WASHINGTON — A 10-year forecast for the food and agriculture sector projects rising global demand, continued strong trade competition and for the United States to remain competitive in the global export market.
“Rising global demand for varied diets and protein is projected to stimulate demand for feed grains and soybeans,” the U.S. Department of Agriculture stated in its Agricultural Projects to 2029 report.
“Although trade competition will continue to be strong, the U.S. is projected to remain competitive in global agricultural markets due, in part, to product quality and market efficiency.”
The forecasts were prepared by the Interagency Agricultural Committee, led by the Office of the Chief Economist, World Agricultural Outlook Board and USDA.
The projections assume the trade disputes to continue during the duration of the projection period.
Net U.S. farm income is expected to increase by $1.4 billion in 2020 to $93.9 billion and remain between $88.8 and $98.6 billion for the remainder of the decade, trending upward during the latter half.
While agricultural crop prices are tending to trend upwards only slowly in nominal terms, U.S. trade disputes with China that existed at the time of these projections were formulated have dampened expectations, particularly for soybeans.
Planted acreage is projected to drop slightly overall compared to recent years, primarily due to expected lower soybean plantings, while corn and wheat plantings are expected to remain mostly unmoved. Acreage enrolled in the Conservation Reserve Program also is expected to rise, lowering total acres to the eight main crops.
Here’s what the outlook noted for specific commodities.
Corn
• U.S. corn production is projected to mostly grow over the next decade from yield growth, as well as relative prices are likely to encourage corn over soybean plantings.
• Expanding meat production is expected to boost feed usage and use for food, seed and industrial is projected to increase over the baseline period.
• Planted area is expected to increase sharply in the near-term and then recede to 89- to 88.5-million acres for the rest of the projection period, similar to more recent years, as markets adjust to a new trade equilibrium and demand for U.S. soybeans grows again.
• Through the baseline period, supply and use are both projected to increase by 7%.
• Corn-based ethanol production is projected to rise slowly over the entire period. Constraints on the expansion of higher ethanol blends (E15 and E85), rising fuel efficiency, rising oil costs and changing consumer lifestyles resulting in lower miles driven all support a decline in domestic ethanol consumption.
• Despite continued competition from Brazil, Argentina and Ukraine, growing domestic feed use and slowly increasing demand for ethanol, the U.S. market share of global corn trade will rise slightly from 30.5% to 31.6% by 2029-2030. This is well below the shares prior to 2010, when the United States last exceeded 50% of global export market share.
Soybeans
• After dropping sharply in 2019-2020 due to weather-related planting issues and trade tensions with China, U.S. soybean plantings are projected to rebound and remain relatively steady over the course of the decade. Plantings are projected to remain in the mid-80-million-acre range, supported by slowly rising prices and net returns.
• Growth in domestic demand continues for soybean meal and oil and thus the crush is projected to continue to increase over the next decade. These gains reflect low expected feed prices, increasing livestock production, stable, but historically high soy oil use for biodiesel and gradually increasing demand by importers as incomes continue to rise globally.
• U.S. soybean exports were subdued in 2019-2020 after climbing rapidly between 2012-2013 and 2017-2018, but recover to recent highs by the middle of the projection period as producers and exporters adjust to the new trade environment. Brazil continues to capture market share and the U.S. share of trade drops from 34% to 32.5% between 2020-2021 and 2029-2030.
• U.S. exports of soybean oil and meal will continue to face strong competition from South America. With a comparative advantage that continues to favor soybean products over soybeans, Argentina’s share of world soybean meal exports continues to grow to 45.9% of the global market by the end of the projection period.
• Brazil is the second-leading exporter of soybean meal and is expected to raise its share of global exports from 22.6% to 24.6%. Despite an increasing level of meal exports, the United States loses global share, dropping from 17.9% to 16.3% of the global market by the end of the decade.
• Soybean oil to produce biodiesel in the United States is projected to remain flat at 8.5 billion pounds throughout the projection, supporting an annual production of over 1.1 billion gallons of soy oil based biodiesel.
Wheat
• U.S. sowings of wheat are projected to range between 45- and 46.5-million acres throughout the projections, below the recent five-year average of 48.8 million, as domestic use and exports both experience slow growth and ending stocks are drawn down.
• With exports generally flat, the U.S. share of global wheat trade continues to decline, particularly due to growing competition from the Black Sea region.
• Wheat-to-corn price ratios remain stable throughout the projection period. However, on ample supplies of other feed grains, wheat feed and residual levels are forecast to decline in the first years of the projection period before stabilizing.
Cattle
• The cattle herd is expected to decline cyclically in the early part of the projection as producers respond to lower returns.
• A decline in cattle numbers early in the period will likely contribute to higher cattle prices, although a modest herd expansion the rest of the period pressures cattle prices lower.
• Rising slaughter weights due to efficiencies from nutrition and genetics will further support gains in beef production.
• Overall, beef production levels are expected to rise to 29.5 billion pounds by 2029.
Hogs
• Slowly increasing corn prices and mostly flat hog prices during the projection period lowers the hog feed price ratio (hog price/corn price), causing the initial growth in farrowings to reverse in the second half of the projections period. However, continued gains in pigs per litter and growth in hog carcass weights continue the upward trend in pork production.
• While pork and beef production has been roughly equivalent in recent years, pork production is expected to exceed beef production for most of the projection period, peaking at just over 32.1 billion pounds in 2029, compared to 29.5 billion pounds for beef.
Background
USDA’s long-term agricultural projections presented in this report are a departmental consensus on a long-run scenario for the agricultural sector. These projections provide a starting point for discussion of alternative outcomes for the sector.
The report assumes that there are no domestic or external shocks that would affect global agricultural supply and demand. Normal weather is assumed. Changes in any of these assumptions can significantly affect the projections and actual conditions that emerge will alter the outcomes.