

Propelled by the global economic recovery from the pandemic, U.S. farm exports will set back-to-back sales records this fiscal year and in the new year beginning on Oct. 1, the government forecast on Thursday. China would account for $1 of every $5 in exports during the two-year span, with annual purchases running more than $10 billion above its previous record, set in 2014.

The federal program that pays landowners to take environmentally fragile land out of crop production to prevent erosion, protect water quality, and preserve wildlife habitat will expand for the first time this year after losing ground annually since 2007. The USDA said on Monday that it expected a net gain in acreage in the Conservation Reserve Program, which was retooled in April to help slow climate change.