Ag Forecast: Uncertainty abounds in 2020
By major indicators, Georgia’s economy appears to be in good shape, according to Georgia State Economist Jeff Dorfman. Unemployment is historically low. Employment is historically high. And, especially encouraging for rural Georgia, 70% of new manufacturing plants set to open in the near future are outside metro Atlanta.
Dorfman, the featured speaker at the opening session of the 2020 Georgia Ag Forecast Series, tempered those trends with these caveats: It’s tough to improve on the highest-ever employment, Georgia’s economy, particularly its agricultural economy, is heavily dependent on trade, and the state’s farmers continue to struggle with recovery from Hurricane Michael 15 months later while waiting on the arrival of disaster assistance funding.
With each of those three factors, there is significant uncertainty. Trade, for instance, is affected by the economies in other countries. Several of the U.S.’ top trading partners are currently in recession.
“We do a lot of international trade business,” Dorfman said via teleconference from Atlanta. “If the rest of the world is doing badly, that tends to slow the Georgia economy down more than it does most other states.”
The Ag Forecast Series featured presentations of information from UGA economists about the economic conditions affecting Georgia’s major commodities. For cotton, decreasing demand is expected in part because of uncertainties related to trade negotiations and a slowing global economy. UGA Economist Adam Rabinowitz said optimistic price expectations could fall in the 67-75 cents per pound range, while pessimistic expectations could range from 62 to 65 cents per pound.
Peanut demand has remained flat for the past four years according to UGA, and Rabinowitz said production would have to decrease for prices to increase. Farm gate prices are expected to hover near $400 per ton in 2020.
Corn prices are expected to increase and resolution of trade disputes could produce opportunities for corn, soybean and wheat growers. Rabinowitz said Georgia corn growers could expect prices between $4.48 and $4.52 per bushel. Rabinowitz cautioned that the expected soybean prices of $8.83 per bushel are highly dependent on resolution of the trade dispute with China and increased competition from Brazil. Wheat prices are expected to hover around $4.82 per bushel.
The beef cattle cycle between liquidation and expansion seems to be nearing the end of expansion. Rabinowitz pointed out that the outbreak of Asian swine flu has hit China’s pork industry hard, and Chinese consumers are turning to beef as an alternative. Plus, while it is unknown the extent of losses in Australia’s beef and dairy sectors due to the historic bush fires there, it could be significant. Australia, through the Trans-Pacific Partnership, is a major supplier of beef to China. These factors may extend the U.S. beef sector's growth phase.
To review all of the information in the 2020 Georgia Ag Forecast, visit www.agforecast.caes.uga.edu.