AGRICULTURAL OUTLOOK -- SUMMARY                             March 27, 1998
March 1998, AO-250
     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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NOTICE:  Please note that several figures in Table 1 have been revised from the 
original release on March 20, 1998.
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AGRICULTURAL DEMAND AND OUTPUT TO STRENGTHEN IN NEXT DECADE

Farm Cash Receipts To Dip in 1998 . . .
     The U.S. agricultural economy in 1998 is edging down from the record-high
income in 1996, with performance expected to be slightly below the 1990-97
average.  Market receipts are likely to decline to $198 billion from a record
$202 billion in 1996 and from $201 billion in 1997, as lower grain receipts
reduce the total return to crops.  Livestock receipts will decline slightly as
lower hog revenues more than offset a small increase for cattle.  With overall
production expenses declining a little, held in check by lower interest rates
and feed costs, net cash farm income is forecast to decline to about $52
billion, more than $2 billion below the average of 1990-97.
     Prices of corn and wheat are expected to remain firm in 1998/99.  U.S.
wheat supplies are expected up only slightly, and for corn, domestic use and
exports expand as production increases.  Large U.S. and foreign soybean
production in 1998/99 is projected to lead to another decline in the
season-average farm price. 
During the first half of 1998, record-high per capita
meat and poultry supplies will drive down returns. 

. . . While Long-Term Ag Prospects Are Bright, Led by Trade
     Strong global trade prospects and a market-oriented domestic agricultural
policy combine for a favorable outlook for U.S. agriculture over the next 10
years.  In USDA's long-term baseline projections, assumptions of generally
favorable global economic growth, combined with liberalized trade associated
with the Uruguay Round agreement and unilateral policy reforms, support strong
expansion in global trade and in U.S. agricultural exports through the year
2007.  Projected economic growth for many developing countries occurs at
income levels that can promote increasingly diverse diets and increase demand
for meats and other high-value products.
     Greater market orientation in the domestic agricultural sector under the
1996 Farm Act puts U.S. farmers in a favorable position for competing in the
global marketplace.  Strong agricultural demand leads to increased output and
strengthening prices, but farm income gains are slightly less than inflation,
so real net farm income is down through 2007. 
     Export markets are the largest source of demand growth for most U.S.
crops.  Stocks-to-use ratios will tighten for major field crops through 2007,
and the historical downward trend in real (inflation-adjusted) crop prices is
projected to slow.  Record total meat supplies, including an increasing
proportion of poultry, are projected through the baseline, with declining real
prices for meats.  Paul Westcott (202) 694-5335 and Rip Landes (202) 694-5275;
westcott@econ.ag.gov and mlandes@econ.ag.gov


Precision Ag: Technology for Improved Resource Use
     By collecting and analyzing information to tailor production inputs like
fertilizers to specific plots within a field, precision agriculture (PA) can
improve resource use, increase profits, and reduce environmental impacts of
agricultural production.  While its promises are attractive, the performance
of PA systems remains largely unproven, and its adoption is not yet
widespread.  Neither the economic nor environmental advantages of PA have been
conclusively demonstrated, in part because resource conditions vary so widely
from farm to farm and region to region.  According to a report by the National
Research Council, public functions in PA involve filling critical auxiliary
roles--particularly in measurement technology, new approaches to research, and
training and education--in an otherwise robust private development of the
technologies.  Ralph Heimlich (202) 694-5477; heimlich@econ.ag.gov

Update on 1998 Food Price Outlook
     Consumers are expected to pay between 2 and 3 percent more for food in
1998 than in 1997.  If the increase is closer to 2 percent, it could be the
smallest  rise in the Consumer Price Index (CPI) for food since the early
1990's.  Last year's retail food price increase was 2.6 percent.
     What determines whether this year's price rise will be closer to 2 or to
3 percent are a number of factors, particularly those affecting the CPI's for
meats, and for fruits and vegetables, which account for 19 and 15 percent of
the food-at-home index, respectively.  For meats, large supplies and dampened
prospects for U.S. exports this year will limit price increases.  For fresh
vegetables, heavy rains in California this past winter are expected to result
in periods of short supply and higher prices throughout the spring. 
Strawberry crops in both Florida and California sustained severe damage from
heavy winter rains, and the severity of the price impacts will depend on the
duration of the wet weather pattern.  Annette Clauson (202) 694-5373;
aclauson@econ.ag.gov



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

                                1997                           1998
                        --------------------      ---------------------------
                         III     IVF   Annual     IF     IIF    IIIF  AnnualF

Prices received by 
 farmers (1990-92=100)   107     106     107      --      --      --      --
  Livestock/products      99      97      99      --      --      --      --
  Crops                  115     113     115      --      --      --      --
 
Prices paid by 
 farmers (1990-92=100)
  Production items       116     115     116      --      --      --      --
  Commodities/services, 
   int., taxes/wages     116     116     116      --      --      --      --
    

Cash receipts($ bil.)1/   49      61     201      48      42      48     198
 Livestock($ bil.)        23      23      93      23      22      23      91
 Crops($ bil.)            26      38     109      25      20      25     107

Retail prices (1982-84=100)
 All food                158     159     157     159     160     161     161
  At home                158     159     158     160     160     161     160
  Away from home         157     159     157     160     161     162     161

Ag. exports ($ bil.)2/  12.9     16.3   57.3    14.4    12.9    12.5    56.0
Ag. imports ($ bil.)2/   8.7      9.2   35.8     9.4     9.5     9.9    38.0
  
Commercial production
 Red meat (mil.lb.)   10,941  11,167  43,222  10,977  10,895  11,242  44,137    
     
 Poultry (mil. lb.)    8,395   8,370  33,242   8,355   8,840   8,855  34,775
 Eggs (mil. doz.)      1,604   1,665   6,447   1,630   1,640   1,665   6,625
 Milk (bil. lb.)        38.9    38.3   156.8    39.2    40.8    38.7   157.1

Consumption, per capita
 Red meat/
  poultry (lb.)         52.5    53.6   208.3    52.9    54.0    54.5   216.0
 
Corn beg. stock 
 (mil. bu.)3/          4,494   2,497     426     883   7,230      --     883
Corn use 
 (mil. bu.)3/          2,001   1,617   8,850   3,021      --      --   9,310

Prices 4/
 Choice steers--Neb. 
  Direct ($/cwt)       65.65   66.61   66.32   63-65   65-69   65-71   65-70
 Barrows/gilts--IA, 
  So. MN ($/cwt)       54.45   43.53   51.36   36-38   39-41   41-45   38-41
 Broilers--12-city  
  (cts./lb.)            62.0    54.0    58.8   53-55   55-59   57-61   54-58
 Eggs--NY gr. A large 
  (cts./doz.)           79.7    88.2    81.2   78-80   68-72   72-78   74-79
 Milk--all at 
  plant ($/cwt)        12.70   14.40   13.38  14.25-  12.75-  12.30-  13.30-
                                               14.55   13.35   13.20   14.00
Wheat--KC HRW 
 ordinary ($/bu.)       4.49    3.76    3.82    4.16      --      --      --
Corn--Chi. ($/bu.)      2.86    2.64    2.74    2.78      --      --      --
Soybeans--Chi. ($/bu.)  7.19    6.95    7.60      --      --      --      --
Cotton--Avg. spot 
 41-34 (cts./lb.)      71.40   67.64   69.89      --      --      --      --



                  
                        1991    1992    1993    1994    1995    1996    1997
                        -----------------------------------------------------
Farm real estate 
 values 5/,6/
  Nominal ($/acre)       703     713     736     782     832     890     945
  Real (1982 $)          521     507     511     529     550     574     598
 
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.

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