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Gloomier forecast for commodities in 2009

January 12, 2009 

U.S. farmers and their commodity organizations won’t have to spend as much time defending farm programs from claims they’re no longer needed because of high grain prices this year.

That’s about the only good news to come out of a crop outlook seminar held in conjunction with the American Farm Bureau Federation’s 90th annual meeting, which kicked off Sunday in San Antonio.

After enjoying record high farm income in 2008 due, in part, to unheard of prices for corn, soybeans and wheat, farmers will probably see lower receipts for those commodities and for cotton, according to economists speaking at the seminar.

“Last year was a good year for US farms, but declining prices cloud the 2009 horizon,” said Jim Sullivan, an agricultural economist and senior vice president with Memphis, Tennessee-based Informa Economics. “Volatility is still there, and we will see declining prices from last summer’s highs.

“The only demand increase we can expect to see for corn this year and next year will be corn used for ethanol,” he noted, adding that ethanol is expected to account for 38 percent of domestic corn consumption and 34 percent of U.S. production. In 2008, 30 percent of total US corn production went to ethanol while it represented 35 percent of total domestic use.

Sullivan sees a “decent” supply of soybeans in the United States and worldwide this year. The economist expects soybean prices, like corn prices, to be down in 2009. For wheat, there is an excess supply both in the United States and worldwide. “We will see stocks build for wheat, which should mean lower U.S. winter wheat plantings,” Sullivan said.

One bright spot of the weak global economy for farmers is that fertilizer prices are coming down from last summer’s record highs. Continued price softening is expected, and Sullivan encouraged farmers to delay their fertilizer purchases.

Back on the grain front, exporting US feed grains is expected to be considerably more challenging in 2009 than in 2008 when merchandisers set records for grain exports from the United States, according to a spokesman for the US Grains Council.

US corn exports totaled 59.9 million metric tons (2.36 billion bushels), up 300 million bushels from last year. US sorghum exports totaled 6.1 million tons (240 million bushels), nearly doubling from 2007’s 3.3 million tons (129 million bushels). USDA projects fiscal 2009 exports for coarse grains lower at 51.6 million tons, nearly 17 million tons below last year.

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