Grain farmers are a tad bit disappointed that grain prices have slumped as dramatically as they have following the 2012 drought-induced spike. Farmers most concerned about immediate prospects are those who are still holding much of their 2013 grain crops unpriced.
At the opening session of today's USDA Outlook Forum in Arlington, Va., Joe Glauber, USDA's chief economist, painted a more optimistic picture going forward for agricultural than some farmers currently see.
Despite record 2013 production for most grains and oilseeds, 2013-14 global ending stocks remain tight.
"Stocks as a percent of use have risen for most grains," admits Glauber. "But levels remain low relative to the early 2000s. Tight stocks will keep prices sensitive to weather conditions. Prices could rise substantially if a major production shortfall were to occur in 2014.
Global soybean stocks have rebuilt over the past two years. But a comparison to the early 2000s is less instructive because of the larger share of production coming from South America in 2014 compared with 2000-03.
Global cotton stocks continue to rise, reflecting the large inventories of cotton held by China. Potential changes in China's cotton support program may end the accumulation of stocks. But concerns about how and when China will make government inventories available to users hang over the market.
U.S. plantings likely to ease lower. USDA projects U.S. planted area for the eight major row crops to decline only slightly in 2014. Total plantings of corn, wheat and soybeans are projected to be 227.0 million acres, a decline of 1.1 million acres, mostly reflecting a decline in Soft Red Winter wheat seedings last fall. Winter wheat seedings were reported at 41.9 million acres, down 1.2 million from a year earlier. Spring wheat seedings are expected to be 13.6 million acres, about 500,000 acres higher than last year due to fewer expected prevented plantings.
USDA expects farmers to plant 171.5 million acres of corn and soybean, about 400,000 less than in 2013. Stronger soybean prices relative to corn should favor soybean plantings this year. The soybean to corn futures price ratio for fall 2014 delivery has been at 2.5, which favors soybeans. "We project that corn area will fall to 92 million acres, a decline of 3.4 million acres from 2013 levels," says Glauber. "Soybean acreage is projected at 79.5 million acres, up 3 million from 2013. Smaller SRW wheat plantings and lower soybean prices will likely reduce soybean double cropping in 2014."