Economists at the Doane Agriculture Outlook Conference in St. Louis this week projected the farm economy generally will remain strong despite this year’s drought.
But large crop plantings in South America and in the U.S. next year could alter crop prices in 2013 and subsequent years.
“Financial conditions in the farm sector are quite strong, despite the drought of 2012,” said Rich Pottorff, chief economist for Doane Advisory Services. “But there certainly are horror stories out there (of farmers who lost the majority of their crops). And livestock producers are really suffering.”
Marty Foreman, senior economist at Doane, predicted USDA will lower its corn production forecast this year by another 75 to 100 million bushels, which will keep pressure on prices near-term.
“We have a huge demand rationing job to accomplish the next several months,” Foreman said.
The situation could turn around quickly next year, though. Doane economists projected farmers in the U.S. next year will plant 96.5 million of corn (down slightly from 96.9 million acres this year) and boost soybean plantings by 800,000 acres next year to a total of 78 million acres. A return to trend-line yields would boost ending stocks and lower prices.
Doane analysts projected prices this year could average $7.75 per bushel for corn and $15.75 for beans before tailing off to an average of $4.75 for corn in 2013/14 and $12 to $13 for beans by mid-decade.
“The drought conditions are not going to get corrected immediately,” Foreman said. “But, supplies can be rebuilt dramatically in a year.”
In other news at the conference, economists projected economic turmoil in Europe will continue while a sluggish U.S. economy is expected to persist into 2013.
More on the outlook meeting at www.doane.com