What does the 1982 farm economy forecast
WASHINGTON, D.C. - Going
/ >to 1982, inventories of farm
' products will continue to be large
relative to demand in domestic and
world markets.
Yet developments in the
weather, world economy,
agricultural and trade policy, and
other key areas could certainly
modify this picture. Perhaps the
most important variable in the
agricultural outlook, outside of
weather, is the performance of the
domestic and world economies,
reports the USOA Economic
Research Service.
In 1981, some expansion in
planted area, plus unusually good
weather, triggered strong in
creases in world production of
grains, oilseeds, and fibers.
Strikingly, most of this year’s
gains took place in the United
States where *crop production
jumped 14 percent from the poor
output of 1988 and livestock output
mcreased 2 percent. -
Although U.S. farm exports
should expand in the next 12
months, U.S. supplies of feed
grains, nee, oilseeds, and cotton
will still exceed projected use.
'I minting to sharp stock buildups.
Poor economic performance,
both here and in most other
countries besides the oil exporters,
is sharply accentuating the effects
of large supplies on American
farmers. Slack demand is
weighing on livestock product
prices and moderating exports of
farm commodities.
The export picture is especially
complex. Not rally have weak
economic conditions and rapid
inflation abroad cut into
agricultural product demand, but
the strong dollar m 1981 has
somewhat offset lower commodity
prices, and high interest rates here
and abroad have forced most users
f to buy on a hand-to-mounth basis.
\ genomic Growth Prospects
Mixed
World economic activity should billion bushels, 14 percent above
pick up- somewhat next year. - last ye 3l- ’ 3 alltime high. These
However, the outlook is still large supplies, combined with
clouded by high interest rates, high prospects for a slight reduction in
unemployment, slow economic foreign production and increased
growth, high inflation, and serious world trade, have raised projec
balance-of-payments deficits for tions of U.S. wheat shipments to a
most nonoil-exporting countries. record 1.9 billion bushels.
Among the developed countries. Domestic use is forecast to rise,
Japan will probably show the best with food use continuing to grow
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SCOTT SECHLER
performance .and the United
Kingdom the weakest. Economic
growth in Western Europe,, which
has been poor during 1981, may
recuperate. In the United States,
improvement in the second half of
1982 is expected to strengthen
demand for farm products.
Economic growth in the
developing countries probably
won’t match historical rates next
year, but there is great diversity.
OPEC countries, for example, are
trying to slow their hectic pace of
expansion, while the low-income
developing countries are still
struggling to recover from the oil
price shocks of 1979-1980. Many
have drawn down reserves, suf
fered high debt-service ratios, and
grown more dependent on external
aid. Next year won’t bring much
improvement. For some nonoil
exporting but rapidly expanding
developing countries, growth is
likely to maintain its present failry
strong pace next year.
Trade with the Soviet Bloc to
Expand
For the third consecutive year,
poor weather has cut deeply into
Russian grain production. Con
sequently, Soviet grain imports
may reach an unprecedented 43
million tons in the coming year.
The United States recently offered
the Soviets up to 23 million tons of
grain under the sixth year of our
long-term bilateral' grain
agreement. The sensitivity to
overall food availability in Eastern
Europe has been heightened by a
smaller total grain harvest,
burdensome debt-service com
mitments, ' and, in Poland, con
tinuing political and economic
difficulties. Tight food supplies
have necessitated rationing in
Poland and, more recently, in
Romania.
CROP HIGHLIGHT
Wheat (U.S.)
The record U.S. wheat crop has
pushed total 1981/82 supplies to 3.74
For quotations of next week's prices
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After 2:00 P.M, Wednesday
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Buyers of Leghorn Fowl
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and feed use increasing fourfold.
Feed use for 1981/82 is esiimated at
200 million bushels.
The huge 1981 wheat harvest, the
sluggish economy, .record feed
grain production, and the high cost
of carrying inventories have
combined to hold wheat prices
down. The 1981/82 season average
price -is projected to range from
|3.80 to $3.95 a bushel, compared
with $3.96 last season.
Food Grains (World)
World food grain production in
1981 in now estimated at a record
858 million tons, up 3 percent from
1980. The increase, well over half
of it in the United States, will be
more than enough to meet the
growing world feed grain demand
in 1981/82 and allow for ebuildup in
ending stocks.
While world crops of both wheat
and rice are expected to reach
record levels in 1981/82, trade
levels for these two grains will
move in opposite directions. Im
port demand for wheat is forecast
to rise to a record level but demand
for rice will contract.
World wheat trade will expand
this year largely because the
major importing countries
especially the USSR, Eastern
Europe, Brazil, and Spain have
had particulary poor crops, while
the major exporting countries
have had record production. Such
a pattern will lead to record world
trade despite the static nature of
global requirements for wheat.
Most of the increase is expected to
result from the larger
requirements of the developing
countries, which account for about
two-thirds of the world’s wheat
imports.
Feed Grains (U.S.)
Although carryin stocks are 18
million tons below a year ago, this
fall’s record feed grain crop will
boost U.S. supplies 12 percent from
1980/81. At 280 million tons, total
feed grain supplies for 1981/82 are
only 4 million below the 1979/80
record.
These large supplies, lower
expected prices, and some im
provement in livestock feeding
margins will lead to increased feed
use in 1981/82. More normal winter
weather than last year’s mild
conditions would also raise
requirements.
UncasterFarniini, Saturday,Jinuary 2,1982-A7
For 1981/82, feed use of feed
grains is projected at 130 million
tons, up 6 percent from last season
but still 6 percent below 1979/80.
Larger broiler production will
account for most of the increase in
feeding this year, as pork
production could be down more
than 5 percent, and fed beef
production may be virtually un
changed from a year earlier.
Total feed grain exports for
1981/82 are forecast at a record 72
million metric tons, up 2.8 million
from last season. Food, seed, and
industrial use of feed grains will
also increase this year, par
ticularly as more com will be used
to produce gasohol and high
fructose corn syrup. Total
domestic use and exports of feed
grains in 1981/82 are projected at
228 million tons, up 5 percent from
1980/81.
Despite the expected increase in
both domestic use and exports,
total use of ffed grains in 1981/82 is
still likely to fall well short of the
record production. Thus, feed
grain stocks in 1981/82 are likely to
build to 53 million tons, 18 million
above last season but about the
same as in 1979/80. The stocks-to
use ratio in 1981/82 of 23 percent
compares with 16 percent in
1980/81 and an average of 22
percent during 1577-79.
Feed Grains (World)
The world feed grain situation
and outlook for 1981/82 is
characterized by a record crop in
the United States, record or near
record production in other ex
porting countries, anticipated
larger imports by the Soviet Union,
and sluggish import demand
elsewhere. These factors are
combining to lower prices from
those of a year earlier.
With expanded imports by the
Soviet Union and several West
European countries, world trade is
currently forecast to rise 6 percent
to a record 110 million tons.
Production, in most of the major
foreign exporting ‘ countries
Canada, Australia, South Africa,
and Thailand is at record or
near-record levels for the second
consecutive year, so 1981/82 ex
ports by these countries should
increase at about the same rate as
total world trade. These trade
expectations lunge heavily on the
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reveal?
outcome of the Southern
Hemisphere harvests in early 1962
and on the absence ,of shipping
difficulties.
. World production is currently
expected to exceed utilization by
about 18 million tons. As a result,
the rise in global ending stocks is
anticipated to exceed last season’s
decline. Most of the stock increase
will occur in the United States, but
stocks in the other exporting
countries are also projected to
rise.
Oilseeds (U.S.) -
' The, oilseeds outlook is
dominated by larger supplies and
lower prices particularly for
soybeans, which account for 85
percent of U.S. oilseed output.
Total U.S. oilseed production is
forecast at 67 million metric' tons,
nearly 20 percent above 1980.
Although domestic use and
exports are both expected to rise
this season, the increase will fall
far short of the change in supplies.
Consequently, stocks will build,
and inflation-adjusted prices of
oilseeds and products, on average,
will fall to their lowest levels in
several years.
This season’s larger soybean
supplies and lower prices are
expected to raise total use of
soybeans to around 2 billion
bushels, nearly 10 percent above
1980/81. Weak economic growth,
high interest rates, a flat livestock
sector, and the strong U.S. dollar
will moderate increases in total
use. Thus, the gain in use will be
due more to lower prices than to
any underlying shift in soybean
demand.
Forecasts of soybean production
and use for 1981/82 imply a record
high carryover of 405 million
bushels on September i, 1982 up
from the 1980/81 carryover of 320
million. If realized, this season’s
carryover would be 20 percent of
total use, up from 17 percent in the
previous two seasons. During
1976/77-1978/79, the stocks-to-use
ratio was below 10 percent.
Primarily because of this
season’s larger supplies and
declining oil and meal prices,
soybean prices are forecast to fall
sharply. At the farm, prices are
forecast to average $5.75 to $6.75 a
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