Yesterday’s USDA reports had one major theme: slow demand. USDA lowered export demand for both corn and wheat in the February WASDE report. In fact, wheat exports are now expected to be the lowest in more than 40 years. USDA Chief Economist Rob Johannson:
And global wheat stocks are up nearly 10.6% year over year. Add that to a 28% increase in U.S. wheat stocks and analysts say you have a real problem on your hands. The U.S. appears to be sitting on the largest stockpile of wheat since the 2009-2010 crop year. But what does that mean for price? USDA is currently projecting a year end price of $5.00/bu on wheat.
With such low prices persisting, there’s been a lot of talk about net farm incomes. USDA also addressed those issues in a less widely discussed report yesterday, the Farm Sector Income Forecast from the Economic Research service. The report showed farm profits are expected to decline for the third year in a row. Again USDA Chief Economist Johannson:
The bulk of that decline is attributed to losses in animal product receipts, while crop income declines are forecasted around just 0.9%. Still, some fear we may be looking at a wave of bankruptcies. There certainly are some stresses on balance sheets, says Johannson, but