* High commodity prices mean record U.S. farm income in 2013
* Farm exports to reach record $145 billion this year
* Big corn, soy crops will lower prices sharply this fall
* High production costs to slash farm income 32 pct in 2014
WASHINGTON, Feb 11 The seven-year-old U.S.
agricultural boom, driven by record-high commodity prices and
painfully tight supplies, is expected to peak this year and then
come to an abrupt end as high costs start to bite, the
government projected on Monday.
The U.S. Agriculture Department said farm income would soar
to a record $127.6 billion this year, up 15 percent, thanks to
high market prices and crop insurance payments that will offset
losses from the worst drought in more than half a century.
Farm income would fall by one-third next year, to $96.9
billion, said USDA, because corn, wheat and soybeans - the three
most widely grown crops - will fetch dramatically lower prices
with bumper crops expected this fall.
The abrupt contraction in farm income could prompt operators
to slow purchases of equipment such as trucks, tractors and
combines, structures such as grain bins, or crop land. Land
prices soared along with grain prices since 2006.
High production costs, up 12 percent in two years, will
compound the effect of lower earnings for crop farmers. But
lower prices for grains and oilseeds will be a welcome relief
for livestock producers who have complained of ruinously high
prices for feed for cattle, hogs and poultry.
"While income declines from the 2013 record through 2015, it
remains well above the average of the previous decade," said
USDA in a battery of projections for farm output, income and
exports this year.
The projections were based on conditions at the end of 2012
and will be updated at USDA's annual Outlook Forum at the end of
SWOLLEN FARM EXPORTS
U.S. farm exports are projected at a record $145 billion
this fiscal year, which ends on Sept 30, up $10 billion from the
previous year. USDA said the record "largely reflects high
Agricultural exports would drop by $3 billion in fiscal
2014, it said, and by an additional $5 billion in fiscal 2015.
Assuming yields return to normal this year, farmers will
harvest a record 14.4 billion bushels of corn, up 34 percent
from last year; the second-largest soybean crop on record at
3.335 billion bushels; and a medium-sized wheat crop of 2.19
billion bushels, said USDA.
Market prices would plunge this fall as a result, said USDA.
It projected corn would sell for an average $5.40 a bushel at
the farm-gate, down nearly $2 from the record-high
season-average price forecast for this year.
Soybean prices would be nearly $3 below the record $14.30 a
bushel expected this year. Wheat would be down by 70 cents from
the record $7.90 a bushel forecast for this marketing year.
"Nonetheless, U.S. prices for corn, wheat, and soybeans are
projected to remain historically high, above pre-2007 levels,"
Growers were projected to plant 254 million acres - second
only to the record set in 2012 - of the eight major U.S. crops,
wheat, rice, corn, sorghum, barley, oats, soybeans and upland
cotton this year, said USDA.
PERSISTENT DROUGHT BRINGS FEAR FOR CROP SIZE
With drought persisting in the U.S. Plains and western Corn
Belt, there was high concern about likely yields. The winter
wheat crop, grown mostly in the Plains, was most at risk from
drought. USDA projected lower yields for wheat and a e percent
smaller crop this year than in 2012 despite larger wheat area.
USDA devoted three pages, out of the 105 pages in its annual
projections, to explaining the methodology behind its
projections of yields. Its corn formula looked at 25 years of
crops, including the 1988 and 2012 droughts.
USDA's projected corn yield was higher than other forecasts.
A Kansas State University economist, Dan O'Brien, used 157.4
bushels an acre as the likely yield in a forecast last month.
David Anderson, agricultural economist at Texas A&M, has used
150 bushels an acre as a reasonable yield that would produce a
Many analysts believe growers will plant 97 million to 99
million acres of corn, compared to the 96 million acres
projected by USDA.
U.S. corn and soybean production has fallen for three years
in a row. Traders have focused on bare-bones corn supplies and
the need to rebuild stockpiles.
Experts say weather in late summer, when the corn and
soybean crops mature, is the greatest determinant of crop size,
despite the anxiety about planting crops in a dry seedbed.
USDA's projections are on the Internet at