Dr. Johansson also noted at yesterday’s Forum that, “Another place we might expect to see the tightening financial situation reflected is in land values and rental rates for farmland as farming profitability erodes.”
The DTN article noted that, “Corn acreage will decline by 4 million acres even though corn prices will increase slightly to an average of $3.50 per bushel, up about 3% from the 2016-17 marketing year.
“Soybeans will see an average price of $9.60 per bushel for the 2017-18 marketing year, up roughly 1.1% from the current marketing year. Still, soybean acres will gain on corn because the price ratio for soybeans is projected at 2.6 times that of corn, based on the February futures prices. If the numbers hold through the rest of the month, they will be the most favorable price spread between soybeans and corn since 1997, [USDA Chief Economist Johansson] said.”
On Tuesday, Bloomberg writer
Jeff Wilson reported that, “While corn is still king — it’s the largest U.S. crop by value and volume — farmers from North Dakota to Texas are preparing to use more of their land on soybeans instead. That’s because cash prices have jumped 9.2 percent since the 2016 harvest, creating the widest premium over corn in 29 years, and the oilseed is cheaper to grow.”
The Bloomberg article added that, “Soybean profits beat corn by an average of $47 an acre this year, based on budgets from the University of Illinois and Purdue University. It will cost farmers between $292 to $315 an acre to grow soybeans, compared with $521 to $531 for corn, according to
Gary Schnitkey at the University of Illinois.”
Trade
After detailing other aspects of the U.S. agricultural economy yesterday, Dr. Johannson turned to trade issues and pointed out that, “Overall, U.S. agricultural exports are forecast at $136 billion for FY 2017, with a rebound in Chinese demand and strong export sales in the beginning of this year.
In FY2017, U.S. exports to China are projected at $22.3 billion, up more than $3 billion from 2016 and making it the top export market for U.S. agriculture.
“Exports to Canada and Mexico are also projected to increase. Together those three countries purchase 45 percent of total U.S. agricultural exports.”
In its more detailed report yesterday, “
Outlook for U.S. Agricultural Trade,” USDA indicated that, “While shipments of sorghum and DDGS have declined, China continues to have a strong appetite for soybeans, cotton, pork and pork variety meats, and dairy (especially whey products). Exports to Japan are forecast up $200 million to $11.2 billion on the strength of beef and pork demand.”
The Trade Outlook added that, “The North American forecast is unchanged at $39.6 billion. Canada and Mexico remain the second and third largest U.S. agricultural markets, with exports forecast at $21.3 billion and $18.3 billion, respectively.”
Meanwhile, in additional reporting on China agricultural trade issues, Bloomberg writer Alan Bjerga reported yesterday that, “
President Donald Trump’s pick to be the U.S. ambassador to China emphasized friendship between the countries as he prepared to meet with China’s ambassador during a trip this week to Washington.
“Cordial ties are ‘going to be an important thing’ between the two nations, Iowa Governor and Trump Nominee Terry Branstad said Thursday in an interview after speaking at a U.S. Department of Agriculture conference in Arlington, Virginia.”
The Bloomberg article added that, “Trump rode to his election victory partly on strong support from voters in rural areas clamoring for an economic turnaround. Farm incomes, which reached a record high in 2013, are expected to fall for a fourth successive year, while debt levels have climbed. Trump and Vice President Mike Pence ‘better understand the needs of rural America,’ and the ‘importance of a level playing field on trade‘ than the previous administration, Branstad said.”
And Jesse Newman and Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Mr. Brandstad said he was confident the Trump administration would pursue export growth and work to eliminate barriers that countries like China have imposed against U.S. agricultural products.
“In particular, Mr. Branstad said he hoped to see the removal of Chinese restrictions on U.S. beef as well as tariffs on imports of U.S. dried distillers’ grains, an ethanol co-product used in animal feed. Earlier this month, an ethanol industry group said U.S. exports of the feed ingredient fell 10% last year amid a sharp drop-off in purchases by China.”