AGRICULTURAL OUTLOOK -- SUMMARY                    February 20, 1998
March 1998, ERS-AO-249                            

                   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 within 3 working days following this summary release.
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U.S. ORANGE JUICE STOCKS CLIMB WITH RECORD ORANGE CROP
 
Good Weather Nets Abundant Citrus Crops in 1997/98

Large U.S. citrus crops will likely keep grower and retail prices for most
citrus (fresh and processed) at or below 1996/97 levels well into the summer. 
U.S. orange production is forecast record-high at 14.3 million tons, up 12
percent from last year, due to favorable weather in Florida and California and
expanded acreage in Florida.  Despite large orange crops and significant
stocks of frozen concentrated orange juice (FCOJ) in both the U.S. and Brazil
(the world's largest producer), near-term futures contract prices for FCOJ on
the New York Cotton Exchange have rebounded to 97 cents per pound solids in
mid-February since bottoming out in October.  The recent rise is due partly to
early reports that the 1998/99 Brazilian orange crop could be down
significantly.

U.S. grapefruit producers also find themselves with another large crop this
year.  Despite a crop nearly 6 percent smaller than a year ago, supplies
remain abundant.  As a result, prices have dropped and grower revenues have
shrunk.  After several years of poor returns, the Florida grapefruit industry
is now pondering supply control options.  
Charles Plummer  (202) 694-5256; cplummer@econ.ag.gov

Rail Problems Disrupt Marketing Flows

During the second half of 1997, rail congestion in the western U.S. on the
Union Pacific/Southern Pacific (UP/SP) and Burlington Northern Santa Fe (BNSF)
lines snarled traffic and brought freight shipments in some areas to a
complete halt.  In the fourth quarter of 1997, grain carloadings dropped 6
percent on BNSF and 28 percent on UP/SP from a year earlier.  The severity of
the western rail service problems ultimately resulted in emergency action by
the Surface Transportation Board (STB), the Federal agency responsible for
oversight and regulation of  the Nation's railroads. 

The 1997 western rail service problems, resulting from the inability of the
largest grain-hauling railroads to position and move their equipment, were
substantially different from equipment shortages and service delays commonly
referred to as Arail car shortages,@ which result from high demand for grain. 
The crisis provides an example of the increased importance of an adequate
grain handling and transportation infrastructure in an era when grain
production and marketing decisions are driven by market signals, not
government programs.   
Jerry D. Norton (202) 720-4211, AMS; Jerry_D_Norton@usda.gov

World Hog Production Faces Environmental Constraints

International trade in pork has risen dramatically in recent years.  Exports
of the major pork exporting countries grew at an annual rate of 4 percent
during 1989-97, and USDA's baseline projection indicates continuing growth in
international pork trade into the next century.  The extent to which the four
major pork exporting countries--the U.S., Canada, Denmark, and Taiwan--can
meet forecast growth will be determined largely by the ability of their pork
industries to produce more hogs.  

An adequate land base for spreading manure residues is essential, because no
other economically viable means of manure utilization currently exists.  With
virtually insurmountable land constraints in small, densely populated Taiwan
and Denmark, the U.S. and Canada with their relatively large land endowments
had seemed the most likely to expand production and meet expected increases in
world demand for pork.  However, public demands for stricter governmental
regulation of hog industry expansion and manure utilization may constrain hog
production in the U.S. and Canada.  

With environmental constraints on land use in all four major pork-exporting
nations, world pork prices could increase more sharply than expected as demand
increases over time.  Higher prices may stimulate further expansion of hog
industries in countries like Mexico and Brazil with large land endowments,
good feed supplies, and low levels of regulation.  
Mildred Haley (202) 694-5176; mhaley@econ.ag.gov

Asia Events Trim U.S. Meat Export Prospects

Economic turmoil in Asia is expected to trim U.S. meat export prospects in
1998.  As Asian currencies depreciate and incomes fall, demand will contract
in some key Asian markets and competition will increase from other countries
whose currencies are also losing value against the U.S. dollar.  At the same
time, the relatively strong dollar is making the U.S. market more attractive
to foreign meat exporters seeking alternatives to Asian markets.  

Due largely to declining sales to Japan and South Korea, U.S. beef and pork
exports are likely to fall in 1998, and poultry exports will see slower
growth.  U.S. beef imports are expected to rise, as the decline in U.S. cow
slaughter and a strong U.S. dollar enhance marketing opportunities for
Australia and New Zealand, the leading exporters of processing beef.   
Leland Southard (202) 694-5187; southard@econ.ag.gov

Reforms in Argentina Spur Agricultural Growth     

A combination of dramatic economic reforms and strong price incentives in
Argentina during this decade have set the country on course to reach its full
agricultural production and trade potential.  The reforms have reined in
inflation, reduced or rescinded agricultural export taxes and input tariffs,
and privatized much of the transport infrastructure, leading to lower
marketing costs and greater investment.  As a result, Argentine farmers were
able in 1996/97 to respond to strong world crop prices with a substantial
increase in harvested acreage and in use of inputs such as fertilizer and
specialized farm equipment. Total grain and oilseed production reached 53
million tons, eclipsing the previous record by nearly 8 million.  

Preliminary indications for 1997/98 favor a second recordbreaking harvest. 
Extremely favorable weather is expected to put total grain production at 36
million tons and total oilseed output at 23 million tons--both records. 
USDA's 1998 baseline projects modest growth in Argentina's grain and oilseed
output during 1997/98-2007/08. 

Argentina's livestock sector has benefited less from the reforms than have the
grain and oilseed sectors.  By the end of 1997, the Argentine cattle inventory
stood at 50.3 million head, the lowest in 27 years.  But most observers expect
a turnaround in 1998 as the cattle industry follows the crop sector in
adopting new technology and improving management practices.  
John Wainio (202) 694-5286; jwainio@econ.ag.gov

For further information call Dennis Shields  (202) 694-5331.  

Printed copies of Agricultural Outlook will be available in about 2 weeks.  To
order, call 1-800-999-6779.


  Table 1.  Key Statistical Indicators of the Food and Fiber Sector

                                                                1997     
                                              ---------------------------
                                               I        II       III 

  Prices received by farmers (1990-92=100    107       108       107 
    Livestock & products                      98        99        99 
    Crops                                    116       117       115 

  Prices paid by farmers, (1990-92=100)
    Production items                         115       117       116 
    Commodities & services, interest,        116       117       116 
     taxes, & wages

  Cash receipts ($ bil.) 1/                   48        44        49 
    Livestock ($ bil.)                        23        23        23 
    Crops ($ bil.)                            25        21        26 

  Market basket (1982-84=100)
    Retail cost                              160       159        -- 
    Farm value                               107       107        -- 
    Spread                                   188       187        -- 
    Farm value/retail cost (%)                24        24        -- 

  Retail prices (1982-84=100)
    All food                                 157       157       158 
      At home                                158       158       158 
      Away from home                         156       156       157 

  Agricultural exports ($ bil.) 2/          14.9      13.2      12.9 
  Agricultural imports ($ bil.) 2/           9.1       9.3       8.7 

  Commercial production
    Red meat (mil. lb.)                   10,459    10,655    10,941 
    Poultry (mil. lb.)                     7,986     8,491     8,395 
    Eggs (mil. doz.)                       1,587     1,591     1,604 
    Milk (bil. lb.)                         38.9      40.6      38.9 

  Consumption, per capita
    Red meat and poultry (lb.)              49.8      52.3      52.5 

  Corn beginning stock (mil. bu.) 3/       425.9   6,903.0   4,494.1 
  Corn use (mil. bu.) 3/                 2,819.8   2,411.2   2,001.3 

  Prices 4/
    Choice steers--Neb. Direct ($/cwt)     66.40     66.63     65.65 
    Barrows & gilts--IA, So. MN ($/cwt)    51.06     56.41     54.45 
    Broilers--12-city (cts./lb.)            60.0      59.1      62.0 
    Eggs--NY gr. A large (cts./doz.)        84.9      72.1      79.7 
    Milk--all at plant ($/cwt)             13.47     12.93     12.70 
                                                                     
  Wheat--KC HRW ordinary ($/bu.)            5.48      4.57      4.49 
  Corn--Chicago ($/bu.)                     3.87      2.86      2.86 
  Soybeans--Chicago ($/bu.)                 7.74      8.54      7.19 
  Cotton--Avg. spot 41-34 (cts./lb.)       70.73     69.81     71.40 



                                            1989      1990      1991 
                                            -------------------------
  Farm real estate values 5/,6/
    Nominal ($ per acre)                     668       683       703 
    Real (1982 $)                            539       528       521 

  1/ Quarterly data seasonally adjusted at annual rates.  2/ Annual 
data based on Oct.-Sept. fiscal years ending with year indicated.  
3/ Sept.-Nov. first quarter; Dec.-Feb. second quarter; Mar.-May third 
quarter; Jun.-Aug. fourth quarter; Sept.-Aug. annual.  Use includes 
exports & domestic disappearance.  4/ Simple averages, Jan.-Dec.  
5/ 1990-94 values as of January 1.  1986-89 values as of February 1.  
6/ The 1989-94 values are revised based on the 1992 Census of 
Agriculture.  
F = forecast, 
-- = not available.

..........................................................continued


................................................continued (new page)


     1997                                1998               
-------------------       ---------------------------------
     IV F    Annual       I F       II F      III F   Annual F

      106       107        --        --        --        --
       97        99        --        --        --        --
      113       115        --        --        --        --


      115       116        --        --        --        --
      116       116        --        --        --        --


       61       201        48        42        48       198
       23        93        23        22        23        91
       38       109        25        20        25       107


       --        --        --        --        --        --
       --        --        --        --        --        --
       --        --        --        --        --        --
       --        --        --        --        --        --


      159       157       159       160       161       161
      159       158       160       160       161       160
      159       157       160       161       162       161

       --      57.4        --        --        --      58.5
       --      35.8        --        --        --      38.0


   11,167    43,222    10,977    10,895    11,242    44,137
    8,370    33,242     8,355     8,840     8,855    34,775
    1,665     6,447     1,630     1,640     1,665     6,625
     38.3     156.8      39.2      40.8      38.7     157.1


     53.6     208.3      52.9      54.0      54.5     216.0

  2,496.6     425.9     883.2   7,229.8        --     883.2
  1,617.1   8,849.5   3,021.1        --        --   9,310.0


    66.61     66.32     63-65     65-69     65-71     65-70
    43.53     51.36     36-38     39-41     41-45     38-41
     54.0      58.8     53-55     55-59     57-61     54-58
     88.2      81.2     78-80     68-72     72-78     74-79
    14.40     13.38    14.25-    12.75-    12.30-    13.30-
                        14.55     13.35     13.20     14.00
     3.76      3.82      4.16        --        --        --
     2.64      2.74      2.78        --        --        --
     6.95      7.60        --        --        --        --
    67.64     69.89        --        --        --        --



     1992      1993      1994      1995      1996      1997
-----------------------------------------------------------

      713       736       782       832       890       942
      507       511       529       550       574       596


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