USDA Sees U.S. Farmers Trimming Acreage as Crop Prices Fall

So the US government just put in place a farm land acquisition subsidy because of purported food shortages. Aivars Lode

 By J

ACOB BUNGE

ARLINGTON, Va.—U.S. farmers are likely to scale back their planting of corn, soybeans and other major crops this year in response to dwindling crop prices and profit margins, a top U.S. Department of Agriculture official said Thursday.

Farmers are likely to trim last year’s record soybean acreage 0.2% to 83.5 million acres, according to acting USDA Acting Chief Economist Robert Johansson, while trimming corn acreage about 1.8% to 89 million acres, he said.

”Lower prices will lead to fewer planted acres,” Mr. Johansson said, estimating that overall U.S. farmland dedicated to the eight major field crops would decline 1.3% to 254.6 million acres. 

Farmers are grappling with sliding commodity prices that follow from back-to-back bumper crops, which are seen building massive grain and oilseed stockpiles. U.S. agricultural exports, meanwhile, are seen declining to $141.5 billion in fiscal 2015, down from last year’s record level, according to Mr. Johansson.

While lower crop prices played into the anticipated decline in overall agricultural export value, Mr. Johansson said, overseas customers are also taking advantage of last year’s massive grain production to build up their own supplies, which has sapped some demand for U.S. crops.

The USDA expects an average price of $3.50 a bushel for corn in the 2015-2016 marketing year, down from $3.65 in 2014-2015. Soybeans’ average per-bushel price is seen falling to $9.00 from $10.20, with wheat down to $5.10 to $6.00, according to Mr. Johansson. 

In response, farmers this year are likely to trim acreage in nearly all major crops, he said. Wheat is likely to be planted on 55.5 million acres, down 2.3% from the 56.8 million acres of the grain planted last year, according to Mr. Johansson. Cotton acreage is likely to fall 12.1% to 9.7 million acres, while rice planting seen being down 1.3% at 2.9 million acres.

Lesser-grown feed grains such as sorghum are where farmers are focusing more acres, planning a 9.1% increase this year to 14 million acres in response to demand from China, Mr. Johansson said. 

“USDA projects that China’s recent increase in sorghum and barley imports—used mainly as a feed—will continue in the future,” he said.

Boosted by cheap grain for feed, U.S. meat production is expected to rise to record levels, according to the USDA. Pork production is seen rising 5.5% to a record 24.09 billion pounds, with broiler production up 3.6% to 39.95 billion pounds. Total meat production will also hit a record of 95.13 billion pounds, Mr. Johansson said.

As hog farmers ramp up production, average hog prices are projected to drop 26.3% to $56 per hundredweight, according to the USDA. Average broiler prices are likely to fall 4.4% to $100.30 per hundredweight while cattle prices are expected to rise 4.8% to an average $162 per hundredweight. 

The forecasts are based on USDA analysis, not on a survey of farmers.