U.S. Farm Sector Overview
Updated April 30, 2008
Agricultural exports continued their record-breaking pace in February. Exceeding $10 billion in any month for the first time ever, exports were up 9 percent over January, and October-February exports were 42 percent above the same period in fiscal 2007. The $10.1 billion for February includes similar increases over the previous month for both bulk and high-value products. Year-to-date increases over fiscal 2007 were much higher for bulk products (up 69 percent) than for high-value products (up 25 percent). The largest increases registered were for wheat (up 147 percent), dairy products (up 110 percent), soybeans (up 64 percent), vegetable oils (up 58 percent), corn (up 50 percent), and rice (up 30 percent).
The CPI for all food increased 0.3 percent in February and 0.1 percent in March, and is now 4.5 percent higher than the March 2007 level. Prices of cereals and bakery products (+1.2 percent), sugar and sweets (+0.9 percent), beef (+0.6 percent), and eggs (+0.5 percent) led food price increases in March, while fruit (-1.7 percent), vegetables (-1.2 percent), dairy (-1.0 percent), and pork (-0.8 percent) led declines. The largest food price increases over March 2007 were for eggs (+29.9 percent), dairy (+11.0 percent), cereals and bakery products (+8.1 percent), poultry (+5.4 percent), sugar and sweets (+4.3 percent), and beef (+3.1 percent). Overall, the Consumer Price Index (CPI) for all food is projected to increase 4.0 to 5.0 percent in 2008, as retailers continue to pass on higher commodity prices, transportation costs, and energy costs to consumers in the form of higher retail prices.
March data on hogs--inventories, farrowings, and litter rates--support recent significant year-over-year slaughter increases in 2008. Farrowing intentions suggest production slowdowns for late 2008 and into 2009. U.S. commercial pork production in 2008 is expected to be 23.5 billion pounds, a year-over-year increase of 7.3 percent. Prices for 51-52 percent live equivalent lean hogs are expected to range between $42 and $44 in the second quarter and between $40 and $42 for the year. Large pork supplies appear to be restraining retail and wholesale pork prices, which in turn, likely buttress both domestic and foreign pork demand. Pork exports in February were 391 million pounds, almost 57 percent above a year ago.
U.S. and global rice prices continue to soar. The nominal U.S. mid-March rough rice cash price was reported at $12.90 per cwt, up from $12.50 in February and the highest since May 1981. Prices are up almost $3.00 from a year earlier. The nominal 2007/08 U.S. season-average farm price was raised 20 cents on both ends to $12.05-$12.35 per cwt, up from $9.96 last year and the highest since 1980/81. Export price quotes for U.S. long-grain milled rice continue to soar due to strong sales, very high prices for other commodities, export restrictions by several competitors, and rapidly escalating global rice prices. For the week ending April 8, prices for high-quality southern long-grain rice were quoted at a record $772 per ton.
Global rice production for 2007/08 is projected at a record 425.3 million tons (milled basis), up more than 2.3 million tons from last month’s forecast and more than 1 percent above the 2006/07 crop. Global rice trade for calendar year 2008 is projected at 27.5 million tons (milled basis), down 1.9 million tons from last month’s forecast and 2.8 million tons below the previous year’s revised record. The March 2008 USDA/NASS Prospective Plantings report indicated 2008 U.S. rice plantings at 2.77 million acres, an increase of just 9,000 acres from a year earlier, but those numbers are based on interviews completed before the recent spike in prices.
Total 2007/08 corn use is projected at a record 13,110 million bushels, up from an estimated 11,210 million in 2006/07. Corn used for ethanol was lowered by 100 million bushels to 3,100 million bushels this month because new plant construction has been slower than expected, but is still up 983 million bushels from 2006/07. Feed and residual use is up 200 million bushels from last month based on March 1 stocks data, and exports are forecast at a record 2,500 million bushels, 50 million bushels above last month and 375 million above the previous year. Ending stocks of corn for 2007/08 are projected at 1,283 million bushels, down 155 million this month and below 2006/07 ending stocks of 1,304 million. The 2007/08 season-average corn price is raised to $4.10-$4.50 per bushel, compared with $3.75-$4.25 per bushel last month and $3.04 per bushel for 2006/07.
Projected wheat exports for 2007/08, at 1,275 million bushels, are up 50 million bushels from March and 366 million bushels from 2006/07. The projected increase from March is based on the export shipments and commitments pace to date and continued restrictions by key competitors, including Ukraine, Argentina, and Australia. Importing countries have continued to turn to the United States for wheat despite high prices and high freight costs. Projected U.S. ending stocks for 2007/08, at 242 million bushels, are unchanged from March, but down 214 million bushels from 2006/07 to the lowest level since the late 1940s. The projected range for the season-average farm price is narrowed 5 cents on each end to $6.55 to $6.75 per bushel. The March 2008 USDA/NASS Prospective Plantings report indicated 2008 wheat planted area of 63.8 million acres, up 6 percent from 2007.
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