When the global economy turned south a year ago, the baseline of agricultural prices was quickly recalculated by the Food and Agricultural Policy Research Institute at the University of Missouri, whose economists released their 10 year forecasts in early 2009. That was then and this is now, and FAPRI says the “outlook for many agricultural commodities has changed markedly” since earlier this year. Has the outlook gotten better or worse?

The FAPRI economists report crop prices remain above pre-2007 levels, despite their recent decline. The observation is made that lower petroleum prices has lowered production costs, but also lowered the demand for biofuels. They expect oil prices to rise in the next 5 years, but remain well below the peak price once seen. Along with that the US economy will expand in 2010 and economic growth reaches 3% in 2011. Additionally, the livestock and dairy sectors, which are in a bleak financial situation, have experienced lower meat and milk prices at a time when production costs are at record levels. They look for a 2010 price recovery in meat and dairy, but which is dependent upon a recovery in the general economy and continued reductions in supply.

Corn:
Acreage will increase to 87 million in current year to 90.4 million in 2014. With a 164.7 bu. yield trend in 2014 production will reach 13.7 billion bu. Feed use will remain steady at 5.2 billion bu., ethanol use will climb to move than 5 billion, and exports will top out at 2.1 billion bu. The average farm price will be $3.47 this year and remain under the $4 point through 2014. Gross revenue per acre will climb from $553 this year to $654 in 2014, with variable production expenses climbing from $296 this year to $350 per acre by 2014.

Soybeans:
Acreage will remain steady around 78 million through 2014, with yield slowly climbing to 43.2 bu. per acre. Production will remain steady at 3.2 to 3.3 billion bu., with the crush slowly increasing from the current 1.6 billion bu. to 1.9 billion bu. Exports will remain under 1.3 billion bu. and ending stocks will remain steady at 220 million bu. The average farm price of $9.44 per bu. this year will fall slightly in the next two years and climb back to $9.74 by 2014. Gross revenue will be around $400 per acre, with variable expenses of $135 this year and climbing to $159 in 2014. The soybean to corn price ratio is at its peak of $2.72 this year and remains around the $2.50 mark. Meal prices remain under $300 per ton and oil prices under 40 cents.

Wheat:
Acreage will slowly decline from the current 59 million to 58 million by 2014, as yields climb gradually from the current 43.3 to 44.8 bu per acre. Production will remain about 2.2 billion bu., food use will slowly climb toward 1 billion, and exports will remain just above 1 billion bu. The average farm price of $5.04 this year will fall below $5 next year and remain in the low $5 range. With slowly rising production costs, net returns will remain in the $90 per acre range.

Cattle:
The beef herd will slowly decline from 31.7 million cows this year to 30 million in 2014, with the calf crop remaining in the 35 million range. Cattle on feed will range from 13.9 million this year, to a low of 13.5 million and return to 13.9 million in 2014. Beef production will remain steady in the 29 billion pound range, as carcass weights gradually decline. Nebraska steer prices will be $85 this year and climb to the $100 range, with feeder steers rising to the $130 mark. Net returns that are nearly a $40 loss per head currently will show a profit in 2010 and reach a $70 high in 2013.

Swine:
Farrowings will drop from the current 12 million to 11.5 million then climb back above 12 million in 2014. The litter rate will continue to climb toward 10 pigs pushing the pig crop to 120 million by 2014. Pork production will be in the 22 billion pound range until 2013 when it will climb back above 24 billion pounds. Prices for lean hogs will average in the $50 range through 2014 with net returns reaching a $2 profit next year, climbing to $8 per head by 2012, then falling back to less than $1 per head by 2014.

Summary:
The explosive prices for grain are history, believe economists, who say corn will average under $4 and beans under $10 for the next 6 years, but with the help of that stability, livestock profitability will return gradually and both pork and beef prices will move away from red ink in the coming year and stay just above the break even mark through 2014.