1 abares 2019 u.s. and global agricultural outlook · 2019-09-23 · office of the chief economist...

Office of the Chief Economist

Robert Johansson

Chief Economist, USDA

Canberra, Australia

March 2019

ABARES 2019

U.S. AND

GLOBAL

AGRICULTURAL

OUTLOOK

1

Office of the Chief EconomistOffice of the Chief Economist

3.00

3.50

4.00

4.50

5.00

5.50

2015 2016 2017 2018 2019 2020 2021 2022

April 2018 forecast

October 2018 forecast

January 2019 interim forecast

Percent change

Growth forecasts less optimistic --- global purchasing power falls by

$0.7 trillion (cumulative from 2019 – 2022)

World GDP

2

Data: IMF

3.00

3.50

4.00

4.50

5.00

5.50

2015 2016 2017 2018 2019 2020 2021 2022

April 2018 forecast

October 2018 forecast

January 2019 interim forecast

Percent change

Emerging Markets and Developing Countries

Office of the Chief EconomistOffice of the Chief Economist 3

Dollar up year-over-year, but mixed over the last few months

Data: Thomson Reuters Datastream

1%

4%

5%

6%

7%

7%

10%

14%

17%

18%

0% 5% 10% 15% 20%

Japan yen

Mexico peso

Korea won

Taiwan dollar

China yuan

Canadian dollar

Euroland euro

Australia dollar

Russia ruble

Brazil real

Argentina peso

US$ appreciation over last 12 months

95%

Last 6

months

36%

-1%

4%

3%

2%

1%

-1%

0%

-1%

2%

-2%


Crop Outlook

https://www.agweek.com/business/agriculture/4512383-moisture-snow-has-really-hampered-harvest

4


Global stocks in days of use: tightening market for corn and soybeans

over next few years

5

40

60

80

100

120

140

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026

Days of use Wheat

Corn

Rice

Soybeans

Data: USDA


Crop 2019F ($/MT) %∆ (YoY)

Soybeans 323 +2.3%

Corn 134 +1.4%

All Rice 240 +0.8%

Wheat 191 +1.0%

Cotton 1477 -6.9%

Data: USDA

5 year low 2019F 5 Year high

Some U.S. prices expected to edge up into 2019


Crop2019F

(mil. ha)%∆ (YoY)

Corn 37.2 +3.3%

Soybeans 34.4 -4.7%

Wheat 19.0 -1.7%

All cotton 5.8 +1.1%

Rice 1.1 -9.8%

Data: USDA

U.S. corn and bean area at parity, wheat holding



Crop2019F

(MMTs)%∆ (YoY)

Corn 378 +3.3%

Soybeans 114 -8.2%

Rice (milled) 6.5 -9.4%

Wheat 52 +0.9%

Cotton (all) 4.9 +22.3%

Data: USDA

U.S. corn and cotton production up, soybeans and rice down



Outlook for Livestock and Dairy

Photograph: Rachel Doyle

9


African Swine Fever (ASF) may affect global pork demand

Source: USDA-APHIS Data: CME (April Lean Hog Contract)

10

40

45

50

55

60

65

70

75

U.S. Hog Prices (Futures)

Aug 2018, China

confirms first

outbreak of ASF

Cents/lb

China 301

retaliation &

Mexico 232

retaliation

China 232

retaliation


Livestock 2019F ($/MT) %∆ (YoY)

Steers 2332 +1.2%

Hogs 836 -7.5%

Broilers 1909 -0.8%

Milk 399 +6.5%


Data: USDA

Low prices for U.S. steers and hogs in 2019; dairy prices recover

11


Item2019F

(MMTs)%∆ (YoY)

Beef 12.5 +2.7%

Pork 12.4 +3.8%

Broilers 19.6 +1.4%

Total1 47.5 +2.3%

Milk 99.9 +1.1%

Data: USDA

U.S. meat and milk production to be record high in 2019


12

1Total red meat and poultry


Trade Outlook

13


U.S. ag export values expected to remain flat in 2019, China share

down sharply

Data: USDA

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

-

20

40

60

80

100

120

140

160

Canada Mexico China Other % of China Share

Billion dollars

15


Global Trade Projections to 2028

Wheat, coarse grains, soybeans

0

50

100

150

200

250

300

350

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

Coarse grains Wheat Soy and products

Beef, pork, and poultry

0

2

4

6

8

10

12

14

16

18

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

Beef Pork Poultry

16

MMT MMT

Source: USDA


China import demand expected to grow

China soybean Imports China wheat Imports

17

Data: USDA

-

20

40

60

80

100

120

140

160

200

0/0

1

200

1/0

2

200

2/0

3

200

3/0

4

200

4/0

5

200

5/0

6

200

6/0

7

200

7/0

8

200

8/0

9

200

9/1

0

201

0/1

1

201

1/1

2

201

2/1

3

201

3/1

4

201

4/1

5

201

5/1

6

201

6/1

7

201

7/1

8

201

8/1

9

201

9/2

0

202

0/2

1

202

1/2

2

202

2/2

3

202

3/2

4

202

4/2

5

202

5/2

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202

6/2

7

202

7/2

8

2018 Projections 2019 Projections

mmts

0

1

2

3

4

5

6

7

8

20

00

/01

20

01

/02

20

02

/03

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03

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/06

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/24

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/25

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/26

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/27

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/28

20

28

/29

2019 Projections 2018 Projections

mmts


China’s Grain Imports: Economics or Policy?

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

50

100

150

200

250

300

350

400

450

500

Ja

n-0

0

Ju

n-0

0

No

v-0

0

Ap

r-01

Sep

-01

Feb

-02

Ju

l-02

De

c-0

2

Ma

y-0

3

Oct-

03

Ma

r-04

Au

g-0

4

Ja

n-0

5

Ju

n-0

5

No

v-0

5

Ap

r-06

Sep

-06

Feb

-07

Ju

l-07

De

c-0

7

Ma

y-0

8

Oct-

08

Ma

r-09

Au

g-0

9

Ja

n-1

0

Ju

n-1

0

No

v-1

0

Ap

r-11

Sep

-11

Feb

-12

Ju

l-12

De

c-1

2

Ma

y-1

3

Oct-

13

Ma

r-14

Au

g-1

4

Ja

n-1

5

Ju

n-1

5

No

v-1

5

Ap

r-16

Sep

-16

Feb

-17

Ju

l-17

De

c-1

7

Ma

y-1

8

Oct-

18

Imp

ort

s, M

MT

Pri

ce

, $

/MT

Cassava (right axis) Barley (right axis)Sorghum (right axis) Corn (right axis)DDGS (right axis) Guangdong Corn (left axis)U.S. Corn FOB Gulf+Freight to Asia (left axis) Australia Feed Barley+Freight to Asia (left axis)Australia Sorghum (left axis)

Source: China National Grains and Oilseeds Information Center, China Customs, USDA, and International Grains Council.


Growing economies, growing supplies, and falling real food prices

improve food security

2018 = 21.1% food insecure 2028 = 10.4% food insecure

19

Source: USDA-ERS.


U.S. Farm Policy

20


U.S. real farm income settles; equity shows slight decline

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$-

$20

$40

$60

$80

$100

$120

$140

$160

1960

19

62

1964

1966

1968

1970

19

72

1974

1976

1978

1980

19

82

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018F

Net farm income Equity

Billion dollars ($2018) Billion dollars ($2018)

Data: USDA-ERS

21


0

5

10

15

20

25

30

35

40

45

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Billi

on

do

llars Coupled

Partially decoupled

Decoupled

Emergency

Conservation

Crop insurance

Data: USDA estimates, fiscal year.

Characteristics of US farm programs changing over time; crop

insurance increasing in importance

10-year average = $18.1 billion per year

--- $6.1 billion from crop insurance

23


2018 Farm Bill outlay = $428 billion over 5 years

Nutrition $326.0 b

Crop Insurance$38.0 b

Commodity Programs (CCC)

$31.4 b

Conservation$29.3 b Other $3.5 b

• An increase of ~$400 mil. per

year over the 2014 Farm Bill

for FY2019 - FY2023

• Percent spent on Nutrition

remains at 76% but with

more funding for

employment training

• Increase in Research

funding of $365 mil. over 5

years

Source: CBO.

24


Conclusions

25

• Global economic growth forecasts less optimistic for 2019, with GDP growth expected to slow due

to market uncertainty.

• U.S. farm income projected to stabilize in 2019, but real net farm income is down almost 30 percent

from the 10-year average. Farm equity slightly lower, but debt is reaching record levels.

• Slight increase forecast crop prices. In the U.S. soybean area falls by nearly 5 percent but corn is up

3 percent.

• Record U.S. meat and milk production expected in 2019, with mixed outlook for prices. US milk

prices expected to increase 6.5% and margins expected to improve.

• U.S. ag exports forecast slightly down in FY 2019, but sales to China are sharply down. Longer term

outlook projects strong global demand for livestock, which supports U.S. meat and feed grain

exports.

• Continued growth in Chinese import demand is expected, although lower for some commodities

(soybeans) relative to last year’s projections. Global crop and livestock markets continue to expand,

as will competition for those markets.

1 abares 2019 u.s. and global agricultural outlook · 2019-09-23 · office of the chief economist...

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