12/14/2013 7:00 AM
By Janice F. Booth Maryland Correspondent
ANNAPOLIS, Md. — Markets, regulations and legislation continue to change the landscape for farmers. In its ongoing effort to help stakeholders keep up with the changes, the University of Maryland’s Center for Agricultural and Natural Resources Policy sponsored the 2013 Agricultural Outlook and Resource Policy Conference Dec. 4 at the Loews Hotel in Annapolis.
Representatives from the farm community and the Department of Agriculture, including Buddy Hance, Maryland’s agriculture secretary, attended the event. Sessions included updates on Maryland’s agriculture policy changes, legislative initiatives and market updates.
David Harvey, an economist with the USDA’s Economic Research Service, or ERS, presented a fairly rosy picture of the poultry market for 2013 and 2014. Using his research and that of his colleague, Alex Melton with the market and trade economics division of ERS, Harvey said the world’s livestock and poultry industries, especially the U.S. broiler industry, have all benefited from lower feed costs and an expansion in production to meet export demands.
Harvey noted that while increased broiler production tends to lower overall prices, this dip may be offset by lower beef production in 2014. And the strengthening of the U.S. economy, combined with a strong export market, will further bolster the economic picture of the U.S. broiler industry.
Harvey said “the forecast for U.S. broiler production in 2013 is 37.8 billion pounds, an increase of 2 percent from 2012. Production is then forecast to continue to expand in 2014 to 38.9 billion pounds, an increase of 2.9 percent Broiler meat production in 2014 is expected to show strong growth in the first half of the year and expand slightly less in the second half of 2014.”
Drilling down a bit, Melton and Harvey pointed out that lower corn and soybean prices, rising production, high stock levels and 7.4 billion pounds of exported broiler meat, all contribute to the positive outlook.
They cautioned that long-term growth will depend on five factors: world economic conditions, growth in world trade (which has increased over the last 20 years), competitive prices, environmental issues and access to foreign markets.
Harvey and Melton recommended three websites for reliable broiler forecasts:
World Agricultural Supply and Demand Estimates, www.usda.gov/oce/commodity/wasde/index.htm, which is revised monthly.
Livestock, Dairy and Poultry Situation and Outlook, www.ers.usda.gov/publications/ldp/.
Livestock and Poultry: World Markets and Trade, www.fas.usda.gov/dlp/livestock_poultry.asp, a biannual report.
The importance of feed prices prepared the audience for Mark Jekanowski, chief of the ERS field crops branch, and his analysis and outlook for U.S. grains and oilseeds. His overview of grain and oilseeds markets was optimistic based on “record high prices and profitability during the current crop year, which will go to market in the first three quarters of 2014.” These strong economic results, Jekanowski said, can be attributed to three factors: export demand in emerging markets, biofuel policy and weather events.
In the U.S., 97 million acres of corn were harvested in 2013. The national average yield was up from the 2012 drought-year figure of 160 bushels per acre. Nearly 14 billion bushels of corn were harvested in 2013. The predicted average price per bushel is $4.50, which is less than 2012 when supplies were tighter.
The one-time star of the corn market, ethanol, has leveled-out over the last two years, Jekanowski said. The U.S. biofuels market is mature, with biofuels making up about 10 percent of the country’s overall fuel supply, but fuel consumption is flat. The demand for corn going to ethanol is no longer expanding.
As for the corn export market, Jekanowski said that up until 2008, the U.S. dominated this market. Since then, Argentina, Brazil and Ukraine have been gaining international market share. In 2013-14, the USDA predicts U.S. corn exports could rebound to 36 million metric tons, up from approximately 18 million metric tons in 2012-13.
As for soybeans, farmers, in recognition of the rising demand for corn, reduced their soybean acreage. The reduction in supply has resulted in a predictable increase in prices. With a 2013 average yield of 43 bushels per acre, the average price per bushel is $12, with some downward fluctuation in the fourth quarter.
The USDA predicts an increase in export demand for U.S. soybeans, especially from China. Brazil, a strengthening competitor with the U.S. for the world’s soybean market, is nearly matching U.S. production and moving ahead on exports. Jekanowski notes, however, that the seasonal reversal of harvests in Brazil and the U.S. makes production complementary rather than competitive.
Jekanowski said corn and soybean production had rebounded from the 2012 drought. While competition is intense, export demands for both crops remains strong. And while prices may be declining due to a large supply, those prices are “regaining normalcy.”