According to the University of Missouri's Food and Agricultural Policy Research Institute, grain prices will stay low and cattle prices will remain high for the remainder of 2014.
That's according to the group's 2014 baseline analysis of the U.S. farm economy, which it provides annually to the U.S. Congress for review. It was presented to the House and Senate Agriculture Committee staff on March 13.
The baselines provide a broad overview of the agriculture sector, taking into account new programs under the 2014 farm bill and the Renewable Fuel Standard revision proposal from the Environmental Protection Agency.
Key themes emerge from the analysis, including a continuation of lower crop prices. Under average market conditions, projected corn prices over the next 10 years are about $4 per bushel. Soybeans prices are about $10 per bushel, the estimates found.
Corn area planted is projected to decline by 4 million acres, while soybean acreage is expected to climb. Lower prices, the baseline summary says, will discourage planting on marginal acres. However, more normal weather this spring may encourage planting on land that could not be planted last year.
In contrast, the lower feed prices may give livestock producers a boost. Reduced cattle numbers, in part caused by drought, will limit beef production in 2014 and drive prices higher. Those prices are expected to remain high until herd recovery.
One uncertainty in livestock production, however, will be the impacts of the Porcine Epidemic Diarrhea virus, the summary document notes.
On the ethanol front, projected growth is limited, under the assumption that the EPA will move forward with its plan to modify the 2014 RFS and follow suit with biofuel use mandates in subsequent years.
Farm bill, farm income
Several changes appeared in the 2014 farm bill, signed into law in February. New provisions include programs that pay farmers only when crop prices or per-acre revenues are below trigger levels, in contrast to direct payments. This could mean volatility in when farmers receive – or do not receive – payments.
The baseline summary estimates that net farm income in 2014 will decline by more than 24% from the 2013 record. This is because lower crop prices and reduced government payments will offset higher returns for livestock and dairy producers.
Food prices are projected to increase by 2%.
Figures reported in the baseline estimates are represent the average of 500 alternative outcomes based on different assumptions about the weather, oil prices and other factors. In some of the 500 outcomes, prices, quantities and values are much higher or much lower than the reported averages.
The analysis, "U.S. Baseline Briefing Book: Projections for Agricultural and Biofuel Markets" can be found online.