U.S. farm production to increase in 2023 as economy cools
The U.S. economy will slow in the new year, constrained by sharply higher interest rates, at the same time that farmers and ranchers expand production, projected the Agriculture Department on Monday. Prices for most commodities — including corn, soybeans, wheat and hogs — would decline somewhat from this year’s elevated levels but remain comparatively high.
With normal weather and trend-line yields, the corn and soybean crops would be the largest ever, following late-summer dryness in the Midwest and drought in the Plains that cut into yields this year. Per capita meat consumption, now 0.62 pounds per day, would rise annually for the next decade, reaching 0.65 pounds in 2032, according to USDA’s long-term baseline. High retail prices for meat have not dented the American appetite.
Lower commodity prices could weigh on farm revenue despite the larger production; the USDA will make its first forecast of 2023 farm income in February. It has forecast net farm income at a record $147.7 billion this year, following $140.4 billion in 2021.
The FAPRI think tank at the University of Missouri said in September it expects farm income to decline in 2023 and 2024 as commodity prices recede more rapidly than input costs, which climbed by $67 billion this year, the largest year-on-year increase ever.
After a 3.1% growth rate this year, U.S. economic growth would be 2.7% in 2023 as the economy cools from its rapid recovery from the pandemic. Inflation would drop to 3.1% and petroleum prices would fall and the jobless rate would remain low but the bank prime rate would be 6.6%, up by 1.9 points from this year. At 3.2%, global GDP would expand faster than the U.S. economy and China, the No. 1 customer for farm exports, would post a 5.3% growth, said the USDA.
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However, the International Monetary Fund forecast global growth of 2.7% in 2023, down from 3.2% this year. “Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades,” said the IMF in a quarterly outlook published last month. “The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering Covid-19 pandemic all weigh heavily on the outlook.”
Growers were projected to plant 92 million acres of corn next year — an increase of 3.4 million acres — while trimming soybean plantings to 87 million acres, down by 500,000 acres. Wheat sowings would rise to 47.5 million acres, an increase of 1.8 million acres. Upland cotton plantings would drop by nearly a third, to 9.5 million acres, affected by drought losses and low market prices this year. Plantings of the eight major U.S. field crops, which also include rice, sorghum, barley and oats, would total 250.8 million acres, 1.3 million acres more than this year.
The corn crop was projected at a record 15.265 billion bushels, nearly 1.4 billion bushels more than this year. The crop would fetch an average $5.70 a bushel at the farm gate, compared to $6.80 this year, said the USDA. Soybean production of 4.480 billion bushels, also a record, would be 167 million bushels larger than this year. The season-average soybean price was projected at $13 a bushel, down by $1 a bushel from this year. The highest farm-gate price for corn was $6.89 a bushel for the 2012 crop and for soybeans, it was $14.40 a bushel, also for the 2012 crop.
This year’s wheat crop is forecast by USDA to sell for a record $9 a bushel, bolstered by warfare in Ukraine, ordinarily a leading exporter. The season-average price would drop to $8 a bushel for the new crop, still the second-highest farm-gate price. Growers were projected to plant 47.5 million acres of wheat this year, producing 1.919 billion bushels. The Upland cotton crop was projected at 13.9 million bales weighing 480 pounds, slightly larger than this year. The season-average cotton price of 80 cents a pound for the 2023 crop, would be 10 cents lower than this year but the best price for years to come, said the USDA.
Beef production was forecast to drop by 6.3% in 2023, part of a brief decline in the cattle inventory that would boost market prices. Pork and chicken meat production was projected to expand slightly in 2023 while market prices for hogs and broiler chickens dipped.
Selected tables from USDA’s long-term agricultural projections were available here.