Each year the USDA Office of the Chief Economist leads the Interagency Agricultural Projections Committee in developing long-term, or baseline projections, for the agriculture sector. This year’s projections were released in February and provides forecasts to 2031. The projections are based on data from the October 2021 World Agricultural Supply and Demand Estimates (WASDE). Obviously, the projections do not account for recent events like the invasion of Ukraine by Russia or other domestic or international shocks which will affect agriculture in the future, but they do provide a glimpse of the underlying supply and demand trends over the long-term. Below are few excerpts from the projections of interest to Nebraska agriculture:
- Nominal [non-inflation adjusted] corn prices are projected to fall from $4.80 per bushel in 2022/23 to $4.00 by 2026/27, and then remain stable at that level through 2031/32. Growth in domestic corn use is driven exclusively by feed and residual use, driven by domestic meat production to meet both domestic and export demand for beef, pork, and poultry. The baseline projects corn use for ethanol to be somewhat lower at the end of the projections than in 2022/23.
- Nominal soybean prices are projected to start at $10.50 per bushel in 2022/23, declining significantly from 2021/22 and continuing to fall through 2026/27 before flattening at $10.00 the remainder of the projection. Global import demand growth, led by China, is mainly fulfilled by increased exports from Brazil, and modest gains from the U.S.
- Although strong trade competition continues, U.S. commodities remain generally competitive in global agricultural markets, with U.S. corn, soybean, and cotton exports projected at record highs by 2031/32.
- In the beef cattle industry, cattle inventory declines in 2022 and into 2023 …as the sector contracts from drought conditions in major U.S. cattle producing regions. The decline in cattle numbers in 2022 is expected to lead to continued strengthening of cattle prices in 2023, after which a modest herd expansion slows the rising pace of cattle prices through the end of the projection period. Increasing slaughter weights will further support production gains as the herd expands. Beef production is expected to increase during the projection period, starting in 2024 at year-over-year rates that average almost 1 percent.
- Tighter supplies of fed cattle at the start of the projection period, coupled with continued strong demand support 5-area steer prices during 2023–31. Supply growth is not expected to keep pace with demand despite the cattle herd expanding and beef production increasing throughout the remainder of the period; steer prices are expected to increase to almost $143 per hundredweight by the end of the period.
- …the United States is expected to export more beef than it imports by a moderate margin, a switch from the pattern early in the forecast period. Strong import demand in key Asian markets will support increasing U.S. exports, while U.S. demand for imported processing-grade beef is expected to be dampened by increasing availability of domestic cows through much of the baseline period. Brazil is projected to remain the largest global beef exporter, while India remains second, and the United States and Australia are expected to compete for the third position. Among the major global beef exporters, the U.S. market share is expected to decline, particularly relative to Brazil.
- The U.S. pork sector in the projection period is characterized by steady production growth deriving largely from innovations adopted by the industry in hog production and processing technologies. Despite some volatility early in the period, progressively increasing supplies of pork are expected to pressure hog prices lower through 2029, before reversing and trending higher through the end of the projection period. National base lean prices for live-equivalent hogs are expected to average just under $50 per hundredweight over the projection period.
Figure 2. U.S. Corn, Soybean, and Wheat Prices, 2001-2031
Figure 3. U.S. Livestock Prices, 2001-2031