Crop Insurance Today Second Quarter 2021 - 17

Figure 9
Index of Farm Prices Paid and Received for Crops and Animals 2000-2020
120
100
80
60
40
20
100
120
140
160
180
Crops Prices Paid
Crops Prices Received
80
40
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60
Source: USDA, NASS, Quick Stats https://quickstats.nass.usda.gov
USDA, NASS Agricultural Prices, various issues, https://usda.library.cornell.edu/concern/publications/c821gj76b?locale=en#release-items
Livestock Paid
Livestock Prices Received
exporting countries produce over 84 percent of
the total. Brazil led global producers with 136
million metric tons in 2020, 37 percent of the
total, followed by the United States with 112.5
million metric tons, accounting for 31 percent.
Next is Argentina, with 49.8 million metric tons,
at 13 percent, and last among the major exporters,
Paraguay, had 10.1 million metric tons, accounting
for three percent of global production.
Total global domestic use increased by 3.5
percent from the previous year to 369.3 million
metric tons. Domestic use globally is highest in
China with 114.5 million metric tons in 2020.
In addition, soybean use is high in the countries
of the EU and Southeast Asia and Mexico.
Domestic supply and demand conditions result
in production falling short of use requiring
imports and/or draw-down of stocks to fill the
gaps. In 2020, the shortfall in production versus
domestic consumption was 83 percent in China,
86 percent in the EU, 94 percent in Southeast
Asia, and 96 percent in Mexico. In 2020, import
demand in these major markets accounted for
78 percent of overall global soybean trade, 130.6
million metric tons of a total 167.8 million tons.
The U.S. soybean industry benefits from a
global export demand for soybeans generated
by the gap between domestic production and
domestic use in foreign markets. U.S. soybean
farmers produced 112.5 million metric tons of
soybeans in 2020 and 55 percent of that production
went to service export demand. Following
China's return to the market, the soybean market
enjoyed robust growth in export demand,
drawing down stocks and putting upward pressure
on market prices in 2020. U.S. exports increased
36 percent in 2020, to 62 million metric
tons, increasing from 45.7 million metric tons
in 2019. The increase in export volume also
helped to decrease ending stocks from 2019 levels
of 525 million bushels to 120 million bushels,
a decline of 77 percent. As a result, the U.S.
stocks-to-use ratio declined to 2.6 percent, the
lowest level since 2013. Coupled with a modest
increase in domestic use of a little over one
percent, export demand and lower stock levels
helped push the weighted average marketing
year price received by farmers to $11.25 per
bushel, up more than 31 percent from the previous
year price of $8.57 (Figure 8). In addition,
lower stocks and expectations of a continuing
robust demand for exports helps fuel optimism
about the market for 2021.
Prices Received and
Prices Paid
The rebound in commodity markets toward
the end of 2020 is a positive sign for the future;
however, the prolonged challenging conditions
facing agricultural producers is reflected
in the overall indices of prices paid, and prices
received by farmers (Figure 9). With hopes for
a sustained increase in commodity prices notwithstanding,
the rise in crop prices received by
producers in 2020 continued to lag the pace of
increases in prices paid for inputs. The same can
be seen regarding livestock operations. While
the gap is narrower, it widened in 2020 reflecting
a downturn in livestock prices relative to a
plateauing of input prices.
The index of prices received by U.S. crop producers
peaked during the period August 2012 to
June 2013 and has not recovered to those levels
since. 2020 ended with the crop prices paid
index at 110.4, down slightly from the previous
year by 1.2 points. The reduction in prices paid
reflect a modest but general decline in the indices
of major input components including all
fuels, fertilizers, insecticides, and herbicides.
Reflecting the upward move in 2020 crop prices
toward the end of the year, the index of prices
received by crop producers moved upward by
2.5 points. The narrowing of the gap between receipts
and expenses is a positive sign and hopefully
continues into 2021.
The story was not as promising for all livestock
sectors. The livestock producers index of
prices received in 2020 moved downward. This
is a trend that has persisted since 2015, falling to
90 from 96 the previous year. In 2020, declines in
meat animal prices and dairy index declined as
did the index for poultry and eggs. For example,
at the end of the year, cattle prices had declined
to $108 per cwt, down $10 per cwt from the previous
year. In the dairy sector, the all-milk price
declined to $18.50 per cwt, down $2.20 per cwt
from December 2019. In 2020, the prices paid
by livestock producers were little changed from
the previous year. The index of prices paid increased
only 0.4 for the year, primarily reflecting
early season lower prices for corn and soybeans.
However, with the late year surge in commodity
prices likely to continue into the new year,
prices paid for livestock feedstuffs are expected
to increase, leading to a widening of the gap for
CROPINSURANCE TODAY®
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https://quickstats.nass.usda.gov https://usda.library.cornell.edu/concern/publications/c821gj76b?locale=en#release-items

Crop Insurance Today Second Quarter 2021

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