The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Agriculture A N E IG H T H D ISTRICT PERSPECTIVE Winter 1984 USDA Analysts Expect Farm Income To Increase Forecasts of agricultural production, commodity prices and farm income for 1984 were presented recently at the U.S. Department of Agriculture’s 60th Annual Outlook Conference. Generally, USDA analysts predicted in creases in net farm income based on expectations of in creased product marketings. Unresolved policy issues, however, tempered the forecasts for many individual pro ducts. Crop forecasts, for example, were subject to much uncertainty since it was not clear how production would respond to the lingering effects of PIK, last summer’s drought and relatively unattractive government incen tives to reduce planted acreage. Retail Food Prices The USDA expects the food component of the Con sumer Price Index (CPI) to increase between 4 and 7 per cent in 1984, more than double the 2.2 percent increase of 1983. As the data in table 1 on the second page indicate, increases are expected to be nearly equal across major food groups; only pork, dairy products and nonalcoholic beverage prices are expected to rise at slower rates. Food prices—red meat prices, in particular—could increase at a slower rate if changes in the dairy program induce a large-scale slaughter of older dairy cows. In the absence of a sizable increase in dairy cow slaughter, however, in creasingly smaller supplies of beef and pork are expected to cause 10 to 15 percent rises in red meat prices during the last six months of 1984. realized through a greater volume of product marketings. Crop marketings—corn and soybeans, in particular—are expected to be primary contributors to increases in farm income as production rebounds from the low levels of out put caused by PIK and the drought. A breakdown by ma jor expenditure and revenue categories is given in table 2. Corn, Wheat and Soybeans Barring a recurrence of last year’s drought, USDA economists expect 1984 production figures for wheat, corn and soybeans to be near record highs. Without strong incentives from price support programs to reduce corn production, a crop in excess of eight billion bushels is expected this year. Incentives in the 1984 wheat pro gram to reduce wheat production also appear to be insuf ficient to cause any sizable reduction in planted acreage. With a 4 to 8 percent increase in expected plantings over the 62.5 million acre level of 1983, a 1984 harvest near 1982’s 2.8 billion bushels is likely. Soybean acreage is ex pected to range between 70 to 73 million acres in 1984 which, when combined with trend yields, would produce a 2.2 billion bushel crop. Harvests for these crops in the predicted ranges would contribute to significant price declines from current levels. Beef and Pork Financial Conditions Net farm income for 1984 is ex pected to increase 10 to 15 per cent from the $24-$26 billion range currently estimated for 1983. In contrast to the nearly $19 billion received from price support programs and direct in com e supplem ents in 1983, however, the USDA expects income gains for 1984 to be THE FEDERAL RESERVE 0 RANK of ST. m i l S Two factors dominate the outlook for meat prices in 1984. First, last summer’s drought and poor grazing conditions, which raised feed costs by about 20 per cent, caused producers to market animals that normally would have been held longer; these in creased marketings in late 1983 portend smaller meat supplies and higher meat prices in the se cond half of 1984. Second, if dairy farmers are paid to reduce output, many analysts believe that about one million dairy cows may be WINTER 1984 FEDERAL RESERVE BANK OF ST. LOUIS slaughtered. A slaughter of this size could dampen in creases in red meat prices from their relatively low pre sent levels by circumventing the potential supply reduction anticipated in the last half of 1984. Hog prices, which averaged $49.55 per cwt. during the first nine months of 1983, are expected to show in creases throughout 1984 to a range of $50 to $54 per cwt. by the fourth quarter. Lower beef and pork pro duction and further increases in personal income were cited as reasons for this 9 percent increase over 1983 hog prices. Most of the increase in retail pork prices is expected to occur in the latter half of 1984 in response to increasingly smaller market supplies. Retail pork prices in the fourth quarter of 1984 are expected to be 13 to 15 percent higher than they were in the fourth quarter of 1983. The smaller pork supplies for 1984 are attributable to the approximately 20 percent increase in feed costs caused by PIK and the drought. The most likely price and production movements for red meats described by USD A economists—without considering the complicating effects of a large dairy cow slaughter—include the following projections: Beef production is expected to decline 3 to 4 percent in 1984. As the effects of the larger liquidation in late 1983 are reflected in smaller numbers of animals available to market, fed steer prices are expected to move from this winter’s $62 to $66 per hundredweight (cwt.) range to the upper $60s by this fall. At retail, this implies an increase in choice beef prices from about $2.40 per pound to about $2.60 per pound. —Michael T. Belongia Table 1 Changes in Consumer Price Indexes (1982-84) 1982 Food Category 1984f 1983p 4 .0 % 2 .2 % 4 -7 % F o o d a w a y fro m h o m e 5 .3 4 .4 4 -7 Food at hom e 3 .4 1.1 3 -6 4 .0 -0 .4 4 -7 A ll f o o d M e a t , p o u ltr y a n d fis h D a ir y p r o d u c t s 1 .4 1 .3 2 -5 F r u its a n d v e g e ta b le s 5 .5 0 .5 4 -7 C e r e a ls a n d b a k e ry p r o d u c ts 4 .5 3 .2 4 -7 N o n a lc o h o lic b e v e ra g e s 2 .8 1 .9 2 -5 p = prelim inary; f = fore cast. SOURCE: USDA O utlook Conference Proceedings, November 2, 1983. Table 2 Net Farm Income (1980-84, billions of dollars) Item 1980 1981 1982 1983' $ 1 4 0 .5 $ 1 4 2 .3 $ 1 4 4 .6 $ 1 4 2 -1 4 4 + 1 .3 1 .9 3 .5 8- - 1984' (c h a n g e ) C a s h r e c e ip ts G o v e rn m e n t p a y m e n ts 1 10 In v e n to r y c h a n g e -5 .3 7 .6 -1 .9 - 6 - G ro s s fa rm 1 5 0 .1 1 6 7 .1 1 6 2 .2 1 6 0 -1 6 2 + 1 2 8 .6 1 3 7 .0 1 4 0 .1 1 3 5 -1 3 7 + 2 1 .5 3 0 .1 2 2 .1 24- 26 + 1 2 .0 1 5 .4 1 0 .7 11 - 12 + in c o m e P r o d u c tio n e x p e n s e s N e t fa rm in c o m e R e a l n e t fa rm in c o m e 2 - 8 + f = forecast. 1 Includ es value o f PIK paym ents. 2 D eflated by th e GNP im p lic it defla tor, 1972 = 100. SOURCE: USDA O utlook Conference Proceedings, November 2, 198.3. Agriculture—An Eighth District Perspective is a quarterly summary of agricultural condi tions in the area served by the Federal Reserve Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public Information Department, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not necessarily official positions of the Federal Reserve System. 2 FEDERAL RESERVE BANK OF ST. LOUIS WINTER 1984 EIGHTH DISTRICT AGRICULTURAL DATA Prices and Costs1 Sept. 1983 Oct. 1983 Nov. 1983 Percent Change Average Year-To-Date2 Same Period for 1982 Year Ago 1983 C O N S U M E R P R IC E IN D E X (% c h a n g e ) N o n fo o d 0 .5 % 0 .4 % Food 0 .2 0.4 0 .4 % -0 .1 0 .3 % 3 .9 % 3 .6 % 0 .2 1.4 1.1 P R O D U C T IO N C O S T S F O R F A R M E R S (% c h a n g e ) A ll in p u ts 0 .3 -0 .3 0 .6 0 .4 3 .5 3 .5 F e r tiliz e r 0.0 0.0 -3 .2 0.0 0.0 -0 .3 -3 .6 -5 .5 A g ric u ltu r a l c h e m ic a ls F u e ls a n d e n e r g y -1 .7 0.0 0.0 -1 .2 0 .7 4 .2 4 .2 -0 .2 -2 .8 -4 .7 P R IC E S R E C E IV E D B Y F A R M E R S (% c h a n g e ) A ll p ro d u c ts -2 .0 -1 .2 0 .8 0.0 6 .9 5.1 L iv e s to c k -1 .2 -1 .7 0 .4 0 .4 -2 .5 -2 .9 C ro p s -2 .6 -0 .8 1.2 -0 .5 1 8 .6 1 5 .5 $ 5 8 .3 1 $ 6 0 .2 0 $ 6 1 .2 0 $ 6 4 .8 2 -1 .8 -4 .2 $ 2 2 .9 6 $ 2 2 .2 7 $ 2 4 .7 2 $ 5 1 .1 4 -4 7 .9 -4 5 .8 3 4 .7 FEED ER CATTLE W h o le s a le p ric e - K a n s a s C ity ($ /c w t.) F E E D E R P IG S W h o le s a le p ric e - S o . M is s o u ri ($ /h e a d ) B R O IL E R S W h o le s a le p ric e -1 2 -c ity (c /lb .) 5 4 .5 1 c 5 0 .3 8 c 5 7 .6 1 c 4 6 .6 7 c 2 9 .2 64 .90C 6 6 .7 2 c 6 6 .4 1 c 6 0 .7 5 C 2 2 .5 TURKEYS W h o le s a le p ric e - N e w Y o rk , 8 -1 6 lb. y o u n g h e n s (C/lb.) -1 .1 CORN W h o le s a le p ric e - S t. L o u is ($ /b u .) $ 3 .6 0 $ 3 .5 0 $ 3 .5 3 $ 2 .5 7 4 1 .8 4 5 .3 $ 8 .4 4 $ 8 .1 5 $ 8 .1 6 $ 5 .8 8 4 6 .8 5 0 .8 $ 3 .9 0 $ 3 .8 4 $ 3 .8 2 $ 4 .0 0 -4 .0 -1 .0 $ 1 8 .6 8 $ 1 8 .8 0 $ 1 8 .9 8 $ 1 7 .7 2 3 .2 8.1 1 6 .4 1 1 .4 SOYBEANS W h o le s a le p ric e - N .C . Illin o is ($ /b u .) W HEAT W h o le s a le p ric e - N o . 1, h a rd w in te r K a n s a s C ity ($ /b u .) L O N G -G R A IN R IC E W h o le s a le p ric e - A r k a n s a s ($ /c w t.) CO TTO N W h o le s a le p ric e - a ll m a rk e ts (c /lb .) U.S. Exports C o rn (m il. b u.) S o y b e a n s (m il. bu.) W h e a t (m il. bu.) R ic e (ro u g h e q u iv a le n t, m il. c w t) C o tto n (th o u , b a le s ) 6 3 .10C 6 4 .1 0 c 6 6 .7 0 c 5 5 .2 7 C July 1983 Aug. 1983 Sept. 1983 Average for 1982 Percent Change Year-To-Date2 Same Period Year Ago 1983 1 2 4 .6 5 1 .6 1 2 6 .0 4 .9 4 3 2 .0 12 1 .9 6 0 .2 9 7 .0 6 .7 4 0 3 .0 1 4 4 .3 5 3 .9 13 5 .8 8 .5 3 3 9 .0 1 6 1 .2 7 8 .0 130.1 6 .3 5 3 2 .7 -1 7 .4 % -4 0 .2 5 1 .0 1 0 3 .7 -1 4 .2 $ 5 ,7 9 9 $6,141 $ 6 ,1 0 4 $ 6 ,1 8 7 - 1 9 .2 6 .5 1 ,1 3 5 1,0 09 1,1 5 2 1,281 -2 5 .5 6 .4 5 ,4 3 0 5 ,9 7 9 5 ,7 2 2 5 ,8 4 8 -2 .4 - 1.4 845 931 893 907 -1 .7 -4 .3 3 3 .5 % -7 .1 1.0 8 0 .4 -8 .4 Receipts3 C R O P S (m illio n s o f d o lla rs ) U n ite d S ta te s D is tr ic t (s e v e n -s ta te to ta l) L IV E S T O C K (m illio n s o f d o lla rs ) U n ite d S ta te s D is tr ic t (s e v e n -s ta te to ta l) 3 EIGHTH DISTRICT AGRICULTURAL DATA Marketing Year Crop Production4 1980/81 1981/82 1982/83 C O R N (O c to b e r 1 - S e p t e m b e r 30) A c r e s p la n te d (m il. a c re s ) P r o d u c tio n (b il. b u .) Y ie ld (b u . p e r a c re ) E n d in g s to c k s (b il. b u .) 8 4 .0 8 4 .2 8 1 .9 6 ,6 4 4 .8 8 ,2 0 1 .6 8 ,3 9 7 .3 9 1 .0 1 0 9 .8 1 1 4 .8 2 ,7 7 4 .2 3 ,9 0 4 .1 5 ,0 7 9 .8 S O Y B E A N S ( S e p te m b e r 1 • A u g u s t 31) A c r e s p la n te d (m il. a c re s ) P ro d u c tio n (b il. bu.) Y ie ld (b u . p e r a c re ) E n d in g s to c k s (b il. b u.) 7 0 .0 6 7 .8 7 2 .2 1 ,7 92.1 2 ,0 0 0 .2 2 ,2 7 7 .0 2 6 .4 30.1 3 2 .2 6 7 9 .4 6 5 2 .2 8 6 6 .9 W H E A T (J u n e 1 - M a y 3 1 ) A c r e s p la n te d (m il. a c re s ) P ro d u c tio n (b il. b u .) Y ie ld (b u . p e r a c re ) E n d in g s to c k s (b il. b u.) 8 0 .6 8 8 .9 8 7 .3 2 ,3 7 4 .3 2 ,7 9 8 .7 2 ,8 0 8 .7 3 3 .4 3 4 .5 3 5 .6 9 8 8 .8 1 ,1 6 3 .9 1 ,5 4 1 .4 R IC E (A u g u s t 1 - J u ly 3 1 ) 3 .4 3 .8 3 .3 1 4 6 .2 1 8 2 .7 1 5 4 .2 Y ie ld (c w t. p e r a c re ) 44.1 4 8 .2 4 7 .4 E n d in g s to c k s (m il. c w t.) 1 6 .5 4 8 .9 6 8 .2 A c r e s p la n te d (m il. a c re s ) 1 4 .5 1 4 .3 1 1 .3 P r o d u c tio n (m il. b a le s ) 11.1 1 5 .6 1 2 .0 0 .8 2 .7 1.1 1.2 6 .6 8 .7 A c r e s p la n te d (m il. a c re s ) P ro d u c tio n (m il. c w t.) C O T T O N (A u g u s t 1 - J u ly 3 1 ) Y ie ld (n e t b a le s p e r a c re ) E n d in g s to c k s (m il. b a le s ) 1 The consumer price index and its components are seasonally adjusted. All other data are not seasonally adjusted. 2 Percent change from December 1982, based on the most recent month available. 3 Data for receipts are seasonally adjusted. 4 Annual data for crops are based on each crop’s marketing year. SOURCE: Crop Production, Statistical Reporting Service, Crop Reporting Board, USDA.
@FedFRASER