With some headwinds, global economic outlook good in ’22

While the global economy faces some challenges, agricultural producers should be optimistic about the upcoming year.

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CoBank protein analyst Brian Earnest says agricultural producers should be optimistic for the coming year

The overall global economic outlook for 2022 is favorable, according to Brian Earnest, protein analyst at CoBank, who spoke January 25 at the Feed Strategy Conference held during the International Production & Processing Expo in Atlanta.

However, he said, there are some potential headwinds that could affect that outlook, including the COVID-19 pandemic, logistical bottlenecks affecting the supply chain, inconsistent consumer spending, monetary tightening in the U.S. and slowing growth in China.

“In 2022, the expectation is we’ll see 4.5% increase in real annual global gross domestic product,” he said.

Farm income has been higher in recent years and that is partly due to strong agricultural trade. Although tariffs have negatively affected some sectors, agriculture has done quite well, Earnest said, with exports hitting record highs in 2021. U.S. trade with China is “a wild card,” he added.

Consumers are concerned about inflation, which is expected to remain high in 2022 but more moderate than in 2021.

“The consumer will have to deal with this. When we think about agricultural products and protein, that likely has an impact on what the consumer is looking to spend their dollars on in 2022,” he said.

U.S. corn and soybean crop values are expected to outperform the prior year for the fourth consecutive year in 2022, Earnest said. Tight stocks, high input costs and weather concerns are driving grain prices.

“There’s a lot of analysts that feel these tighter stock situations and uncertainty about the outlook really does provide some room for a higher-priced environment” going into 2022, he said.

With the fertilizer index at historically high levels, there is the possibility that more farmers will shift more acres from corn to soybeans.

“Demand was the main factor in 2021,” he added. “Looking at where grain flows needed to go, there’s undoubtedly some weather factors that played into the prices, a little bit of movement in between acreage, but overall, that that demand factor remains strong in terms of price implications.”

Global meat production is expected to grow 1% in 2022, with a strong rebuilding of the global swine herd after a steep decline in 2020. China, in particular, saw its swine population grow 18.4% in 2021 from 2020.

U.S. protein production is expected to moderate in 2022, with labor constraints expected to persist throughout the year. The broiler industry in the U.S. “is really the only sector with the potential for growth,” Earnest said, with 1% to 2% growth expected. Breeder issues should dissipate, and integrators can expect to see “another great year,” he said.

Global meat exports will grow in 2022, with chicken exports seeing the highest numbers. China and Mexico have been strong importers of U.S. broiler meat.

“Agriculture has been one that, from a dollar perspective, has done quite well in 2021. There’s an expectation that we won’t necessarily see this sort of growth in the upcoming year. But overall, things do appear to be worth being optimistic about in terms of how exports add to the overall value from a protein perspective and agriculture overall,” Earnest said.

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