office of the chief economist 1 2019 agricultural outlook · 2019-10-03 · u.s. and global crop...

Office of the Chief Economist Office of the Chief Economist 1

Robert Johansson

Chief Economist

U.S. Department of Agriculture

September 26, 2019

2019 Agricultural Outlook

Office of the Chief Economist

3.00

3.50

4.00

4.50

5.00

5.50

2015 2016 2017 2018 2019 2020 2021 2022

October 2018 forecast

April 2019 forecast

July 2019 update (only through2020)

Percent change

Growth forecasts less optimistic --- global purchasing power falls by $1.7 trillion (cumulative from 2019 – 2022)

Data: IMF

3.00

3.50

4.00

4.50

5.00

5.50

2015 2016 2017 2018 2019 2020 2021 2022

October 2018 forecast

April 2019 forecast

July 2019 update (only through2020)

Percent change World GDP Emerging Markets and Developing

Countries

2


Dollar mostly higher year-over-year, but mixed over the last few months

Data: Thomson Reuters Datastream

-7%

-3%

-2%

0%

1%

2%

3%

4%

5%

6%

-10% -5% 0% 5% 10%

Russia ruble

Japan yen

Brazil real

Taiwan dollar

Canadian dollar

Mexico peso

China yuan

Australia dollar

Korea won

Eurozone euro

Argentina peso

US$ appreciation over last 12 months

46%

3

Since March 1

44%

3%

6%

4%

6%

1%

0%

0%

9%

-3%

-3%

3


Summary Recent trends and policies have generally led to falling food prices and growth in trade

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

1960 1970 1980 1990 2000 2010 2020

Corn Oilseed, Soybean

Global corn and soybean exports (1000 mt)

Data: USDA http://www.amis-outlook.org/indicators/prices/en/

5

http://www.amis-outlook.org/indicators/prices/en/




Real prices trend down, as crop production outstrips demand

6

0

100

200

300

400

500

600

700

800

1960 1970 1980 1990 2000 2010 2020

Real Crop Prices

Corn

Soybeans

Rice

Wheat

2005 = 100

0

30

60

90

120

150

180

210

240

1960 1970 1980 1990 2000 2010 2020

World Crop Production

Corn

Soybeans

Rice

Wheat

Data: USDA, BLS

2005=100

Corn price down 59%

since 1960, soybeans by

52%, rice by 70%, and

wheat by 65%.

Corn output has risen 435% since

1960, soybeans by 1,190%, rice by

225%, and wheat by 215%.


U.S. and global crop outlook

7


On the other hand, soybean progress is far behind the 5-year average.

16 days behind on

average nationally

Data: USDA

8


And Corn progress is well behind the 5-year average.

12 days behind on

average nationally

Data: USDA

9


Crop $/MT 2019F %∆ (YoY)

Soybeans 312 0.0%

Corn 142 0.0%

All Rice 291 +10.0%

Wheat 176 -7.0%

Cotton 1278 -17.7%

Data: USDA

5 year low 2019F 5 Year high

Higher corn and rice prices forecast, while wheat and cotton are lower

10


Crop 2019F

(mil. hectares) %∆ (YoY)

Corn 36.4 +1.0%

Soybeans 31.0 -14.0%

Wheat 18.5 -4.6%

All cotton 5.6 -2.4%

Rice 1.0 -13.9%

Data: USDA

Corn acreage forecast slightly up, other crops lower


11


Global 2019/20 production and consumption at near-record or record highs

300

400

500

600

700

800

MMT

Production

Consumption

Wheat

300

400

500

600

700

800

900

1,000

1,100

1,200

MMT

Production

Consumption

Corn

0

50

100

150

200

250

300

350

400

MMT

Production

Consumption

Soybeans

12

Source: USDA, World Agricultural Supply and Demand Estimates, September 12, 2019


Global stocks in days of use: tightening market for corn and soybeans next year, but wheat and rice stocks remain high

40

60

80

100

120

140

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Days of use

Wheat

Corn

Rice

Soybeans

Source: World Agricultural Supply and Demand Estimates, September 12, 2019

13


China’s ending stocks as a share of global ending stocks

14

0

20

40

60

80

0

20

40

60

80

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Percent Percent Wheat

Corn

Soybeans

Cotton

Rice

Source: USDA, World Agricultural Supply and Demand Estimates, September 12, 2019


U.S. and Indian Cotton Production Projected Up in 2019/20

Source: World Agricultural Supply and Demand Estimates, September 12, 2019

15

Office of the Chief Economist 16

U.S. and global livestock outlook


5 year low 2020F 5 Year high Livestock 2020F ($/MT) %∆ (YoY)

Steers 2535 +1.3%

Hogs 1301 +19.2%

Broilers 2028 +5.7%

Milk 416 +2.7%

Data: USDA

Low prices for U.S. steers; stronger hog and milk prices

17


Item 2020F

(MMTs) %∆ (YoY)

Beef 12.6 +2.6%

Pork 12.9 +2.9%

Broilers 19.7 +1.2%

Total1 48.2 +2.1%

Milk 100.3 +1.5%

Data: USDA

U.S. meat and milk production to be record high in 2020


18

1Total red meat and poultry


Continued Growth in India Milk Production in 2019

19

0

20

40

60

80

100

120

140

160

180

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Cows Buffalo

Million metric tons

Source: USDA.


Outlook to 2028

20


Several world events potentially setting the stage for impacting projections --- trade disruptions, African Swine Fever, poor weather

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

-

20

40

60

80

100

120

140

160

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9F

202

0F

Canada Mexico China Other % of China Share

Billion dollars

US exports to China down ~$18 from 2015 July 2019: 152 confirmed cases in China (all provinces), spread

through Vietnam, Cambodia, Laos, Mongolia, and North Korea

Sept 2019: Philippines confirms first case (not reflected in map)

Last week South Korea confirmed its first case (not reflected in

map) Data: USDA

21


Global crop and meat trade projected to increase

22

0

25

50

75

100

125

150

175

200

225

250

275

300

325

1990 1995 2000 2005 2010 2015 2020 2028

Soybeans and soybean products 1

Wheat

Million metric tons

0

2

4

6

8

10

12

14

16

18

1990 1995 2000 2005 2010 2015 2020 2028

Poultry

Pork

Million metric tons

Source: USDA. Meat trade is major exporters, not world total.


Global demand drives growth in U.S. livestock and dairy exports

Data: USDA

-

2.0

4.0

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

Mil

lio

n o

f m

etr

ic t

on

s

Beef Pork Chicken

0

5

10

15

20

25

30

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

Mil

lio

n o

f M

etr

ic t

on

s

Dairy, Fat-Basis

Dairy, Skim Solids-Basis

23


Data: USDA

… and drives growth in U.S. feed grain exports

Million metric tons Million metric tons

24

-

10

20

30

40

50

60

70

80

-

10

20

30

40

50

60

70

80199

6/9

7

199

7/9

8

199

8/9

9

199

9/0

0

200

0/0

1

200

1/0

2

200

2/0

3

200

3/0

4

200

4/0

5

200

5/0

6

20

06

/07

200

7/0

8

200

8/0

9

200

9/1

0

201

0/1

1

201

1/1

2

201

2/1

3

201

3/1

4

201

4/1

5

201

5/1

6

20

16

/17

201

7/1

8

201

8/1

9

201

9/2

0

202

0/2

1

202

1/2

2

202

2/2

3

202

3/2

4

202

4/2

5

202

5/2

6

202

6/2

7

202

7/2

8

202

8/2

9

Corn Wheat Soybeans


Projections for India’s beef production are tempered compared to previous years

0

1

2

3

4

5

6

7

Mil

lio

n m

etr

ic t

on

s

2013

2014

2015

2016

2017

2018

2019

Actual

25


India’s wheat production to grow steadily over the next ten years

60

70

80

90

100

110

120

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

Mil

lio

n m

etr

ic t

on

s

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Actual

26


India’s rice production is projected to maintain rapid expansion

80

85

90

95

100

105

110

115

120

125

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

Mil

lio

n m

etr

ic t

on

s

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Actual

27


U.S. farm sector and

policy

28


Real net farm income is projected to fall

0

20

40

60

80

100

120

140

0

20

40

60

80

100

120

140

200

5

20

06

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

20

17

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

Billion dollars Billion dollars

Nominal Net Farm Income

Real Net Farm Income (2009$)

Data: USDA-ERS

29


$0

$100

$200

$300

$400

$500

$600

Billion dollars

Direct government

payments

Crop insurance indemnities

Farm-related income

Crop cash receipts

Animal & animal products cash receipts

Government payments make up only a small share of farm gross cash income

Data: USDA-ERS

30


Farm Policy

32


19th to early 20th century: Expansion, scientific agriculture, and market development

• Land distribution and infrastructure

development--to encourage settlement

and markets

• Science and education—research,

education and extension to improve

farming and farm life

• Information, credit, and marketing—to

assist farmers’ participation in changing

economy

33


20th-21st century: Productivity Impacts

• Securing post-war prosperity • High price supports

• Adjusting to explosive

productivity gains • Adjust price supports • Distribute surplus stocks • Increase acreage reductions

• Responding to globalization

• End price supports & acreage controls

• Move toward risk management

34


…culminate in greater focus on risk management…

Decoupled payments replace target prices and deficiency payments

Planting flexibility replaces acreage and marketing controls

Crop insurance program expanded

$0

$20

$40

$60

$80

$100

$120

$140

0

50

100

150

200

250

300

350

400

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

Billio

n d

olla

rs M

illio

n a

cre

ss

Insured acreage (left axis)

Liability (right axis)

Data: USDA-RMA

35


2018 Farm Bill: 4 titles dominate projected outlays

Nutrition ($326 billion)

Crop Insurance ($38 billion)

Commodity Policy ($31.4 billion)

Conservation ($29.3 billion)

Other ($3.5 billion)

Trade

Credit

Rural Development

Research, Extension, and Related Matters

Forestry

Energy

Horticulture

Miscellaneous

5-yr total = $428 billion

Data: CBO 2018 Farm Bill score.

Nutrition 76%

Crop Insurance 9%

Commodity Programs

7%

Conservation 7%

Other 1%

2018 Farm Bill Outlays: 2019-2023

36


But farm policy has also responded to unexpected conditions…

37

https://oceanservice.noaa.gov/news/historical-hurricanes/

https://www.dtnpf.com/agriculture/web/ag/equipment/article/2018/09/04/farmers-typically-sell-soybeans-may















0

5

10

15

20

25

30

35

40

45

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019f

Bill

ion

do

llars

Coupled

Partially decoupled

Decoupled

Emergency

Conservation

Crop insurance

Data: USDA, fiscal year.

Characteristics of US farm programs changing over time; crop insurance increasing in importance

MFP1.0

10-year average = $18.7 billion per year

--- $6.2 billion from crop insurance

WHIP1.0

38


WASDE: World Agricultural Supply and Demand

Estimates (Next WASDE Oct. 10)

Secretary's WASDE Briefing Slides

FAS: World Agricultural Production

Weekly Weather and Crop Bulletin

Links to the latest WASDE related publications

USDA/NASS Crop Progress Report

USDA Agricultural Projections to 2028

39

http://www.usda.gov/oce/commodity/wasde/latest.pdf









http://www.usda.gov/oce/commodity/wasde/Secretary_Briefing.pdf





https://apps.fas.usda.gov/psdonline/circulars/production.pdf







http://www.usda.gov/oce/weather/pubs/Weekly/Wwcb/wwcb.pdf





https://usda.library.cornell.edu/concern/publications/8336h188j

https://www.usda.gov/oce/commodity/projections/USDA_Agricultural_Projections_to_2028.pdf

office of the chief economist 1 2019 agricultural outlook · 2019-10-03 · u.s. and global crop...

Documents