Top 10 Charts from the Kickoff of USDA's Ag Outlook Forum

Despite weather trends, planting projections for 2023 find corn, wheat and soybeans similar to 2022, for a combined 228 million acres—a 3% increase from 2022.
Despite weather trends, planting projections for 2023 find corn, wheat and soybeans similar to 2022, for a combined 228 million acres—a 3% increase from 2022.
(Lori Hays, USDA)

Seth Meyer, USDA chief economist, opened the 2023 Ag Outlook Forum on Thursday—one year after Russia’s invasion of Ukraine. While aftershocks from COVID-19 and the war in Ukraine injected “tremendous” uncertainty into global ag markets, Meyer is hopeful 2023 will not look the same.

“Crop and livestock prices are still strong despite declining from recent highs and the farm sector, as a whole, enters the new year in good financial health with a strong cash position and solid balance sheet following a year of record-high net cash farm income in 2022,” Meyer says.

However, drought, input costs and unusual weather patterns continue to put a damper in USDA projections. And weather, according to Meyer, always has the final say.

Weather Repercussions

At peak drought in 2021, around 65% of the country was in drought conditions. As of Nov. 2022, nearly 63% of the U.S. was experiencing drought conditions. And USDA isn’t convinced the pattern will begin a change to neutral quick enough to make an impact in 2023.

“The ongoing drought in the western U.S. has further drifted into cattle and wheat areas and there appears to be no immediate scope for significant improvement,” Meyer says.

Drought Monitor

Brazil looks to see a break from the dreaded La Niña pattern—something the Western U.S. has been hoping for the past two years.

“A fading three year La Niña weather pattern which contributes to regional dryness, and continued expansion in planted area in Brazil in particular, could add to global soybean stocks,” Meyers says.

La Niña

USDA, according to Meyer, will keep its eyes on Brazil, as the relaxed drought will add to Brazil’s export potential.

“Brazil’s safrinha corn crop is being planted, if a bit delayed, and will provide increased competition for U.S. corn with Brazil’s new access to China, even as China’s import of corn and corn substitutes is effectively highly managed by state owned enterprises,” Meyer says.

Acres Planted

Despite weather trends, planting projections for 2023 find corn, wheat and soybeans similar to 2022, for a combined 228 million acres—a 3% increase from 2022.

Total wheat planted area for 2023/24 is projected at 49.5 million acres, which is up nearly 3.8 million acres from 2022, and the highest wheat area since 2016/17. 

“Among the three main crops, wheat area is projected to increase the most in response to continued high global prices and tight U.S. and global supplies, partially due to the ongoing war in Ukraine,” Meyer says. 

Winter Wheat Planted Acres

These projections show a rebound from wheat’s historical lowering trend, but USDA isn’t convinced it’s a reversal that will last.

As USDA anticipates soybean acres will sustain their levels due to domestic demand driven by biofuels, Meyer says. 

Renewable Diesel Production Expansion

According to Meyer, soybean export scales showed signs it could lean in favor of South America in the 2023/24 marketing year. He says the soybean crush opportunities in the U.S. will keep American soybean demand afloat.

“Soybean oil for biofuel in the U.S. is expected to grow 8% to 12.5 billion pounds in 2023/24, supporting domestic crush,” Meyer says.

Soybean Crush Futures

Corn acres look to increase, if Mother Nature will allow, according to Meyer. USDA anticipates a 3% increase in acres from last year when weather, prevented plant, higher production costs and input availability were all factors at play.

Crop Prices to Come Down

Cash receipts from ag commodities look to decrease by $23.6 billion in 2023, according to USDA’s forecast, down from 2022’s record level of $541.5 billion to $519.9 billion.

“Season-average prices received by farmers for all three crops are projected to be lower than in 2022 but remain higher relative to historical averages over the past 10 years,” Meyer says.

USDA projects corn cash receipts in 2023 to fall $4.05 billion from 2022, but if realized, would be at their second-highest level in inflation-adjusted terms since 2012, according to Meyer.

Soybeans look to follow the same trends as corn in 2023.

“Oil crops [soybeans] cash receipts are forecast to fall $5.133 billion in 2023 from 2022 (7.6% in nominal terms), but still be at their second-highest level in real terms,” Meyer says.

Wheat largely remains unchanged in 2023 cash receipts compared to 2022, at $15 billion.

2023 Cash Receipts

Overall, crop cash receipts are estimated to hit $267.87 billion in 2023, down $8.86 billion from the forecast from 2022. However, total production expenses are expected to increase 4.1%. Believe it or not, this is down compared to year-over-year data.

“In 2023, expenses are forecast at $455.76 billion, which is a slowing versus the 18.5% increase from 2021 to 2022,” Meyer says.

While cost of production will continue its climb, net income will head in the opposite direction according to USDA estimates.

Net Farm Income

Net cash farm income in 2022 reached a record high of $160.5 billion. USDA projects that number will fall to $150.56 billion.

Net Farm Income

When adjusted for inflation, 2023 net cash farm income is projected to decrease by $44.72 billion (22.9%) from its record high in 2022 but remain above the 20-year average of $130.5 billion. 

Trade Deficit on the Horizon

USDA again cut U.S. ag export forecast for fiscal year (FY) 2023 but kept their forecast for US agricultural imports intact, resulting in an expansion of the forecast for a trade deficit for the sector in FY 2023. 

USDA forecasts ag exports at $184.5 billion with imports of $199 billion, for a trade deficit of $14.5 billion. In November, USDA saw exports at $190 billion against imports of $199 billion. 

Ag Trade Situation

"The U.S. dollar remains relatively strong,” Meyer says. “That produces headwinds for us when we think about exports.”

Who Will Be Importing U.S. Ag Products? 

China remains the top destination for U.S. ag exports based on the FY 2023 forecasts. China will import an estimated $34 billion from the U.S. in 2023, which is down from 2022’s record $36.4 billion. According to Meyer, this is due to “reduced sorghum, cotton, and tree nut exports.” 

U.S. Ag Export Market

Mexico is in the number two spot and Canada at number three at a slightly lower estimate for 2023 compared to 2022 numbers, despite ongoing trade and USMCA disputes over corn and dairy, respectively.

“Despite these uncertainties, given strong levels of farm income in 2022, the sector, as a whole is expected to see above average levels of farm income in 2023 and is well positioned to handle some turbulence though the year,” Meyer says.

 

Latest News

Where Did All the Corn Acres and Principal Crop Acres Go? The Two Biggest Questions from USDA's Big Prospective Plantings Report
Where Did All the Corn Acres and Principal Crop Acres Go? The Two Biggest Questions from USDA's Big Prospective Plantings Report

USDA says farmers intend to plant 90 million acres of corn this year, which is lower than the trade expected prior to USDA's big Prospective Plantings report.

Vestaron and Simplot Announce Distribution Agreement
Vestaron and Simplot Announce Distribution Agreement

The distribution agreement focuses on Vestaron’s Spear Lep insecticide, which is a peptide-based control method meant to provide growers with a more environmentally friendly alternative to traditional chemicals.

The Scoop Podcast: How To Gear Up For Carbon And Sustainability Programs
The Scoop Podcast: How To Gear Up For Carbon And Sustainability Programs

Tim Hushon, sustainability and technology director at The Mill, details how sustainability factors into their ag retail business and how to partner with farmers on the technology adoption required.

Two Crop Protection Partners Divest Postharvest Solutions Company
Two Crop Protection Partners Divest Postharvest Solutions Company

Sumitomo Chemical and Valent BioSciences have announced Pace International will become part of AgroFresh Solutions.

The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett
The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett

Farmer and philanthropist Howard Buffett held a fireside chat during the 2024 Top Producer Summit to share his experiences visiting the front line of Ukraine over the past two years.

Get the Facts Straight on Highly Pathogenic Avian Influenza
Get the Facts Straight on Highly Pathogenic Avian Influenza

Now that the mystery illness impacting some dairy herds has been revealed as the same strain of Highly Pathogenic Avian Influenza that has been impacting the U.S. poultry flock, pork producers are asking questions.