Boston, MA -- (SBWIRE) -- 04/30/2014 -- The US agriculture sector is unlikely to repeat the performance of 2013, a record year for production and incomes. Grain production overall is expected to be lower due to a smaller area planted and there are now concerns over soil quality in wheat-growing areas. However, the grains sector looks relatively positive compared with livestock, where production growth will be minimal in 2014. The pork sector is facing significant disease concerns from PEDv, while beef production will fall due to increased heifer retention. Fewer cattle facing slaughter will exacerbate record high retail beef prices. The dairy sector should see some improvement, but a record drought in California (the largest producing state) leads to strong downside production growth. Over the long term, the poultry sub-sector will remain the outperformer in livestock, and we see the strongest production growth potential for soybeans among the grains.

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Key Trends

- Beef production growth to 2017/18: 1% to 11.7mn tonnes. We have revised our beef production forecasts lower due to herd rebuilding in 2013, which should lead to fewer cows available for slaughter. The length of the cattle cycle means we expect production to stagnate until the end of our forecast period.
- Corn consumption growth to 2014: 5% to 278mn tonnes. We have revised our 2014 consumption forecast lower due to our expectation for reduced demand from the livestock and ethanol sectors.
- Poultry production growth to 2017/18: 18% to 23.8mn tonnes. The US is the world's second largest poultry exporter behind Brazil. As such, increased global demand for poultry, particularly from emerging markets, is likely to serve as a powerful production incentive.
- 2014 real GDP growth: 2.8% year-on-year, up from 1.8% in 2013; predicted to average 2.5% from 2013 until 2017.
- Consumer price inflation (avg): 1.8% ave in 2013, up from 1.7% in 2013.

Industry Developments & Revisions

Revisions - None this quarter

Industry Developments

We highlighted in a previous article that the spread of porcine epidemic diarrhoea virus (PEDv) in the US was likely to lead to downside pork production risks. However, at the time, we expected the effect on the total pig crop to be mild. Indeed, as late as mid-October 2013 there was relatively little change in the number of PEDv cases. However, the outbreak has accelerated in recent months, and there are now more than 250 new cases reported per week. Many of the new cases are being reported in Iowa, the country's largest pork-producing state. The USDA says the actual number of PEDv cases might be higher than the official estimate as reporting requirements are reduced due to mandatory bio-safety regulations for USDA staff members (which prohibit them from visiting affected sites).

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