U.S. corn, soybean and wheat farmers are benefiting from record demand at home and abroad, demand which is preventing record crop production from pushing commodity prices much below current levels, the USDA’s chief economist says.

Livestock, dairy and poultry producers, on the other hand, have had a difficult year despite lower feed costs and slightly higher demand from stronger world GDP growth in the second half of 2009, according to Joseph W. Glauber.

Speaking at the USDA’s annual Agricultural Outlook Forum in Arlington, Va., Thursday (Feb. 18), Glauber said record crop production around the world has weakened price prospects for grain and oilseeds but the outlook for prices of those commodities remains positive because of demand.

“Five years ago, such large crops might have resulted in $2 corn, $3 wheat and $5 soybeans, but because of strong domestic and foreign demand, crop prices still remain high relative to historical levels,” he said. “Stronger world GDP growth in the latter half of 2009 has contributed to higher cotton prices as world consumption of textile and apparel rebounds.”

Glauber said prices for livestock animals and products suffered sharp declines in 2009, and despite lower feed costs, returns for many livestock and dairy producers were negative for much of the year. “Producers responded by reducing herd and flock sizes, which led to some improvement in prices by the fourth quarter of last year.”

Crop and livestock cash receipts in 2009 were down a combined $39 billion from 2008’s unusually high levels. Lower fuel and feed costs reduced cash expenses for farmers in 2009 by almost $11 billion. Net cash income for farmers in 2009 was $70.8 billion, down 27 percent from the record $97.5 billion set in 2008.

USDA’s Economic Research Service is forecasting net cash income for 2010 at $76.3 billion, up $5.5 billion from 2009. Crop receipts are forecast at $160.3 billion in 2010, down $6 billion from 2009, but still the third highest on record.

Livestock receipts for 2010 are forecast at $130.3 billion, up $11.5 billion (and also the third highest on record). Farm expenses are expected to be relatively unchanged in 2010 with declines in fertilizer and feed expenses offset by increases in fuel and pesticide.

USDA believes less land will be planted to the major field crops in 2010 as prices continue to ease from their record levels in 2008. Lower fertilizer prices boost the net returns outlook for most of the major crops, but the sharp reduction in winter wheat area will not be completely made up by spring plantings.

“Total planted area for the eight major crops (wheat, corn, barley, oats, sorghum, soybeans, upland cotton, and rice) is expected to decline to 247.3 million acres, down 1.6 million from 2009. The eight-crop total is down 5.7 million acres from the recent high in 2008 as the net returns outlook is much less favorable than two years ago when prices were at or near record highs.

In his report, Glauber said:

• Wheat planted area for 2010 is expected to decline 5.3 million acres to 53.8 million. Winter wheat seeded area at 37.1 million acres is down 6.2 million from 2009 and the lowest since 1913. The late row crop harvest and wet weather delayed winter wheat plantings in most states last fall. Partly offsetting the decline in winter wheat area is an expected increase in spring wheat in the northern Plains.

• Soybean planted area for 2010 is expected to fall nearly 500,000 acres from last year to 77.0 million acres as improved returns for corn and rotational considerations boost corn plantings. Corn plantings for 2010 are expected to rise 2.5 million acres from last year to 89.0 million, the highest level since 2007.

• Cotton area should see increases as higher returns relative to competing crops such as corn and soybeans favor those crops. U.S. planted area is projected at 10.5 million acres, up 15 percent from 2009, producing a crop of 16.0 million bales. (USDA’s forecast is higher than that in the National Cotton Council’s annual survey, which projected total plantings at 10.1 million acres.)

• Rice planted acreage for 2010 is projected at 3.2 million acres, up 2 percent from last year. Long-grain accounts for all of the area increase. Medium/short-grain acreage is projected to decline, with most of the decline occurring in the South.

To see the complete text of Glauber’s presentation, go to USDA Forum: Glauber.

e-mail: flaws@farmpress.com