Market News & Headlines >> USDA Cuts Farm Income Forecast

USDA’s Economic Research Service on Wednesday estimated U.S. net farm income for 2016 at $66.9 billion, down $4.6 billion from its previous forecast in August and down 17.2% from 2015, due largely to weakness in the livestock sector. 

A that level, net farm income would be a seven-year low in both real and nominal terms and would be 46% of the record high of $123.7 billion recorded in 2013. 

Net cash farm income for 2016 is forecast at $90.1 billion, down 14.6% from the 2015 estimate. Overall, cash receipts are now forecast to fall $23.4 billion or 6.2% due to a 12.3% drop in animal/animal product receipts, with crop receipts forecast essentially unchanged from 2015, ERS said. 

Nearly all major animal specialties—including dairy, meat animals, and poultry/eggs—are forecast to have lower receipts, including a 14.8% in cattle/calf receipts. A marginal expected gain in cash crop receipts is due largely to a forecast $5.3 billion increase in receipts for oil-crop receipts, primarily soybeans. 

The good news for producers is that production expenses are seen falling for the second year in a row. Total production expenses are forecast to fall by $9.2 billion, or 2.6% versus 2015, led by declines in farm-origin inputs such as feed, livestock/poultry and seed, as well as fuel/oils. However, that decline is slightly less than the 2.8% fall USDA forecast in August. 

Farm asset values are forecast to fall by 2.1% in 2016, while farm debt is forecast to increase by 5.2%, with farm sector equity expected to fall by $79.9 billion or 3.1%.