Slowing demand for key commodities such as wheat and soybeans continues to depress prices for farmers, according to the latest estimates from the U.S. Department of Agriculture. Meanwhile, rising prices could spell long-term volatility for the meat industry.
Wheat, corn and soybean prices were revised slightly downward in the USDA’s most recent World Agricultural Supply and Demand Estimates released last Thursday. Cattle, pork and poultry prices are all expected to rise.
Farmers have marketed most of their crops for the 2023-2024 cycle, though some have held on to their commodities in hopes of higher prices. The agency next month is scheduled to release its first estimates for the 2024-2025 crop.
Here’s a quick look at some of USDA’s predictions.
Major commodities on the decline
Large corn and soybean harvests have hurt price prospects, while returns on wheat remain lower amid reduced demand.
The appetite for corn has accelerated with growing demand for ethanol and animal feed. Corn used for ethanol, for example, was raised by 25 million bushels to 5.4 billion compared to last month’s estimates.
Still, even with accelerating use and lower ending stocks, the USDA expects the season-average price for corn to hit $4.70 per bushel, a 5-cent decline from last month.
A similar story is playing out in soybeans, where large stocks are offsetting any potential benefits of a rise in demand. Lower soybean exports have grown domestic supply as competition with South America heats up. Soybean prices were forecast at $12.55 per bushel, down 10 cents from March estimates.
Meanwhile, wheat prices were revised down 5 cents from a month ago to $7.10 per bushel. The global appetite for the crop remains sluggish, and domestic consumption is down with lower-than-expected feed use.
Livestock markets remain volatile
Red meat and poultry prices are rising as the long-term outlook remains volatile for many livestock growers.
Beef production increased on higher slaughter, and the USDA expects exports to also rise. However, declining cattle inventories are set to hurt long-term supply, which could upend the market by significantly raising consumer beef prices. The U.S. cattle herd entered 2024 at the lowest inventory level since 1951, and it’s anticipated to decline further during the year.
Rising prices could also hurt overall demand for chicken, with the USDA noting “expectations [of] higher prices may affect trade to a number of price sensitive markets.” Chicken prices in other countries are expected to become more competitive as feed prices drop.
One bright spot is in pork, which has experienced stronger-than-expected demand. The USDA raised its estimates for pork production, noting higher slaughter rates and more pigs per litter. U.S. exports are forecast almost 8% higher in 2024 with significant activity in Mexico and Japan, in addition to increasing momentum in South Korea.