U.S. net farm income should rise 11.8% to $63 billion in 2010, primarily because of stronger livestock prices, USDA said on Thursday in its first income forecast of the year.

At that level, annual net farm income, which reflects income from 2010 production, whether or not it is sold within the calendar year, would be about $25 billion below the record high of 2004 and the near-record level of 2008, but would be the fifth highest recorded by USDA.

Net cash income, which reflects only the cash transactions occurring during the calendar year, is forecast to rise $5.5 billion, or 7.8%, in 2010 to $76.3 billion, which would be $3.5 billion above the 10-year average. Net cash income is a measure of solvency, or the ability to pay bills and make payments on debt.

Livestock cash receipts are projected to rise by $11.5 billion, or 9.7%, in 2010, offsetting an expected drop of $6 billion in cash receipts for crops.

Dairy cash receipts are predicted to increase by $7.4 billion as a result of higher prices resulting from lower production and a continued recovery in U.S. dairy product exports.

Cash receipts for cattle and calf producers are forecast to rise by a combined $2.8 billion due to higher prices spurred by recovering domestic beef consumption and larger U.S. beef exports.

Hog cash receipts are expected to increase by a modest $700 million with higher pork prices more than offsetting the impact of a 2.8% decline in pork production.

The largest decline in 2010 crop receipts is expected be for wheat. USDA projects wheat receipts will be down $2.5 billion, reflecting expectations of both lower prices and lower sales quantities.

Soybean receipts are expected to experience the second-largest decline ($1.8 billion) in 2010, largely reflecting an expected price decline of 58¢/bu.

Corn receipts are expected to slip $900 million due to lower prices and smaller sales.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.