USDA Chief Economist Seth Meyer talked about the state of the ag economy and the headwinds it faces in 2024. During his speech at the 100th Annual Ag Outlook Meeting, he said there are challenges ahead.
“We’ve seen a lot of growth in trade for agricultural commodities, for bulk agricultural commodities. Maybe the challenge is the fact that other countries have also stepped up and are producing more. So, our challenges our export share has declined. We’ve gotten more competition in the global market, but we need that trade to continue to grow.”
One of U.S. agriculture’s biggest challenges comes from South America.
“One of the examples here is that we have seen tremendous growth in soybean production in South America. Tremendous growth. When you think about Brazil, Paraguay, Argentina, tremendous growth in production, and we can handle that production at a global level and support prices when Chinese demand was growing at more than four percent and up to eight percent a year. So, we have China in the market pulling large volumes of soybeans off the market. That demand has slowed. Who’s going to pick up that demand as we get an additional six million metric tons a year from Brazil and two million metric tons from Argentina? Land is expanding. They’re going to continue to grow. We have a challenge here in terms of how we are going to meet export demand, and what are we going to do internally for demand?”
When it comes to soybeans, increasing domestic use can counter some of the lower international demand.
“Domestic crush has been quite strong, fueled largely by our biofuel demand. So, if you have challenges in the export market, it is good to have domestic demand. One of the places that we’ve had good domestic demand is in the biofuel market. But one of the challenges is we are drawing imported feedstocks into our biofuel production from around the world, and actually, imports as a total share of feedstocks is growing over time. And it is canola and used cooking oil, and so this is a very policy-driven market. If we want to have a domestic use for our crops. This is one of the options that is at least in front of us.”
The competition isn’t just soybeans, especially in China.
“When you go forward you see them starting to take a large amount of U.S. corn, you can see them also starting to pick up Ukrainian corn, which is more at risk, and now you see the big change in China has been the elimination of phytosanitary restrictions on Brazilian corn. And now, Brazilian corn flowing very easily into China and very price competitive. And again, we’re facing additional competition for what is a pretty big market and growing year over year into China of more than 20 million metric tons.”
Agriculture Secretary Tom Vilsack, Agriculture Chief Economist Seth Meyer and Joseph Parsons chair of USDA’s Agricultural Statistics Board and director of the NASS Methodology Division. USDA photo by Tom Witham.