US farm incomes lowest since 2002: USDA
OREANDA-NEWS. Total US farm incomes are expected to decrease by 3pc to $54.76bn in 2016, the lowest level since 2002, according to the US Department of Agriculture (USDA).
The initial USDA projection for 2016 marks the third straight year that farm income projections have fallen since 2013, which was a record-setting season at $123.7bn. Farm operators are projected to receive the lowest returns since 1988.
Depressed corn, soybean and wheat prices continue to weigh on farm incomes. Increased global competition, especially from Argentina and Brazil, a strong US dollar and record world ending stocks all continue to push crop prices in the US downward, according to the USDA's latest World Agricultural Supply and Demand Estimates Report. Corn prices are expected to fall again as the average farm price estimate is down by 10?/bushel to $3.60/bushel. The USDA expects soybean prices to remain under pressure in 2016 as average farm prices are expected to drop by $1.28-1.38/bushel from last season to $8.67-8.80/bushel, the lowest since 2006.
The lower grain prices are partially offset by lower input cost, such as fuel and fertilizer. Farmers are expected to reap the benefits of the lowest fuel cost since 2005 as fuel and oil purchases are projected to be down by $1.8bn from last year to $10.7bn. US farmers are forecast to spend $24.35bn on fertilizer and soil conditioner for 2016, down 5pc from 2015 and the lowest level since 2010.
Lower fertilizer prices are part of the reason for the decrease in fertilizer input cost for farmers. Average prices for granular urea, ammonia, DAP and potash were all lower in 2015 when compared to 2014. So far in 2016 these same products are selling at a significantly lower rate than this time last year. Average prices to-date for granular urea are $200/st fob Nola, down $120/st from this time last year. Average DAP prices are down $119/st to $325/st fob Nola, while average potash prices are down by $143/st to $220/st fob Nola. Average west Corn Belt ammonia prices so far this year are at $411/st fot, down by $204/st from the same time in 2015.