USDA Chief Economist Robert Johansson said the 2016 farm economy performed better than he had expected because of great crops here and not great ones in South America, but 2017 has the potential to be worse than he is forecasting.
“Going into 2017, I think the concern is that even with crop prices going up a little this year, if South America has a good crop and we have another good crop then prices will be a little lower than what we projected,” Johansson told Farm Futures on the sidelines of this year’s annual USDA Outlook Forum.
Earlier on Thursday, Johansson told the forum audience USDA expects the average wheat price to be up nearly 12% at $4.30 a bushel, corn up 3% at $3.50 and soybeans up about 1.1% at $9.60.
Brazil is on track to harvest a record soybean crop of about 104 million metric tons and 29% more corn at 86.5 million metric tons. Argentina will be producing more corn and wheat, but fewer soybeans.
“I think 2016 was much better than we thought it would be. When we were looking at the farm income numbers last year at this time we projected a lower farm income than what we actually ended up with. Farmers were able to cut their costs more than we thought,” he said.
In addition, U.S. farmers produced big crops in 2016 while South America did not have a great crop last year. That supported U.S. crop prices and increased exports, he said.