2013-02-19 10:16:45 - New Food research report from Business Monitor International is now available from Fast Market Research
BMI View: The US agricultural sector will be happy to see the end of the 2012 calendar year: The combined production growth of the country's major grains and animal products is expected to be the worst in two decades. We are somewhat optimistic for the 2013 season, as we anticipate a strong rebound in corn and soybean production. We also forecast growth in the poultry sector due to moderating corn prices. We are particularly bullish cotton due to a higher area planted. We expect the beef sector to be the laggard in the livestock complex, and see strong downside risks to the 2013/14 US wheat crop. Given that we forecast generally stable consumption growth, we expect the US to remain
the world's largest food exporter over the coming years.
* Soybean production growth to 2016/17: 27.4% to 105.7mn tonnes. This is mainly owing to the increase in poultry production over the long term. This will create production incentives by driving demand for soybean, which is used as feed. Furthermore, livestock production is still expanding globally, driving feed export demand.
* Corn consumption growth to 2017: 6.9% to 298.7mn tonnes. This will be driven by increases in ethanol production - though this growth will be less steep than in the past few years - and an increase in feed use in the later years of our forecast period as the livestock sector picks up. Base effects are a key factor why the growth rate is not higher.
* 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: 2.1% year-on-year (y-o-y), down from 2.3% in 2012; predicted to average 2.2% from 2012 until 2017.
* Consumer price inflation: 2.2% ave in 2013, up from 1.8% in 2012.
Full Report Details at
- www.fastmr.com/prod/536596_united_states_agribusiness_report_q1_ ..
We see potential for the 2012 US Farm Bill to be extended for several months, which has occurred with previous bills, but see little chance that the bill will expire outright. Food stamps were the largest single part of the 2008 farm bill, and this would continue if the current bill is implemented. When the 2008 bill was passed in June of that year, food stamps comprised two-thirds of the projected total five-year net outlay (US$284bn). If the current bill were extended, the US Congressional Budget Office forecasts that food stamps would comprise 78% of all spending (US$772bn) over 10 years.
We will be watching the fortunes of the 2013/14 US wheat crop in the coming weeks, as soil conditions remained the poorest in almost 30 years as of early December 2012. As of late November, almost a quarter of all soil was rated in either 'poor' or 'very poor' condition. There is not a direct correlation between early-season soil conditions and harvest totals, but given that the US is the world's largest wheat exporter, changes in US supply represent upside risks to prices in 2013, even though the global wheat market is one of the world's most diversified. We continue to forecast a slight decrease in US wheat output to 58.5mn tonnes in 2013/14 as supply reverts to historical averages.
We continue to forecast lower US beef production and consumption in 2013, as poor pasture conditions and high grain prices lead to record low cattle inventories. Feedlot operators have been particularly squeezed by the recent spike in grain prices and volatility in feeder cattle prices. The low inventories, in turn, have caused wholesale and retail beef prices to rise, leading to reduced consumption at a time when beef demand is slowing amid increasing health consciousness. We expect major beef producers in the US to continue underperforming the S&P500 over the next few months. We continue to expect lower beef production and consumption in the US in 2012/13, with beef production being constrained by cattle inventories that are at their lowest levels since 1960
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