U.S. economy and inflation to slow in 2024; crop prices to dip again

Interest rates and inflation will slow in 2024, along with the U.S. economy overall, projected the Agriculture Department on Tuesday in an outline of farm sector conditions in the new year. Farm-gate prices for the three major field crops—corn, soybeans, and wheat—would fall for the second year but remain above pre-pandemic levels while market prices for cattle and hogs go up.

Americans would consume an average of 224 pounds of meat in 2024, down by 1.8 pounds this year, chiefly due to the smaller and higher-priced beef supply. Beef cow numbers have fallen for five years in a row, so there are fewer steers and heifers available for slaughter. A recovery in cattle numbers and the beef supply is expected in 2025.

With lower season-average prices expected, farmers would reduce corn and wheat plantings by a combined 5 million acres. Soybean plantings would increase by 3.7 million acres. With normal weather and yields, the soybean crop could be the largest ever at 4.475 billion bushels. Upland cotton would expand by 1.6 million acres.

Commodity prices have been at comparatively high levels since 2020, with the end of the Sino-U.S. trade war and the return of China as the top customer for farm exports. The Russian invasion of Ukraine in February 2022 drove prices higher. They have drifted downward since then. In its 10-year baseline, the USDA projects season-average prices of $4.50 a bushel for corn, $11.30 for soybeans, and $6.30 for wheat grown in 2024. Prices peaked at $6.54 a bushel for corn, $14.20 for soybeans, and a record $8.83 for wheat harvested in 2022. The projections were built around prices and crop supplies in October.

Steer prices in the five leading cattle states would average $185 per 100 pounds in 2024, up from $177.30 this year. The farm-gate price for hogs would climb by $1.75 per 100 pounds, but prices of broiler chickens, eggs, and milk would fall.

Lower commodity prices could squeeze farm income. The Food and Agricultural Policy Research Institute estimated in September that U.S. net farm income, a gauge of profitability, would decline to $140.4 billion in 2024, down by 2 percent from this year. The 10-year average for net farm income is $101.3 billion. The USDA will make its first forecast of 2024 farm income in February, ahead of its annual Agricultural Outlook Forum.

Based on conditions this summer, the USDA projected an economic growth rate of 1.2 percent in 2024, compared to 1.7 percent this year for the United States. Global GDP also would slow in 2024 but at 2.7 percent would exceed the U.S. growth rate. The U.S. inflation rate would fall to 2.9 percent, a drop of 1.3 percentage points. The bank prime rate would fall by nearly 0.5 points, to 7.7 percent.

The USDA projections were presented in a series of tables on macroeconomic factors and on U.S. commodity production, usage, and season-average prices. Additional tables on international trade and global supply and demand for agricultural commodities along with USDA analysis of the U.S. and world outlook will be released in February.

In its projections, the USDA said farmers would plant 91 million acres of corn, 87 million acres of soybeans, and 48 million acres of wheat for harvests of 15.04 billion bushels of corn, 4.475 billion bushels of soybeans, and 1.94 billion bushels of wheat. If the projections prove true, the corn crop would be marginally smaller than this year, soybeans would be 9 percent larger, and wheat would be 7 percent larger.

The USDA tables are available here.