Forecast shows stable oil, trouble for agriculture

By  | 

BISMARCK, N.D. - Legislators are getting an early look at what to expect for revenue next biennium. The office of management and budget put out there numbers, but the legislature got a second look.

In the plainest terms- oil stabilizes slightly higher than were it is now. The Ag industry nationally struggles. North Dakota job market continues to be strong, but constrained by a shortage of workers. With this extra information, not much changes for legislators set their agenda.

Oil will provide a chunk as always.

"We're probably going to see production right around where they have around 1.3 to 1.35 million barrels a day. The biggest question is going to be how much are we assuming for price of oil for the next two years,” said Rep. Corey Mock, D-Grand Forks

"We're going to take a conservative approach to it, truthfully I think the oil prices might be a little high. We'll probably reduce them down as we go forward and stuff on it,” said Rep. Keith Kempenich, R-Bowman.

IHS Markits, the firm who commissioned the report, said oil prices will be $50-70 a barrel the next two years. But the news for ag producers wasn't good as IHS predicted a national decline in soybean prices ($2 a bushel in 2019) and exports (decrease additional 11 percent) making the upcoming year for farmers difficult.

"When you've lost money here this last six or eight months, there isn't enough increase to offset that,” said Kempenich.

"What you're probably going to see is what plants are even planted in the ground this next growing season. You're going to see a decrease in a lot of soybean acres,” said Mock.

But the report planted seeds of hope for North Dakota's employment numbers, which will continue to grow. Nancy Johnson with the North Dakota Soybean Growers Association says about 7 of every 10 rows of soybeans in North Dakota goes to China. Without China- sales go from $1.5 billion to $648 million.