NOTE: AO has 10 issues in 1999.  Please note that reports are released in one
month, BUT THE ISSUE DATE IS FOR THE FOLLOWING MONTH; e.g., the May 1999 issue
is released in April.

AGRICULTURAL OUTLOOK -- SUMMARY                          August 20, 1999
September 1999, ERS-AO-264
     Approved by the World Agricultural Outlook Board
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This SUMMARY is published by the Economic Research Service, U.S. Department
of Agriculture, Washington, DC 20036-5831.  The complete text of the 
report will be available electronically 2 working days following this summary
release.    
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Farm Aid Package Would Offset Low Crop Prices

The $7.4-billion farm aid package passed by the U.S. Senate on August 4, 1999,
was a response to this year's low field crop prices.  The House of
Representatives is expected to consider a similar measure after the August
congressional recess, and if the aid is delivered before the calendar yearend,
the legislation would raise 1999 total net farm income well above last year's
level and the average level of the 1990's. Mitchell Morehart (202) 694-5581;
morehart@econ.ag.gov

Soybean Prices Plummet to Lowest in 27 Years

Farm prices for U.S. soybeans are expected to plummet to their lowest level
since the 1972/73 marketing-year average as farmers confront the third
consecutive year of record soybean crops.  As supplies mount, prices are
expected to fall to $4.10-$4.90 per bushel in 1999/2000 from $5 per bushel
last season.  Compounding the impact of a bumper crop is the uncommon
concurrence of weak prices and exports in 1998/99, nearly doubling U.S. ending
stocks from a year earlier.  Until world demand can work down large global
stocks of soybeans and soybean products, U.S. producers will rely on
government marketing assistance loan benefits to support their incomes.  
Mark Ash (202) 694-5289; mash@econ.ag.gov

Anatomy of a Merger: Cargill's Acquisition of Continental Grain

An agreement in October 1998 to combine two of the nation's largest grain
trading businesses appeared to many observers to illustrate a disturbing
trend: increasing concentration in agribusiness leading to fewer marketing
choices and lower prices for farmers. The Department of Justice, which decided
a review of the merger was warranted, concluded after an investigation that
the merger could proceed under certain conditions.  Cargill and Continental
were required to divest themselves of 10 elevators in 7 states, and the firms
agreed to comply over the next few months.  A review of the economic issues
helps explain the outcome of the case. James MacDonald (202) 694-5391;
macdonald@econ.ag.gov

NAFTA: The Record to Date

The North American Free Trade Agreement (NAFTA) has generally contributed to
the expansion of U.S. agricultural trade with Canada and Mexico.  Agricultural
exports to these two countries have risen from an annual average of $7.4
billion during 1989-93 to $11.3 billion during 1994-98.  For several U.S.
agricultural exports, NAFTA has had a relatively large proportional impact,
including beef and processed tomatoes destined for Canada, as well as cattle,
dairy products, apples, and pears destined for Mexico.   Agricultural imports
from Canada and Mexico have also increased--climbing from an average $6.2
billion during 1989-93 to $10.5 billion during 1994-98.  NAFTA has boosted
U.S. imports of Canadian beef and Mexican peanuts more than 15 percent.  More
general gains from the agreement include reorientation of trade in which
regional, cross-border exchanges may replace less economical within-country
exchanges. Steven Zahniser (202) 694-5230; zahniser@econ.ag.gov

U.S.-Mexico Sweetener Trade Mired in Disputes

The Mexican and U.S. Sugar Industries, and the U.S. high-fructose corn syrup
(HFCS) industry continue to disagree over interpretation of the North American
Free Trade Agreement (NAFTA).  While trade in sweeteners between Mexico and
the U.S. was addressed directly by provisions of NAFTA, pressure on trade
agreements has increased as these industries have grown, leaving the future of
U.S.-Mexico sweetener trade uncertain. Stephen Haley (202) 694-5247;
shaley@econ.ag.gov

1999 Apple Forecast: Production Dips, Prices to Rise

USDA's August forecast for 1999 U.S. apple production is 10.6 billion pounds,
down 7 percent from 1998 and 3 percent below the 5-year average.  Reduced
production is expected to lift apple prices for the 1999/2000 marketing
season, but may also limit exports of fresh-market apples.  Higher ending
stocks of processing apples in 1998/99, and increased production in areas
where processing apples account for a large share of output, raise prospects
for U.S. apple juice and cider exports in 1999/2000.  Agnes C. Perez (202)
694-5255; acperez@econ.ag.gov

The Changing Structure of Mexico's Pork Industry

Rapidly changing swine production technology, intensified disease control
measures, increased foreign trade activity, and economic and policy shocks
over the past quarter of a century have combined to produce marked change in
the Mexican pork industry.  A joint study by USDA's Economic Research Service
and Mexico's agriculture ministry examines developments in hog farm structure,
slaughter infrastructure, vertical integration, and market efficiency, and
their implications for the future of the industry in Mexico.  Leland Southard
(202) 694-5187; southard@econ.ag.gov

END_OF_FILE
