ERS, Agricultural Outlook Magazine, March 1999

Publications

Agricultural Outlook

March 1999

Economics Editor: Dennis A. Shields, dshields@ERS.USDA.gov

This issue was published in March 1999 by the Market and Trade Economics Division.

Agricultural Outlook is published 10 times per year by the Economic Research Service, U.S. Department of Agriculture. To order Agricultural Outlook, please visit the ERS-NASS Sales Desk. The contents section at the bottom of this page links to each article in Adobe Acrobat PDF format.

In This Issue...

LOWER OUTPUT TO REVIVE HOG PRICES IN 1999 -- In 1998, hog prices tumbled to the lowest annual average since 1972-- $31.67 per cwt--and the monthly average for December was just $14 per cwt. Responding to the run of low returns in 1998, U.S. producers reduced breeding herds late in the year. Based on market hog inventory, pig crops, and farrowing intentions, pork production in 1999 is expected to total about 18.9 billion pounds, down from last year overall (less than 1 percent), and declining sharply in the final quarter. With receding slaughter levels, lower production, and continued increases in net exports, hog prices are expected to rebound from the extreme lows in late 1998, rising throughout 1999. Leland Southard (202) 694-5187, southard@ERS.USDA.gov

BRAZIL'S FINANCIAL CRISIS & POTENTIAL AFTERSHOCKS -- The intensifying financial crisis in Brazil has renewed concerns about the consequences for U.S. agriculture. Latin America and Asia together bought about 60 percent of U.S. agricultural exports last fiscal year, and Brazil's currency devaluation is already having repercussions in other countries in Latin America. In the short run, Brazil's currency devaluation will have relatively little impact on U.S. agricultural trade with Brazil. In the longer run, the potential for effects on U.S. agricultural trade is greater, particularly if Brazil is unable to regain financial control and if the continuing crisis forces other Latin American countries to take measures to stay competitive--such as devaluing currencies. Suchada Langley (202) 694-5227, slangley@ERS.USDA.gov

COFFEE EXPORTERS COUNT ON HIGHER EARNINGS -- Brazil and other coffee exporting countries are expecting a smaller 1999/2000 Brazilian crop to draw down world supplies and reverse the 1998/99 downturn in prices and foreign exchange earnings. Prices for arabica coffee--the type most widely consumed in the U.S.--have been lower since last summer due to sharply higher 1998/99 production, particularly in Brazil, which accounts for about one-third of world output. Traditionally, importers reacted to declining coffee prices by building up stocks. In recent years, however, U.S. and other importers and roasters have moved toward just-in-time inventory to avoid carrying costs. Because of this, prices will vary more than in the past. John Love (202) 720-5912, jlove@oce.usda.gov

VALUE-ENHANCED CROPS: BIOTECHNOLOGY'S NEXT STAGE -- Biotechnology's next quest, to provide field crops with value-enhanced qualities for end-users--output traits--is underway. Biotechnology's first stage featured crops with improved agronomic qualities--input traits--valued by farmers, such as resistance to pests. The industry now visualizes a system in which farmers grow crops designed for the specific needs of end-users in food manufacturing, the livestock sector, and even the pharmaceutical industry. Whether biotechnology's second stage is a wave or a modest ripple will hinge on several economic and technical factors. Peter A. Riley (202) 694-5308, pariley@ERS.USDA.gov

FARMERS SHARPEN TOOLS TO CONFRONT BUSINESS RISKS -- Risk management involves finding the combination of strategies most likely to achieve a desired level of return at an acceptable level of risk. Three risks that concern farmers most, according to USDA's 1996 Agricultural Resource Management Study, are uncertainty regarding commodity prices, declines in crop yields or livestock production, and changes in government law and regulation. Farmers have a variety of tools for cutting risk, such as diversification of production across multiple enterprises, entering into production and/or marketing contracts, and keeping extra cash on hand for emergencies. Other strategies include crop or revenue insurance, futures market trading, and off-farm employment. Since farm business characteristics vary widely, there can be no "one size fits all" approach to risk management. Joy Harwood (202) 694-5310, jharwood@ERS.USDA.gov

This publication is in Adobe Acrobat Reader 4.0 PDF format. You can download and get help using the Adobe Acrobat Reader to view and print this document. Text-only versions of Agricultural Outlook are also available, immediately after publication clearance.

Contents; 63 kb.

In This Issue...; 49 kb.

Briefs; 66 kb.