New Report Available: United States Agribusiness Report Q3 2013

From: Fast Market Research, Inc.
Published: Wed Jul 31 2013

In general we expect a rebound in US grain production for the 2013/14 season, which underpins our view of lower average prices over the coming months. We forecast moderate production growth over the long term. We believe soybean production will outperform corn over the coming years, as we expect the soybean/corn ratio to move more to soybean in the coming years. We also expect the livestock sector to show improvement in the coming years as grain prices fall, with the poultry market outperforming.

Although we are maintaining our forecasts for now, the new farm bill that is making its way through the US Congress could have considerable effects on grain and dairy prices depending on the final draft. Within the dairy segment, we forecast the US to remain a net cheese exporter over the coming years after being a net importer for several decades.

Key Trends

* Soybean production growth to 2016/17: 14.2% to 94.8mn tonnes. This is mainly owing to the increase in poultry production over the long term. However, we have revised our long-term figures down as we do not see continued increases in the area dedicated to soybean given our view of lower average prices in the medium term.
* Corn consumption growth to 2017: 17% to 304.1mn tonnes. This will be driven by increases in ethanol production and an increase in feed use in the later years of our forecast period as the livestock sector picks up.
* Poultry production growth to 2016/17: 20.1% to 23.1mn tonnes. The US is the world's second largest poultry exporter behind Brazil. As such, increased global demand for poultry, particularly from emerging markets, is likely to serve as a powerful production incentive.
* 2013 real GDP growth: 2.3% year-on-year, up from 2.0% in 2012; predicted to average 2.4% from 2012 until 2017.
* Consumer price inflation: 2.0% ave in 2013, same as 2012.

Full Report Details at

Industry Outlook

The most recent US farm bill expired in 2012, and Congress is debating competing replacements, one each in the House of Representatives (H.R. 1947) and the Senate (S.954). The bills are broadly similar but have a few key differences. Both aim to reduce the US deficit by either US$17bn (Senate bill) or US$33bn (House bill) over 10 years including the effects of sequestration, according to the US Congressional Budget Office, which scored the bills. Although the respective bills are only enforceable for five years (they will both expire in 2018), all scores are calculated based on a 10-year period. As of early June, the Senate has begun debate on the Senate bill, while the House bill has passed the committee stage but no floor action has been scheduled.

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