­­Production Is Higher Across the Board, Except for Cattle

By Lee Schulz and Chad Hart

USDA’s World Agricultural Supply and Demand Estimates (WASDE) report outlines the current view for agricultural markets over the next 12–18 months. These projections are molded to fit the current events within agriculture. One challenge to monitor this fall will be the impacts of Hurricanes Helene and Milton. Some respondents completed USDA’s surveys used for the October update before both hurricanes struck the United States, while other respondents completed surveys in-between the events. Thus, the current outlook does not capture the full extent of the hurricanes’ impact—subsequent reports will do that.

In general, US agricultural production continues to set records. The pork and poultry industries are maintaining high production, while beef production declines with fewer cattle across the country. For crops, corn and soybeans are both expected to see record national average yields. US meat demand has been and is expected to be supportive for livestock prices, with the possible exception of hogs. However, the large crop production numbers are overwhelming strong crop usage projections for the 2024 marketing year, leading to lower prices for Iowa crops.

For the livestock sector, some production challenges faded away in 2024, only for some to quickly reappear over the last couple of months. The avian influenza outbreaks over the previous couple of years had limited flock sizes for the poultry markets and luckily, those outbreaks have decreased in both size and intensity. The cattle herd had been shrinking due to the extended drought across the western half of the United States; and, while for the first seven months of 2024, moisture conditions improved greatly over most of the United States, drought has quickly returned over a large swath of the country in September and October. This continues to constrain thoughts of expanding cattle herds, although it is not the only reason—beef prices are high enough to continue to entice cattle producers to place heifers in feedlots. As the 2024 meat production year stands, the beef production estimate continues to edge higher on those heifer feedlot placements. USDA has slightly lowered projected pork and poultry production on lower sow farrowings and slower flock growth. However, expectations are that total meat production in 2024 will reach nearly 108 billion pounds. Given good meat demand across the board, USDA has increased all of the livestock price estimates for 2024, with cattle and broilers leading the way.

For 2025, recent trends are projected to continue. Cattle numbers are projected to decline again, but hog and poultry numbers continue to grow. Beef production will shrink by roughly a billion pounds, but growth in the pork and poultry sectors will more than offset that. Total meat production will exceed 108 billion pounds (table 1). Meat exports, with the exception of beef, are also expected to continue to grow. Combining solid international demand with stable domestic demand, livestock prices in general are heading higher, with the exception of hogs—even there, recent shifts in demand are improving the price outlook.

The outlook for corn contains a bin-busting national average yield, another 15 billion bushel crop, and usage that continues to churn through a lot of corn (just not enough to keep up with production). After a few years of drought-impacted crops, this year’s corn crop showed what a little additional water would do for production. The October estimate for the national average corn yield is a whopping 6.5 bushels above the previous record set last year, soaring well above 180 bushels per acre for the first time. So, as has been the case for the past several years, the corn market will have lots of kernels to feed and fuel users.

Corn usage has also set records over the past couple of years, but those records are still below 15 billion bushels. Feed and residual use increased by over 300 million bushels last year, and USDA expects it to grow slightly in the coming year. Fuel use also increased last year by nearly 300 million bushels and is projected to be steady this year. But there are a couple of sectors where corn usage has slipped. Corn sweetener use has declined within the past five years, down roughly 50 million bushels since 2020. Consumer shifts in beverage choices, mostly a decline in soda consumption, have driven this change. However, the largest shift remains in the export sector. The 2020 marketing year set the record for corn export sales (in bushels), pushed by the COVID-19 recovery surge and the Phase One trade deal with China. Corn exports dropped after that, as rising corn prices, the slowdown after the surge, and the completion of the trade deal limited US competitiveness in global markets. The largest drop came in 2022, as corn exports had fallen by over a billion bushels from the record two years earlier. The drop in corn prices over the past 18 months has translated into more international sales recently, with exports up over 600 million bushels last year. As with feed use, USDA’s projections display slight growth over the coming year. The issue is that is still 400 million bushels below sales from 2020.

With production exceeding the record usage, corn stocks have been building. For most of this calendar year, the projections for corn stocks at the end of the 2024 marketing year have exceeded 2 billion bushels, which is a healthy 240 million bushels above corn stocks for the 2023 marketing year and 640 million bushels above stock levels in 2022. The most recent update lowered the stock estimate to 1.999 billion bushels, showing usage slowly trying to catch up to production (table 2). But as stocks have grown, prices have fallen. The season-average price for corn was $6.54 per bushel for the 2022 crop, which dropped to $4.55 per bushel for 2023. The current projection is $4.10 per bushel for 2024. Current corn futures roughly agree with that outlook, with the futures at the end of the WASDE report day signaling a $4.15 per bushel price.

The combination of a surge in soybean planting this spring and the temporary cessation of drought through most of the growing season has led to record projections for both the national average soybean yield and soybean production. The current yield estimate is 53.1 bushels per acre, besting the record 51.7 bushels per acre from 2021. The previous soybean production record also comes from 2021 at 4.464 billion bushels. The 2024 estimate is 4.582 billion bushels, so there is a lot of beans for the markets to work with this fall.

While corn is capturing record usage, soybean usage is rebounding, but has not quite reached prior levels. The major growth area has been domestic crush, mainly for renewable diesel development. Given USDA’s current estimates, crush will consume over 200 million more bushels this year than it did in 2022. The challenge, however, is that growth has not been enough to offset the declines in soybean exports over the past several years. Like corn, soybean exports set their record in 2020. The same factors (higher prices, post-surge slowdown, and completion of Phase One) led to lower exports in 2021, 2022, and 2023. The cumulative drop is roughly 600 million bushels. While 2024 looks like a better export year, USDA’s projection leaves soybean exports at 1.85 billion bushels, over 400 million bushels below the 2020 record (table 3).

Table 3. US Soybean Supply, Usage, and 2024 Projections from October
Note: Marketing Year 2024 = 9/1/24 to 8/31/25.
Source: USDA-WAOB (2024).

Thus, soybean stocks are building as well. The 2024 ending stocks estimate is 550 million bushels, more than double the stock level from 2022; and again, as stocks have grown, prices have fallen. The season-average price for soybeans was $14.20 per bushel for the 2022 crop, which dropped to $12.40 per bushel for 2023. The current projection is $10.80 per bushel for 2024. Current soybean futures are not in alignment with that outlook. The market is more pessimistic for soybeans. Futures prices at the end of the WASDE report day imply a $9.80 per bushel price, a full dollar below the USDA estimate.

References

US Department of Agriculture World Agricultural Outlook Board (USDA-WAOB). 2024. "World Agricultural Supply and Demand Estimates." WASDE-653, October 11, 2024. US Department of Agriculture, Washington, DC. https://www.usda.gov/oce/commodity/wasde/wasde1024.pdf.

Suggested citation

Schulz, L., and C. Hart. 2024. "Production is Higher Across the Board, Except Cattle." Agricultural Policy Review, Fall 2024. Center for Agricultural and Rural Development, Iowa State University. https://agpolicyreview.card.iastate.edu/fall-2024/production-higher-across-board-except-cattle.