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                        November 19, 1999
December 1999, ERS-AO-267
     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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The Ag Sector: Yearend Wrap-Up

The U.S. farm sector saw cash receipts slide in 1999 as supplies rose and farm
prices fell overall.  But record government payments are expected to pull up
net cash income to just below the 1997 record.   With national average crop
yields high and export demand stagnant over the last 3 years, stocks are
mounting for key commodities, including wheat, corn, soybeans, cotton, and
rice.  Field crop prices have fallen from record or near-record levels in the
mid-1990's to the lowest in many years.  Although total meat production is
forecast record large in 1999, some livestock prices, particularly cattle, are
showing signs of recovery.  Farm financial conditions on average remain
strong, but regional fortunes vary significantly, depending on the mix of
production and local weather.  Frederic Surls (202) 694-5202;
fsurls@econ.ag.gov

The Long-Term Boom in China's Feed Manufacturing Industry

China's feed manufacturing sector is expanding rapidly as livestock production
shifts from a sideline--feeding farm byproducts to very few animals--into a
full-time occupation--feeding purchased feedstuffs to a relatively large
number of animals.  China may continue to resist importing complete feeds as
it emphasizes self-sufficiency in grain production, although imports of
nongrain feed ingredients will likely expand.  For U.S. exporters of oilseeds,
oilseed meals, and feed additives, medium- and long-term prospects remain
positive as China's livestock and feed sectors prepare to respond to growing
consumer demand.  Frederick W. Crook (202) 694-5217; fwcrook@econ.ag.gov

Rising Milk Production Restrains Prices

Milk production gains likely will exceed demand growth during the remainder of
1999 and into early 2000, leaving farm-level milk prices somewhat weak in
first-half 2000 and pulling down the projected annual average by 8 to 12
percent from 1999.  Prices are forecast to recover in second-half 2000 as
increases in milk production start to abate and demand growth remains firm. 
James Miller (202) 694-5184; jjmiller@econ.ag.gov

Larger Citrus Crop Expected in 1999/2000

The 1999/2000 citrus crop is expected up 20 percent from last year as better
weather conditions so far in California and Florida promise substantially
larger orange, lemon, and tangerine crops.  In contrast, grapefruit production
is expected to rise just 5 percent as Florida growers reduce acreage in
response to several years of low returns.  Oranges for fresh use should be in
ample supply this winter, and both growers and consumers will likely see lower
prices than last year.  Susan Pollack (202) 694-5251; pollack@econ.ag.gov

Abundant World Rice Supplies Pull Down Prices

International rice prices have declined sharply this year in the face of large
supplies in nearly all exporting countries and weaker global demand stemming
from a production rebound in major importing countries.  World rice trade is
projected to fall 11 percent in 1999 from last year's record 27.3 million
metric tons (milled basis).  Indonesia, Bangladesh, the Philippines, and
Brazil--the four largest rice importing countries--are responsible for the
bulk of the 3-million-ton drop.  Global trade is projected to drop in 2000 as
well.  With a record 1999 U.S. crop and lower export demand, the U.S.
season-average 1999/2000 farm price is projected to drop about a third to
$5.50-$6 per cwt, with the lowest midpoint since 1986/87.  Nathan Childs 
(202)694-5292; nchilds@econ.ag.gov

Profiling Crop Insurance Purchasers

Demand for crop insurance has increased recently as commodity program changes
followed passage of the 1996 Farm Act, Federal insurance premium subsidies
rose, and several new revenue insurance products were introduced.  USDA's
Economic Research Service has examined three factors that affect demand for
insurance--farmers' risk characteristics, farm income level, and cost of
insurance--based on data from Iowa corn and soybean producers who purchased
yield and revenue insurance in 1997.  Study results suggest that by
considering risk and other characteristics associated with farmers who buy
different types of contracts, it may be possible to structure insurance rates
to more closely reflect farmers' risk profiles and may lead to a more 
self-sustaining agricultural insurance industry.  Shiva S. Makki (202) 694-5316;
smakki@econ.ag.gov

Agriculture in Poland & Hungary: Preparing for EU Accession

Several Central and East European countries (CEE's), including Poland,
Hungary, and the Czech Republic, are likely to join the European Union (EU)
sometime in the next decade.  CEE economies will benefit from the inflow of
structural funds (e.g., for developing institutions and infrastructure), and
CEE farmers will benefit from price and income supports enjoyed by EU-15
farmers.  But many CEE producers, especially in Poland, are increasingly
dubious about their ability to compete with high-quality EU products in a
single market, particularly when costs of adopting EU regulations raise
farmers' production costs.  USDA's Economic Research Service recently analyzed
the effects of enlargement on farm production and trade.  Among the
conclusions is that enlargement could lead to EU surpluses of rye, beef, and
pork, and that as a result the EU could have difficulty meeting its
commitments on limiting export subsidies for beef and pork.  Nancy J. Cochrane
(202) 694-5143; cochrane@econ.ag.gov

END_OF_FILE