USDA’s 10 year projections for commodity production, economics, and trade were released Feb. 11, the second in a series of long term agricultural projections from the federal government.
The Congressional Budget Office released its data a week ago, with both pushing and pulling on the market with their focus on the 2013 crop. The USDA’s specific projections for the new crop year will be released February 21 & 22 at the Agricultural Outlook Forum.
The USDA report is based on normal weather, no economic surprises, and production trends. While they may not have the surprise that makes for excitement in the market place, the projections refine trends that are important to the market.
Instead of summarizing the 105 pages of data, significant trends were selected, many of them for the next 10 years:
US and global economy:
- Global economic growth is forecast at 3.3 percent, while US economic growth is forecast at 2.6 percent.
- Overall, birth rates will decline, but 82 percent of the population growth will be in developing nations.
- The value of the dollar will continue to depreciate, which will enhance exports.
- Oil prices that have recently averaged $93 per barrel, will average $120 by the end of the decade.
- About 35 percent of corn use will be for ethanol, but production increases will slow as demand for gasoline slows.
- World meat demand grows at an annual rate of 1.8 percent, primarily in Africa and the Mid-east.
- Prices for many major crops are projected to decline in the near term as global production responds to recent high prices. But prices will hold above pre-2007 levels.
- Improved livestock-sector net returns provide economic incentives for expansion.
- Over the latter half of the projection period, livestock prices generally rise, reflecting a moderate pace of production expansion combined with increasing domestic use and export demand.
- Farm income is projected to reach a record high nominal level in 2013 reflecting high commodity prices as well as large crop insurance indemnities paid to the sector. Although projected to decline from this record as commodity prices retreat, strengthening global food demand, a weaker dollar, and sustained biofuel demand keep net farm income historically high over the projection period.
- While some slowing is expected, China’s economic growth is expected to average around 7.8 percent over the next decade. This growth in per capita income is expected to move a significant number of people out of poverty and continue to boost food demand.