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USDA sees drop in planting, prices in 2016

[/title][fusion_text]Friday, February 26th 2016

The Department of Agriculture released its 2016 market projections today, setting the stage for a year that looks to be heading toward decreased planting and incomes. At the annual Agricultural Outlook Forum in Arlington, Virginia, the department’s chief economist, Rob Johansson, said USDA’s Economic Research Service is projecting a $1.6 billion drop in net farm income, about 3 percent below 2015 levels. That’s on the heels of a projected dip in prices, which will lower commodity values in both domestic and international markets. Johansson said weak global economic growth and a strong U.S. dollar will make for a competitive trade marketplace in 2016. Johansson said total U.S. agricultural exports are looking to be about $125 billion for fiscal year 2016, a drop of 10.5 percent from the previous year and a record $152.3 billion in 2014. Reduced sales to China will play a big role in that drop, but Johansson said that “much of the reduction” is due to lower grain and feed exports. In many crops, prices are projected to take a tumble for the fourth straight year after reaching record highs in 2012. The lower prices will trigger fewer acres as producers leave some land fallow that was brought into production after the price boom of a few years ago. Perhaps a bit of relief to producers is a projected drop in land values and cash rents. Johansson said figures show that land values may have plateaued in the fourth quarter of 2015, potentially triggering less expensive land for rent and purchase.

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