Agricultural Outlook October 2001

Jeanne McLaughlin, executive editor; Dennis A. Shields, economics editor

Agricultural Outlook No. (285) October 2001

About this magazine

AO is the main source of USDA's farm and food price forecasts. AO emphasizes the short-term outlook for all major areas of the agricultural economy. It also presents long-term analyses of such issues as U.S. agricultural policy, trade forecasts and export-market development, food safety, the environment, and farm financial institutions. Each issue includes 25 pages of data on individual commodities, the general economy, U.S. farm trade, farm income, production expenses, input use, prices received and paid by farmers, per capita food consumption, and related issues. AO is published 10 times per year by the Economic Research Service, U.S. Department of Agriculture. Materials may be reprinted without permission. Contents have been approved by the World Agricultural Outlook Board.

In this report ...

Articles are in Adobe Acrobat PDF format.

Contents, 43 kb

In This Issue, 42 kb

Agricultural Economy

• Sluggish U.S. and World Growth Mutually Reinforcing--Global economic growth this year will be the slowest since 1993, and any rebound during 2002 is expected to be modest. The U.S. economy, the locomotive that pulled the world economy out of the 1997-98 financial crisis, is now stalled. Given the effects of the U.S. slowdown, Europe in 2001 is now expected to be a drag on global economic growth. Lacking a developed-country engine, Asian growth is expected to be slower than during 1998. David Torgerson (202) 694-5334, 93 kb.

Briefs

• Drought Delays Cattle Herd Expansion--Drought since 2000 in many areas, particularly the Southern Great Plains and Pacific Northwest, combined with the harshest winter since 1992/93, have delayed cattle herd expansion until 2004, despite relatively strong prices that normally result in heifer retention for breeding. The additional heifers in feedlots have increased beef production in the near term. Ron Gustafson (202) 694-5174, 39 kb.

• 2001 U.S. Apple crop Smaller, Prices Likely to Rise--U.S. apple production in 2001 is 9.6 billion pounds, down 10 percent from a year ago and the smallest crop since 1988. Because of the smaller apple crop this year, and less competition from a smaller pear crop, apple prices in 2001/02 will likely increase. Reduced supplies and higher prices will limit domestic and export demand for U.S. apples. Agnes Perez (202) 694-5255, 71 kb.

• Tracking Wholesale Prices for Organic Produce--Organic agriculture is one of the fastest growing segments of the U.S. food sector. But collection of data (e.g., on prices) for this segment has lagged the industry's growth. Wholesale prices for organic produce are occasionally provided in Market News Service reports published daily by USDA's Agricultural Marketing Service covering terminal markets in 15 U.S. cities. A more complete picture of industry price patterns will emerge if and when data become available for other terminal wholesale markets. Emy Sok (202) 694-5257, 72 kb.

Commodity Spotlight

• Corn Market to Strengthen in 2001/02--Corn prices are expected to strengthen in 2001/02 as ending stocks decline to the lowest since 1997/98. U.S. corn production in 2001 is expected to drop 7 percent, pulled down by lower acreage and yields. Meanwhile, domestic use is forecast to reach a record high, and exports are expected to rise 2 percent as global use expands. The average farm price is forecast at $1.95-$2.35 per bushel, up from $1.85 in 2000/01. Allen Baker (202) 694-5290, 113 kb.

World Agriculture & Trade

• U.S. Agricultural Exports Forecast to Rise in Fiscal 2002--U.S. agricultural exports are projected to increase in value for the third consecutive year in fiscal 2002. Much of the gain is expected to be from sales of the major bulk commodities-corn, wheat, soybeans, and cotton. Record exports of horticultural products, such as fruits and vegetables, also are projected. Higher prices of wheat, corn, and soybeans would account for much of the gain in export value. Carol Whitton (202) 694-5287, 97 kb.

• Turkey's Financial Crisis: How Will It Shake Out?--Turkey joins Brazil and Argentina in a state of economic crisis at a time of global uncertainty. Turkey is a sizable market for certain U.S agricultural goods. In the short run, U.S. exports to Turkey should decline as the crisis shrinks demand, with the lira's drastic fall making imports relatively more expensive. Longrun impacts may be mixed, depending not only on whether Turkey's economy recovers, but also on whether needed structural reforms in agriculture are implemented. Stefan Osborne (202) 694-5154, 102 kb.

• APEC's Food System Initiative: Opportunities for U.S. Agriculture--This month, the Asia-Pacific Economic Cooperation (APEC) forum holds its 13th Ministerial in Shanghai, China. An initiative of rising significance on APEC's agenda is the APEC Food System (AFS). AFS focuses not only on the importance of trade liberalization to the region's food systems, but also on the need for rural development. The U.S. stake in this initiative is large because it could affect many significant U.S. markets. In fiscal 2001, the APEC economies accounted for more than 60 percent of U.S. agricultural and food exports and 50 percent of imports. William Coyle (202) 694-5216, 113 kb.

Food & Marketing

• Food Price Inflation Should Moderate in 2002--Consumers' demand for beef, dairy products, and fresh fruits and vegetables, coupled with reduced production of these food items, have generated a larger increase in 2001 food prices than forecast earlier this year. Price increases in 2002, for these items and for food in general, are forecast to be moderate as supplies recover. The consumer price index for all food is forecast to increase 3.2 percent in 2001 and 2.5 to 3 percent in 2002. Annette L. Clauson (202) 694-5389, 80 kb.

Research & Technology

• Production of Value-Added Crops: The Case of High-Oil Corn--U.S. corn producers have been relatively slow to devote significant acreage to production of high-oil corn and other varieties with specialized traits that add value. This reluctance contrasts with the relatively rapid adoption of corn hybrids with input traits such as herbicide tolerance. Among the discouraging factors, producers cite falling premiums for high-oil relative to conventional corn--the result of low prices for substitute products in feed rations. Other factors include risks related to price, yield, quality, and market forces. Jorge Fernandez-Cornejo (202) 694-5537, 125 kb.

Announcing...

Agricultural Outlook Forum 2002, 35 kb

USDA's new report: Food and Agricultural Policy: Taking Stock for the New Century, 31 kb

Statistical Indicators, 176 kb

Entire issue, 551 kb

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Updated date: October 2001