Farm income expected to decline in 2023 but is forecast to remain above average
The U.S. Department of Agriculture held its annual Ag Outlook Forum on Feb. 23-24. Farm income and net farm cash income were records in 2022 and are likely to decline.
WASHINGTON — The U.S. Department of Agriculture held its annual Ag Outlook Forum on Feb. 23-24.
According to USDA, farm income and net farm cash income were records in 2022 and are likely to decline. However, it's still expected to be an above-average year.
"2022 was a really great year for farm income," said Seth Meyer, USDA chief economist. "When we look forward into receipts in the coming year, those lower commodity prices are going to produce lower receipts across the board, but they're coming off what are pretty high receipts."
The event started with outlooks for various sectors of agriculture. The full reports are available at https://www.usda.gov/oce/ag-outlook-forum/commodity-outlooks. Here is a summary of some of the relevant reports for the northern Plains and upper Midwest.
Corn, soybeans and wheat outlook
If realized, the USDA projection for this year's corn crop would be the second highest on record behind 2016-17, at 15.085 billion bushels. That would be 10% above last year. Planted acreage is expected to be up 2.4 million from a year ago, to 91 million acres, with a yield projection of 181.5 bushels per acre, assuming normal planting progress and growing season weather. Corn use also is expected to grow relative to last year, with growth coming in feed and residual use and exports. The season average corn price received by producers is forecast down $1.10 to $5.60 per bushel.
Rebound in wheat, bean acreage is largely unchanged & corn has a bit of a rebound. We find ourselves in a similar situation as last year with a notable exception that input prices are on the downside. We also ended up with higher than normal prevented planting acres #AgOutlook23 pic.twitter.com/YOnfFeyYdp— Dept. of Agriculture (@USDA) February 23, 2023
Soybeans also are projected to increase 5% above 2022-23, to 4.5 billion bushels. The increase comes mostly on a forecast for higher yields, to 52 bushels per acre, with planting area unchanged at 87.5 million acres. Crush is expected to rise to a record of 2.31 billion bushels because of demand for soybean oil due to vegetable oil supplies and announcements to expand renewable diesel capacity in the country. While domestic soybean oil demand has increased, the meal side of the equation is not supposed to increase as much, leading to forecast increases in soybean meal exports but with lower prices for the product. Soybean exports are projected to increase from 2022-23. However, record harvests in Brazil are expected to limit gains in U.S. exports. The soybean season-average farm price is projected at $12.90 per bushel.
Seth Meyer: "All the prices are down year over year on what were pretty high prices. Across the board, decreases on those commodities but what are still pretty decent prices. For a producer, what matters is how do your input prices follow those output prices down." #AgOutlook23 pic.twitter.com/GmcV86LKWK— Dept. of Agriculture (@USDA) February 23, 2023
U.S. wheat production is projected 14% above last year, at 1.887 billion bushels, on projections for higher acreage and higher yield. Winter wheat plantings are estimated up 11% from last year and the largest since 2015-16. The expected harvested area is reduced a bit because of continued drought in the southern Plains. Combined spring and durum wheat plantings for 2023-24 are projected slightly higher than last year, at 49.5 million — but growth is expected to be moderate because of "favorable net returns" projected for corn, soybeans and other crops grown in the northern Plains. with the area expansion constrained by expected favorable net. Projected use is up 4% from last year but remains below the five-year average. Feed and residual use are expected to increase, and food use is projected "marginally higher" to a new record of 977 million bushels. Exports also are expected to increase from last year but remain below the five-year average. U.S. wheat prices are expected to remain too high for some export markets. The projected season-average farm price is $8.50 per bushel, down $0.50 from last year but still the second highest on record.
Seth Meyer: "Winter wheat had a pretty big rebound. With high prices for wheat, some related to the war in Ukraine, farmers have responded and planted a lot more wheat." #AgOutlook23 pic.twitter.com/8VzREoYfHu— Dept. of Agriculture (@USDA) February 23, 2023
Livestock and dairy outlook
Livestock prices are mixed in 2023, hogs and poultry prices expected to decline #AgOutlook23 pic.twitter.com/WuQn0qWXq4— Dept. of Agriculture (@USDA) February 23, 2023
USDA expects feed prices to decrease in 2023. Weak economic growth is expected to limit growth in meat demand.
The cattle inventory continues to contract and is likely to decline further in 2023. Producers are estimated to have retained 6% fewer replacement heifers and 5% fewer beef heifers are expected to calve this year. Dairy herd was up marginally from a year earlier, but producers have indicated they will hold fewer heifers, too. Cow slaughter has been up in 2023 so far compared to 2022. Calves produced likely will be smaller than the previous year. Other factors, like cattle on feed, continue to lag, too, and feedlot placements are expected to shrink. That could mean higher imports, mostly from Mexico as Canadian supplies also remain tight. U.S. demand is expected to be strong. Imports also were up slightly in 2022. Beef exports increased 3% in 2022 but are expected to decline in 2023 because of limited supplies, higher domestic prices and increased competition from other countries. Prices are expected to be up sharply from 2022, near or above record rates from 2014.
The dairy industry expects a challenging 2023, with relatively high feed costs and uncertainty in forage supplies. Like the beef cattle sector, dairy inventories have decreased. Milk prices are expected to be the second highest since 2014 but down from 2022. Milk per cow is expected to increase slightly. Domestic demand is expected to remain soft on slow economic growth, and so are exports. Supplies are expected to grow, leading to shrinking prices.
Seth Meyer: "Narrowing margins for producers. As product prices fall in 2023, feed prices will fall too. Pretty good overall decline in the milk prices" #AgOutlook23 pic.twitter.com/Se8MJmaWnK— Dept. of Agriculture (@USDA) February 23, 2023
The hog industry also experienced contraction in 2022, but indicators are that the inventory is growing slightly. Exports for 2023 are expected to increase slightly after 2022 experienced sharply lower exports compared to a huge year in 2021 due to global disease outbreaks. Imports are expected to fall in 2023. Prices are expected to fall on a larger pig crop, increased farrowings, and moderate slaughter demand. A big factor for the year could be the outcome of lawsuits over California's Proposition 12, which restricts in-state marketing of pork not produced in compliance with California state law.
Sheep inventory continues to decline, and that also is expected to continue. Imports are expected to rise slightly. Tight supplies and "firm demand" are expected to support lamb prices.
Broiler meat production is forecast 1% higher than in 2022 as the poultry industry continues to try to recover from avian influenza. Problems of lower-than-historical numbers of eggs hatching, observed in 2021 and 2022, seems to be continuing. Broiler meat exports are expected to increase slightly, though demand may be constrained by avian influenza-related restrictions and higher prices. Prices are expected to be down about 10% from the 2022 average.
Turkey production is expected to increase 7% from 2022, when the sector was dampened by avian influenza. Approximately 4.2 million turkeys were depopulated from August 2022 to January 2023, but data indicates the industry is working to recover, encouraged by higher prices and moderating feed prices. Exports might be low on increased prices. Prices are expected to fall as the industry continues to recover in numbers but to remain above the five-year average.
Total U.S. egg production is expected to increase 4% over the avian influenza-affected levels of 2022. Like other poultry sectors, indicators appear to show that the egg sector is coming back from avian influenza with ramped up production, and a full recovery is expected. Egg exports were sharply lower in 2022, driven by low supplies and higher prices, but are expected to increase this year. Egg prices spiked in December but have started to go down and are expected to continue decreasing.
Even with the impending closure of the Sidney Sugars sugarbeet processing plant in Sidney, Montana, and the loss of the 19,500 acres that had been expected to be grown in the nearby area, the USDA still anticipated an increase in beet sugar production from 2022-23.
The agency on Tuesday projected at 5.165 million short tons, raw value production for the year, a 64,000 short tons, raw value increase over 2022-23. Cane sugar production also is expected to increase by 28,000 short tons, raw value to 4.159 million.