USDA Outlook for U.S. Agriculture

The U.S. Department of Agriculture (USDA) opened the 97^th annual Agriculture Outlook Forum on February 18, 2021. This is the first ever virtual conference, with nearly triple the typical attendance. In his opening address, USDA Chief Economist Seth Meyer focused on the resilience of the agriculture sector and detailed the outlook for 2021.

USDA is looking to the 201-2014 period of higher prices and tighter stocks-to-use ratios to forecast 2021 acres. Planted acres of the 8 major row crops (corn, soybeans, wheat, upland cotton, sorghum, rice, barley and oats) averaged nearly 257 million acres. The average since that time has been about 8 million acres smaller. Assuming a return to a more favorable planting season that sees a reduction in prevented planted acres, corn acreage is expected to grow 1 million acres to 92 million. Soybean acreage is expected to expand 6.9 million acres to 90 million. 

Given continued strong international demand and tight stocks, soybean prices are projected to remain elevated. Corn prices are expected to decline slightly with larger acreage and a return to trendline yields, but will be supported by demand.

• Cotton acres are pegged at 12 million, down slightly from the previous year. A considerable reduction in carry-in stocks and steady exports are projected to result in smaller ending stocks for 2021-22. Drought conditions in the southwest cotton belt could result in further reductions in production. 
• Rice acres are expected to decline after last year’s very large crop that resulted in sharply higher ending stocks in 20/21. Large stocks and high prices for alternative crops are projected to cut into rice acres. Exports are expected to decline if 21/22 due to smaller supplies and tough global competition. Rice prices are projected to remain firm, however, with carryover support from other commodities.
• Livestock and poultry sectors will, of course, be faced with higher feed costs, but demand is expected to stabilize and prices are forecast to average above 2020 prices. Total red meat and poultry production is forecast to increase 1% over last year. The broiler sector is expected to undergo a slowdown in expansion for 2021 on higher feed costs and weakening returns.
• Dairy farmers will also face higher feed costs in 2021, and all-milk prices are expected to decline. This is expected to result in a decline in the herd during 2021. Producers are forecast to keep approximately 2% fewer heifers this year for the breeding herd. 

USDA currently expects net farm income to finish 2020 at $136.2 billion and to fall to $128.3 billion in 2021. Cash receipts are expected to increase $20.4 billion to $390.8 billion in 2021. However, the decline in direct government farm payments from 2020 to 2021 is expected to more than offset the increase in cash receipts and drive most of the decline in net farm income.