AGRICULTURAL OUTLOOK -- SUMMARY                             October 20, 1998
November 1998, AO-256
     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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China's Livestock Sector Growing Rapidly

China is among the world's largest producers and consumers of animal proteins. 
Although current per capita consumption of animal proteins is lower in China
than in wealthier nations, it is increasing rapidly as China's economy and
personal incomes grow.  Increasing overall population and rural-to-urban
migration is expected to foster continued rapid growth in demand for animal
products.  Despite measures to increase feed efficiency, China has the
potential to become a growing market for feedstuffs and/or animal protein
imports, as demand for meats, fish, eggs, and milk is expected to outstrip
domestic feedgrain supplies.  And because of the sheer size of China's
livestock sector, even relatively small changes in either livestock inventory
growth or meat demand trends can have notable impacts on global trade
projections for feedstuffs or animal proteins.  Frederick W. Crook
(202) 694-5217; fwcrook@econ.ag.gov

Environmental Policy & the WTO

The World Trade Organization (WTO) recognizes that environmental protection is
a legitimate policy goal, despite the fact that environmental policies can
effectively alter production and price levels and thus disrupt trade patterns. 
When environmental policies are assumed to affect trade and production only
minimally, the "green box" provisions of the Uruguay Round Agreement on
Agriculture permit such policies to be exempt from a country's commitments to
reduce support to agriculture.  Discussions between now and the conclusion of
the WTO mini-round on agriculture scheduled to begin in late 1999 may address
a number of unresolved questions, such as how to assess the tradeoff between
environmental protection and trade distortion and how to interpret "minimal
trade-distorting effects."  Utpal Vasavada (202) 694-5494;
vasavada@econ.ag.gov

U.S. Rice Prices Remain Firm Despite Bumper Supplies

Relatively high prices at planting pulled up U.S. rice area more than 5
percent in 1998 from a year earlier to nearly 3.22 million acres, the second
consecutive annual increase.  The larger planted area will more than offset a
drop in yield to produce the third-largest rice crop on record.  U.S. farm
prices are projected to remain firm during the 1998/99 marketing year, given
expectations of record domestic use, continued strong exports, and smaller
ending stocks.

Global rice production is projected to drop more than 2 percent from the
1997/98 record of 385.4 million tons, a result of weaker crops in several
major Asian rice producing countries, particularly China and India.  The low
level of global stocks relative to use will likely have minimal impacts on
world trade and international prices, as supplies in these two countries
remain adequate for domestic needs and as several exporting
countries--particularly Thailand, Vietnam, and Pakistan--are projected to
produce large crops in 1998/99.  Nathan Childs (202) 694-5292;
nchilds@econ.ag.gov

U.S. Textile Imports & Cotton Production Weave New Relationship 

U.S. imports of cotton textiles and apparel have been rising during 1998 at
twice the average rate of the last decade.  In part because of this import
surge, U.S. textile mills are expected to use less cotton fiber in 1998/99. 
The U.S. milling industry purchases domestically produced cotton fiber almost
exclusively, and farmers are seeing their best customer reduce its purchases. 
At the same time, Asian textile exporters that traditionally ship to the U.S.
are expected to enter the next century with weaker currencies and with notably
lower wages and incomes than originally expected, making their exports more
price competitive.  However, the increasing technical complexity and vertical
integration of the U.S. textile industry, combined with several decades of
global trade liberalization, will help U.S. cotton farmers continue to find
both domestic and foreign customers for their fiber.  Stephen MacDonald (202)
694-5305; stephenm@econ.ag.gov 

Hog Producers Signal Plans To Expand

Hog producers plan to continue increasing production over the next 6 months,
according to the September Hogs and Pigs report, despite sharply lower hog
prices.  Large supplies of pork and competing meats have pushed hog prices
nearly 40 percent below a year ago.  This might have been expected to lead to
a decline in farrowings, dampening prospective pork production gains next
year.  But many producers may be receiving higher prices through carcass
quality pricing and forward contracts, and corn and soybean meal prices have
declined this year.  Consequently, returns to production may have dropped less 
sharply than the decline in average hog prices would suggest.  Leland Southard 
(202) 694-5187; southard@econ.ag.gov

U.S. Orange Crop To Decline Sharply in 1998/99

After 2 years of record-setting citrus crops, adverse weather is expected to
lower U.S. production 17 percent from last season.  Wet and cool conditions
have reduced production prospects in California, and wet weather in Florida
this past winter followed by drought in the spring stressed orange trees. 
Florida's citrus crop is expected to drop about 18 percent from last year,
with orange production accounting for most of the decline.  The orange crop,
primarily used for juice, is forecast at 8.6 million tons, down 22 percent
from last year.  Smaller crops in Florida and in Brazil, the world's other
major orange juice producer, could boost grower prices this season, but large
beginning stocks will partially offset declines in orange juice production. 
Susan Pollack (202) 694-5251; pollack@econ.ag.gov

Printed copies of Agricultural Outlook will be available in about 2 weeks. 
For further information call Dennis Shields  (202) 694-5331. The full text of
the magazine will be available electronically tomorrow at 
http://usda.mannlib.cornell.edu/reports/erssor/economics/ao-bb/.  For details
on electronic subscriptions, call (202) 694-5050.
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