As farmers ramp up production this year to meet growing demand, global crop prices are expected to fall sharply, the U.S. Department of Agriculture forecast on Thursday. Farmers are working hard to bring stability back to commodity markets and ease food inflation fears after two years of supply shortages.
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“Certainly the high prices that we saw last year have prompted a global production response for most commodities,” USDA Chief Economist Joe Glauber told the agency’s annual outlook forum.”This should help relieve some of the volatility that have roiled markets over the past five years and improve prospects for future livestock expansion.”
Corn, a key barometer for farmers, could retreat 20 percent this year to $5 a bushel. But despite forecasts for lower prices, U.S. farmers are expected to go on a planting binge. The USDA forecasts that farmers will increase planting of the eight major crops in the United States — corn, wheat, sorghum, barley, oats, rice, soybeans, and upland cotton — by 2.2 percent to 254.4 million acres. That estimate is up 1.3 percent from a projection made in early February due to larger soybean and wheat plantings.
The USDA is forecasting that farm income will shrink 11.5 percent this year if higher supplies suppress prices, but Glauber said the farm community’s “debt picture still continues to be quite, quite good” following a spike in land prices. He also noted that a number of uncertainties remain, citing concerns about drought withering crops in South America and in the southern United States. Weather, particularly in Texas, “will be a key concern this year,” he said.
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