SUMMARY:
AGRICULTURAL OUTLOOK                                        September 22, 1997
October 1997,  AO-245
               Approved by the World Agricultural Outlook Board
-----------------------------------------------------------------------------
This SUMMARY is issued monthly (except January) by the Economic 
Research Service, U.S. Department of Agriculture, Washington, DC 
20005-4788.  The complete text of AGRICULTURAL OUTLOOK will be 
available within 3 working days following this summary release.    
-----------------------------------------------------------------------------

OUTYEAR PROJECTIONS FOR U.S. AG TRADE AND FOOD CPI          

Corn Output Stable, Demand Prospects Strong

The corn market this fall is relatively calm, with supplies more
abundant than a year ago and prices fairly stable. Last year, in
contrast, corn supplies were virtually exhausted across most of
the country, and users were paying hefty premiums to procure the
first new-crop corn coming out of the southern states. Corn
production in 1997, forecast at 9.27 billion bushels, is down
fractionally from 1996 but would be the fourth-highest crop on
record. With much larger carryin stocks, corn supplies in 1997/98
are expected to increase 5 percent, but with strong prospective
domestic demand and increased exports, the supply outlook is
relatively tight and ending stocks are projected to shrink.

The season-average price of corn received by farmers is forecast
at $2.45-$2.85 per bushel in 1997/98. The midpoint forecast is
only slightly below the 1996/97 price, despite a tighter outlook.
[Pete Riley (202) 501-8512]

U.S. Ag Exports To Rise In Fiscal  98 

Fiscal 1998 U.S. agricultural exports are projected at $58.5
billion, up $2 billion from the 1997 forecast and second only to
the 1996 record of $59.8 billion. At $38 billion, agricultural
imports are also projected up $2 billion, so the agricultural
trade surplus will remain unchanged from the 1997 forecast of
$20.5 billion. The export value of both bulk and 
high-value products (HVP's) is expected to rise--HVP value is 
projected up $1.5 billion over fiscal 1997 and bulk exports are 
expected up $500 million.

Meat and horticultural products account for much of the increase
expected in HVP export value in 1998. The volume of bulk exports
will be pushed up by larger U.S. exportable supplies of wheat,
declining export competition for wheat and corn, and strong
foreign demand for soybeans. [Carol Whitton (202) 219-0825]

Food Prices Maintain Slow Rise

The Consumer Price Index (CPI) for food in 1998 is forecast to
rise 2.5-3 percent, close to the 2.8-percent rise forecast for
1997. The at-home component of the CPI is forecast to increase
2.5 percent in 1997 and between 2.5-3 percent in 1998, and the
away-from-home component is expected up 2.9 percent in 1997 and
2.5-3 percent in 1998. Food prices have held to moderate gains of
3 percent annually since 1992 for several reasons. General
inflationary pressure has remained stable, keeping in check the
costs of food production and marketing. Because the farm value
proportion of the U.S. food dollar has been declining, retail
prices are determined less by farm commodity prices, and more by
food processing and marketing costs. [Annette Clauson (202) 501-6552]

New CRP Criteria Enhance Environmental Benefits

The 1996 Farm Act continued the Conservation Reserve Program
(CRP) up to a maximum of 36.4 million acres through the year
2002. The 15th CRP signup, conducted in March 1997, was the
largest CRP signup ever--USDA accepted 16.1 million acres of the
23 million offered. Acceptance was based on the ranking of offers
using an environmental benefits index (EBI). Early results
suggest that the farmland acres accepted in the 15th signup, the
first major CRP signup under the 1996 Farm Act, will provide
greater environmental benefits and cost 22 percent less compared
with CRP historically.

USDA will hold a 16th signup during October and November 1997.
Modifications to the EBI to further enhance environment
effectiveness are in place for the 16th signup. [Tim Osborn (202)
219-1030] 

U.S. Is Well Below WTO Domestic Farm Support Ceilings

The U.S. will be able to meet World Trade Organization
commitments to reduce domestic support to agriculture without
making any further changes in domestic programs through the final
year of the WTO implementation period--2000. The 1994 Uruguay
Round (UR) Agreement on Agriculture requires WTO 
member-countries to reduce the total amount of trade-distorting domestic
support for agriculture by 20 percent from a base period level (1986-88).
In addition to the UR's limitations on export subsidies and
import barriers, the agreement provided for restrictions on
domestic support because of general concern that those policies
have significant indirect effects on trade. 

The ability of the U.S. to meet its WTO domestic support
reduction commitments stems from two main factors, which greatly
reduce current and future U.S. domestic support levels relative
to the 1986-88 base value of support. The first involves WTO
provisions that specified how domestic support reduction
objectives would be defined and implemented. Second is the shifts
in U.S. farm programs after 1985 toward increased market
orientation and reduced subsidies. [Frederick Nelson (202) 219-0643]

The New Tax Law: How Farmers Benefit

Most farmers will pay less Federal income tax, and farm families
will find it easier to transfer family farms across generations,
under the Taxpayer Relief Act of 1997. Farmers are expected to
save over $1.6 billion per year in Federal income taxes and
between $150 and $200 million in Federal estate taxes through a
number of general and targeted tax relief provisions. 

Education incentives, retirement accounts, new tax credits for
households with children, increased deductions for health
insurance payments by self-employed taxpayers, and lower capital
gains taxes will help reduce income taxes. Farmers will also
benefit from several provisions that address income fluctuations
across several tax years. Finally, the estate tax provisions
reduce the likelihood that a farm or its assets will need to be
sold to pay estate taxes. [Ron Durst (202) 219-0896]

New Standards for Pesticide Residues in Food 

The Food Quality Protection Act of 1996 (FQPA) creates a new,
uniform, health-based standard for allowable pesticide
-related risks in food. Under FQPA, a new safety standard for residues
applies to all foods--raw and processed. FQPA establishes a new
risk assessment process and requires the U.S. Environmental
Protection Agency (EPA) to review all residue tolerances against
the new standard within 10 years. EPA must also consider any
special susceptibility of infants and children to pesticide
effects. Additional provisions address registration of 
minor-use pesticides; uniformity between state, Federal, and international
standards; improved data collection to support implementation of
the law; and Federal communication with consumers about the risks
and benefits of pesticide use. [Craig Osteen (202) 501-8282]


Printed copies of Agricultural Outlook will be available in about
2 weeks. For further information call Randy Schnepf (202) 219-1281, 
Anne Effland (202) 501-8448 or Joel Greene (202) 219-0649.
The full text of the magazine will be available electronically in
3 working days; for details, call (202) 219-0515.



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

                                            1996            1997      
                                           -----        --------------
                                          Annual         I      II F  

  Prices received by farmers (1990-92=100)   112       107        --  
    Livestock & products                      99        98        --  
    Crops                                    126       115        --  

  Prices paid by farmers, (1990-92=100)
    Production items                         115       113        --  
    Commodities & services, interest,        115       116        --  
     taxes, & wages

  Cash receipts ($ bil.) 1/                  202        --        --  
    Livestock ($ bil.)                        93        --        --  
    Crops ($ bil.)                           109        --        --  

  Market basket (1982-84=100)
    Retail cost                              156       160       159  
    Farm value                               111       107       107  
    Spread                                   180       188       187  
    Farm value/retail cost (%)                25        24        24  

  Retail prices (1982-84=100)
    All food                                 153       157       157  
      At home                                154       158       158  
      Away from home                         153       156       156  

  Agricultural exports ($ bil.) 2/          59.8      14.9      13.2  
  Agricultural imports ($ bil.) 2/          32.4       9.1       9.3  

  Commercial production
    Red meat (mil. lb.)                   43,135    10,458    10,655  
    Poultry (mil. lb.)                    32,289     7,986     8,488  
    Eggs (mil. doz.)                       6,358     1,587     1,591  
    Milk (bil. lb.)                        154.3      38.9      40.6  

  Consumption, per capita
    Red meat and poultry (lb.)             209.2      49.7      52.2  

  Corn beginning stock (mil. bu.) 3/     1,557.8     425.9   6,903.7  
  Corn use (mil. bu.) 3/                 8,522.3   2,819.1   2,411.9  

  Prices 4/
    Choice steers--Neb. Direct ($/cwt)     65.21     66.40     66.63  
    Barrows & gilts--IA, So. MN ($/cwt)    53.39     51.06     56.41  
    Broilers--12-city (cts./lb.)            61.2      60.0      59.1  
    Eggs--NY gr. A large (cts./doz.)        88.2      84.9      72.1  
    Milk--all at plant ($/cwt)             14.87     13.47     12.93  
                                                                      
  Wheat--KC HRW ordinary ($/bu.)            5.48      4.57      4.49  
  Corn--Chicago ($/bu.)                     3.87      2.86      2.86  
  Soybeans--Chicago ($/bu.)                 7.53      7.74      8.54  
  Cotton--Avg. spot 41-34 (cts./lb.)       77.93     70.73     69.81  




                                            1988      1989      1990  
                                             -------------------------
  Farm real estate values 5/,6/
    Nominal ($ per acre)                     632       668       683  
    Real (1982 $)                            530       539       528  

  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          
----------------------------      ------------------------
   III F      IV F  Annual F       I F      II F  Annual F

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


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


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


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


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

      --        --      56.5        --        --      58.5
      --        --      36.0        --        --      38.0


  10,990    10,785    42,888    10,652    10,820    43,762
   8,480     8,450    33,404     8,530     8,940    35,460
   1,610     1,655     6,443     1,605     1,615     6,580
    38.7      38.2     156.4      39.2      40.8     156.9


    53.5      53.4     209.0      52.4      53.7     215.8

 4,494.1   2,494.9     425.9     941.4        --        --
 2,002.9   1,556.0   8,790.0        --        --        --


   64-65     68-72     66-67     69-75     71-77     70-76
   54-55     51-53     53-54     49-53     52-56     51-55
   62-63     58-60     60-61     56-60     58-62     57-62
   79-80     81-85     79-81     72-78     67-73     72-78
  12.40-    13.70-    13.10-    12.90-    12.00-    12.65-
   12.60     14.20     13.30     13.70     13.00     13.65
      --        --        --        --        --        --
      --        --        --        --        --        --
      --        --        --        --        --        --
      --        --        --        --        --        --




    1991      1992      1993      1994      1995      1996
----------------------------------------------------------

     703       713       736       782       832       890
     521       507       511       529       550       574

END_OF_FILE

