A mid-year update of the 2010 U.S. agricultural baseline shows increased wheat exports, moderate rises in grain prices and modest recovery in meat and dairy prices paid to farmers.
The drought in Russia and reduced global wheat production have affected the entire U.S. agricultural outlook. Shifts in U.S. crop production also have shown effects and changes in one sector ripple through all farm segments.
The baseline revision comes following release of new USDA data, said Scott Gerlt, crop analyst with the University of Missouri Food and Agricultural Policy Research Institute.
“Russia and neighboring countries have lowered production estimates and banned exports,” Gerlt said. “That comes at a time of large U.S. domestic wheat stocks. U.S. exports should increase to fill part of the gap in world markets.”
FAPRI projects an average wheat price of $5.10 per bushel for the current market year. Total wheat use, including exports, could top 2.4 billion bushels by the 2011-2012 crop year.
“Corn exports also increase in response to strong demand in global grain markets. Higher grain prices could result in increased U.S. acreage for both corn and wheat in 2011,” Gerlt said. However, more commodity acreage dampens price increases.
Corn prices are projected to average $3.68 per bushel for the crop harvested this fall. USDA estimates record yields this year, which moderates price increases for corn, Gerlt said
FAPRI projects a soybean price average of $9.35 per bushel for the 2010 crop. For both corn and soybeans, prices over the next five years remain below the 2008 peak, but well above price levels prior to 2007.
Lower feed prices have had a positive impact for livestock producers. “Some sectors are now profitable,” said Scott Brown, FAPRI livestock economist.
Feed prices have declined from the peaks of 2008, reducing costs for livestock feeders. “However, feed and nonfeed expenses have not dropped to 2006 levels,” Brown said. “As a result, 2010 returns per head remain below long-term averages.”
For pork, demand recovery and supply reduction help make swine profits possible for the next three years. “Both supply and demand are moving in the right direction,” Brown said.
The new baseline shows a hog price average in 2011 at $56.39, up from $54.59 per hundredweight projected for 2010.
“While demand is helping, we must look at supply side,” Brown said. “We’ve seen cutbacks in pork production of 2.5 percent this year. Reduced supply helps the improved price outlook.”
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Source: University of Missouri Food and Agricultural Policy Research Institute