What Did USDA's Chief Economist Forecast for 2013?

Greetings from a snowy Midwest USA! This past week USDA chief economist Joseph Glauber told attendees of the 2013 USDA Outlook Conference that he expects US agricultural exports will have another record-breaking year and said the financial outlook for the ag sector remains solid. However, he acknowledged that the livestock guys have not had it easy.

“Row crop producers have generally fared well despite the adverse weather, in large part due to higher prices and federal crop insurance programs which have helped offset yield losses,” Glauber said. “Livestock, dairy and poultry producers have experienced sharply higher feed costs, combined with poor pasture conditions, with limited safety net programs on which to fall back.”

His 2013 outlook calls for a rebound in crop yields resulting in record production levels for corn and soybeans, and by fall 2013, he expects lower prices for most grains and oilseeds which should lead to lower feed costs and improved profitability for the livestock, dairy and poultry sectors.

US agricultural exports for fiscal year (FY) 2013 are projected at $142 billion, down $3 billion from the November 2012 forecast, but $6.2 billion above FY 2012 levels.

Exports to China are projected to be $22 billion, down $1.4 billion from last year’s record, but for the second straight year China has edged out Canada ($21 billion) as the number one market for US agricultural exports.

“US agricultural exports to China have grown, on average, almost 20 per cent annually since FY 2005,” Glauber said. “Soybeans and cotton have dominated US exports to China, accounting for as much as 75 per cent of total agricultural exports in recent years, although red meats, coarse grains, and feeds and fodder have all shown strong growth. “

In part due to record corn production, reduced domestic use and available export capacity, Brazil will likely overtake the US as the world’s largest corn exporter in FY 2013. While the US will likely regain its position as largest corn exporter in FY 2014, the low levels of exports reflects the severity of year’s drought.

Global grain stocks are expected to tighten in 2012/13, while cotton stocks increase as China increases its public inventories.

“The droughts in North America, southern Europe and the Black Sea region sharply reduced wheat, corn, and soybean supplies,” he said. “Global wheat stocks for 2012/13 are projected to be at their lowest level as a per cent of use since 2008/09. Global corn stocks as a per cent of use are projected to be the lowest since 1973/74.”

Despite record production, strong demand has reduced global rice stocks, and soybeans stocks are anticipated to increase reflecting large anticipated production in the Southern Hemisphere, he said. Large global supplies should lead to stock rebuilding in 2013/14, but markets are expected to remain volatile.

Expectations for more normal spring weather should result in more soybeans and slightly less corn being planted in 2013, he noted.

Corn planted acreage is projected at 96.5 million acres, down slightly from last year’s 75-year high. Soybean acreage is projected at 77.5 million. 

This week, I’m off to sunny Florida for the Bayer CropScience Ag Issues Form followed immediately by the 2013 Commodity Classic. More on both events next week.

Have a great week!