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10 year commodity trends sneak peak

When USDA releases its longterm agricultural sector outlook for the next ten years later this month, the projections through 2026 covering commodities, trade and aggregate indicators of the farm sector will give retailers a glimpse of the next decade's expectations. Once the agency makes it available, you can access the entire report here (Adobe Acrobat format). Until then, here are some highlights of what the report will show:

 

Less Land in Crops; Conservation Continues. As prices for most crops have fallen from highs of recent years, U.S. farmers have responded by planting fewer and fewer acres to the major field crops. That decline is expected to continue, as the acres planted for corn, sorghum, barley, oats, wheat, rice, upland cotton and soybeans is projected to remain below 250 million acres. Wheat, corn, and cotton account for most of the decline between these years. Much of that idled land will remain in the government program that compensates farmers for removing the most environmentally sensitive land from cropping use.

Plantings will gradually decine

Plantings will gradually decine

Corn Ethanol Use Remains Level. Ethanol production in the United States is projected to fall over the next decade. But even with the U.S. ethanol production decline, demand for corn to produce ethanol continues to have a strong presence in the sector. While the share of U.S. corn expected to go to U.S. ethanol production falls, it accounts for over a third of total U.S. corn use throughout the projection period. Use in feed to produce farm animals that produce your meat, milk and eggs remains the No. 1 use of this farm staple.

Corn use for ethanol will level off

 

U.S. Appetite for Meat will Stay Strong. Per-capita consumption of meat and poultry will continue, although more moderately than in the past, with chicken still leading the plate by almost double over beef and pork.

Meat consumtion will stabilize

U.S. to Continue as Meat-Growing Power. In order to feed both those domestic consumers and a growing international meat market, U.S. farmers will continue the upward trend in production of the major meats.

Meat production estimates

Increasing Animal Productivity. A theme illustrated in USDA's projected data: U.S. agriculture will continue to produce more and more food using fewer and fewer resources. Here's an example: The amount of milk put out by the average U.S. dairy cow is almost three times what it was compared to 30 years ago. That means the size of the nation's dairy herd will continue dropping, even as milk supply continues to climb.

Milk cows and their production

 

Five more ways to keep shoppers grilling

Of the 75 percent of American adults who own a grill or smoker, according to Virginia's Hearth, Patio & Barbecue Association, the trade group for grill manufacturers, 61 percent of them will use their grill or smoker year-round. If you're tapering off the grill promotions after Labor Day, you're missing out on a significant and growing segment, says the association. Need more evidence?

Turkey pricesTurkey. Although USDA preliminarily reports weekly production of turkey for the month of October was below year-earlier levels and that total production for the final quarter of the year has been cut by 30 million pounds, the average price for whole hens has not risen in anticipation of Thanksgiving's demand increase as much as they would in a normal year. USDA lowered its fourth-quarter forecast for frozen hen prices to $1.18 to $1.22 per pound, on the basis in part of stocks of tom turkeys that are at their highest level for a September in three years. In addition, exports that draw off the domestic supply and could contribute to increased prices remained well below levels seen during 2012 to 2014, when they were shut off by avian influenza.

Why aren't meat prices behaving as expected?

"Why is beef demand growing as per-capita income shrinks?" BEEF magazine editor Wes Ishmael pondered in a Jan. 2014 column written to cattle ranchers. The gap between rich and poor has widened, income growth at the bottom is stalled, and beef prices are leading nagging food inflation. "None of that should be positive news for commodity products with a high price compared to substitutes;" he noted, "beef vs. chicken and pork in this case." Yet Ishmael is surprised to point out that annual retail demand for beef has continued to defy expectations and to rise during those developments. "There’s no simple explanation for this paradox between dwindling domestic per-capita wealth overall in tandem with growing demand for pricier beef."

Now, a study scheduled for publication in the journal Applied Economic Perspectives and Policy by Oklahoma State ag economist Jayson Lusk and Kansas State ag economist Glynn Tonsor has attempted to explain and quantify that paradox.

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