Twice yearly, the Food and Agricultural Policy Research Institute at the University of Missouri releases a highly anticipated baseline update for US agricultural markets. The most recent reflects information available in mid-August. Dr. Pat Westhoff is the institute director, and says large global stocks are keeping prices on grains low across the board.
“Yeah, we’ve had a lot of supplies globally right now. And unless there’s something, a big change of the demand side of the picture, ordinary weather conditions around the world the next several years would lead to continue large supplies. Obviously, we’re going to have some weather shocks the like in the near term, so we don’t know which year will be a good year, which will be might be a bad year. On average, we think current prices are more or less reflective of the current market situation.”
Westhoff adds there’s no incentive at this point for farmers to consider big acreage shifting in 2025.
“Given our current snapshot, which of course, will change in the months ahead, there’s we’re seeing lower prices for almost all the major crops that are being produced. So it’s not as if by switching from one crop to another, you come out ahead. So we don’t expect to see right now, at least, major shifts in acreage in 2024 or 2025 I should say.”
On the livestock front, current data does not point to much relief in sight for pork producers.
“Still find about relatively narrow margins so still losses for some producers in 2024 maybe in the 2025 as well. We think you mentioned, that has to translate into a bit lower production. But when that might occur is hard to predict. You know, we do have in our baseline a very slight downturn in production in 2026 that’s mildly supportive of prices, but we’re not talking about, you know, high profit levels anytime soon.”
The one bright spot in ag might be beef, where Westhoff was surprised by this year’s rise in consumption.
“I would never have told you a year ago we’d be looking at increase per capita consumption a beef in 2024 is that’s what USDA is currently looking at. Right now, we’ve managed to produce a bit more than we thought we were going to be able to those reduced cattle numbers. We’ve got fewer or more imports coming in, less exports going out, and so the net result of all that is natural increase in per capita consumption of beef this year. Going ahead, we don’t think we have the cattle numbers to support that kind of an increase again. in 2025. That should be supportive to beef prices, provided the overall economy is strong enough, too many people want to continue to buy beef.”
Westhoff says milk prices are predicted to remain stable for the next several years.
“If feed costs come down, that may indeed be able to get people back to a break even, or maybe slight profits for the most efficient producers, but we’re not talking about high levels of profitability in the dairy industry anytime soon. We’ll continue to have contraction of the herds that are higher cost producers and continued concentration industry in the years ahead. Dairy, like almost any other major commodity, is very reliant on international markets these days, so changes in production in New Zealand and Australia and Australia, and changes in demand from China and other countries can swing those prices around dramatically from one year to the next, as we’ve seen.”