Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

In the Year 2010

Acres of cotton and rice are projected to decline over the first 10 years of this century, while the outlook for soybean and grain acres is mixed, according to baseline projections by USDA for the period to 2010. The figures were announced at the annual Agricultural Outlook Conference in Washington.

In the initial years of the baseline projects prepared by the office of the chief economist, the U.S. agricultural sector would continue to recover from the market situation of the late 1990s, when large global production and weak global demand reduced agricultural commodity pries, U.S. agricultural export value, and market cash receipts to U.S. farmers, with net farm income maintained only through large marketing loan benefits and additional emergency and disaster assistance payments.

The projections also assume economic recovery in many countries will strengthen global demand and trade in the near term.

Still, the analysts see a buildup of global supplies “that will keep agricultural prices under pressure for the next several years, reducing farm income in the absence of further government ad hoc assistance.”

Over the longer term, they expect continuing macroeconomic improvement. “While strong export competition is expected to continue, strengthening global economic growth, particularly in developing countries, will provide a foundation for gains in trade and U.S. agricultural exports, resulting in rising market prices, increases in farm income, and improvement in the financial condition of the U.S. agricultural sector.”

For the various crop sectors, these are the economists’ projections for the period to 2010:

COTTON: Planted area of upland cotton is expected to decline from 15 million acres to 13.8 million acres during the period. In 2001 and 2001, acres are projected at about 15 million, responding to cotton’s expected favorable returns relative to other commodities.

During the remaining years of the period, however, cotton plantings are forecast to decline as some area is bid away to other crops. The projections are based on average abandonment of 8 percent yearly.

Upland cotton yields are expected to reach 662 pounds per harvested acre by 2010, an average increase of 3 pounds per year, well below the 705-pound record of 1994. Projected projection ranges from 18.3 to 17.5 million bales during the baseline period, as the decline in planted acres offsets the slight rise in yields. Productivity is expected to nearly keep pace with growth in total use.

Total consumption in 2001-02 and 2002-03 is expected to “expand modestly,” as global consumption continues to expand to meet improving demand for cotton’s textile-apparel products. Total use is projected to increase to 18 million bales in 2002-03, still below the historically high level of 1994-95. Total consumption is expected to decline slightly for the remainder of the period.

Mill use of upland cotton is expected to decline slightly throughout the period as structural adjustments in the U.S. textile-apparel industry continue in preparation for full phase-out of Multi-Fiber Agreement quotas scheduled for 2005.

By 2005-06, liberalization of restrictions on cotton’s textile-apparel import quotas is likely to result in larger imports, primarily apparel, from developing countries with lower wages. Increases in cotton textile-apparel imports are projected to more than offset larger exports of those products. As a result, U.S. upland mill use is projected to decline by about 1 percent per year beginning in 2005-06, dropping to 9.3 million bales by the end of the period.

Exports of upland cotton are projected to remain flat at 8 million bales during the first several years, but increase slightly each year after 2004-05, though not completely offsetting the decline in mill use.

Producer net returns for upland cotton are expected to be somewhat stable through the period, but below the relatively high levels of the 1996-98 seasons.

RICE: Plantings are projected to decline moderately after 2002-03 “as domestic prices will not be high enough to maintain acreage at 2001-02 levels. The bulk of the contraction is expected to occur on the Gulf Coast, where rice acreage has declined for more than two decades due to high costs and urban sprawl.”

Acreage is expected to expand in 2001-02 due to expected favorable returns and few planting alternatives. From 1997 to 1999, U.S. rice acres expanded to near historic levels, with the Delta accounting for the bulk of the expansion. Acreage dropped substantially in 2000, primarily due to much lower prices.

Production is forecast to drop from 196 million hundredweight in 2002-03 to 194 million in 2010-11, staying well below the 1999 record of 206 million. The projected contraction of acres will offset small but steady increases in yield.

U.S. rice imports are expected to expand about 2.5 percent annually, hitting 13.1 million hundredweight by 2010-11, but this will be a slowdown over recent years. Imports are chiefly high quality, specialty varieties, mostly Thai jasmine and basmati from India and Pakistan.

Domestic use is expected to rise about 2.2 percent per year, with food use accounting for virtually all the growth. “A growing share of the U.S. population of Asian and Latin American descent, a greater emphasis on healthier lifestyles, and greater use of rice in processed and convenience foods will account for most of the expansion,” the economists say. Brewer’s use is unlikely to expand due to stagnant per capita beer consumption, growing popularity of light beers that use less rice, and larger imports of beer.

Exports are projected to decline slowly after 2001-02 as rising domestic use accounts for a larger share of production. U.S. prices are projected to rise faster than world prices, making U.S. rice exports less competitive in some international markets.

The U.S. season average farm level price is expected to rise from a projected $6.10 per hundredweight in 2001-02 to $7.71 in 2010-11. Rice producers’ net returns, including marketing loan benefits, are projected to decline an average of almost 2 percent per year, falling to $143 per acre by 2010-11.

SOYBEANS: U.S. soybean acreage gains in 2001 will reflect marketing loan benefits, which support soybean net returns and acreage, and relatively higher input costs for corn, which limit plantings of that crop somewhat, the economists say.

For the remainder of the period, soybean marketing loan benefits are expected to decline as the loan rate reverts to the formula or minimum level set in the 1996 farm bill and soybean prices rise. Also, strengthening corn and wheat net returns are expected to limit soybean plantings through the early years of the decline.

Yields are expected to regain an annual trend growth of 0.5 bushel per acre. Continued expansion of narrow-row seeding practices and improvements in varieties are expected to contribute to growth in yield. By 2010, soybean production is expected to exceed 3.2 billion bushels on 73.8 million harvested acres.

After falling to a low of about $4.55 per bushel in 2001-02, prices are projected to continue below the loan rate until 2003-04. For at least the first three years of the baseline period, it is expected that loan deficiency payments and marketing loan gains will supplement revenue from farm sales. But once supplies come closer into balance with demand, soybean farm prices are projected to rise, reaching $6.30 per bushel by 2010. Soybean net returns, however, are not expected to mach the 1997-98 level until about 2008-09.

Exports are projected to reach a record 1.065 billion bushels by 2003-04 due to slowed foreign production caused by low world market prices. Consequently, the United States is expected to capture a larger share of the world soybean market. But as domestic prices begin to firm, foreign soybean output is expected to resume its growth, with the competition slowing U.S. soybean export growth in the second half of the period.

CORN: Planted area is projected to remain relatively large, although declining in the initial years in response to lower net returns. Area is expected to increase in 2003 and through the remainder of the period as use strengthens and prices improve. Relative net returns are expected to favor corn over soybeans for most of the period, except 2001, when marketing loan benefits make soybeans more attractive.

Strong yield gains for corn are projected to continue throughout the entire period, a result of genetic improvements and gains from farming practices such as timely planting and effective input use. Production is expected to increase throughout the period, surpassing the previous record of 10.2 billion bushels by 2004.

Projected exports show strong growth compared with the 1980s and 1990s, but should remain below the record established in 1979-80 until 2006-07.

WHEAT: Prices are expected to increase for U.S. producers over the period to 2010 as both increased exports and domestic food use reduce U.S. stocks. The variable cost of producing wheat is expected to rise steadily, led by fertilizer prices, but net returns will maintain a positive growth through most of the period as revenues outpace variable costs.

Production is expected to increase steadily from 2003, after burdensome stocks decline in the early years of the baseline period. Farmers are expected to respond to an increase in net returns by planting more wheat, after small declines through 2002, accompanied by an assumed reduction in the loan rate from $2.58 to $2.24 per bushel for 2002-03. Planted acres should expand to 66 million by 2010, with yields rising steadily with the assumption of more normal weather patterns. Yields are “expected to rise even faster once prices exceed $3 per bushel in 2003-04 and beyond.”

E-mail: Hembree Brandon

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.