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United States Agribusiness Report Q4 2012 - New Market Research Report

Recently published research from Business Monitor International, "United States Agribusiness Report Q4 2012", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 01/26/2013 -- US corn and soybean production is expected to fall significantly by the end of the harvest in October owing to the country's worst drought in more than 50 years. This is likely to result in prices for those crops reaching record highs. The wheat crop was largely spared, although we expect production to moderate due to lower yields next year. High corn prices also led to a reduction in output growth for animal and ethanol products, leading us to revise our consumption forecasts significantly lower for 2012 and 2013. Regarding livestock, we see pig and cattle herds struggling over the short term due to high feed costs, with poultry showing the most promise. The US will remain the world's largest food producer and exporter, although it will very likely relinquish the claim as the world's largest soybean exporter (to Brazil) for the first time.

Key Trends

- Soybean production growth to 2015/16: 10.4% to 100.0mn tonnes. This is mainly owing to the increase in poultry production over the long term. This will create production incentives by driving demand for soybean, which is used as feed. Furthermore, livestock production is still expanding globally, driving export demand.
- Corn consumption growth to 2015/16: about 4% annual average to 285.4mn tonnes. This will be driven by increases in ethanol production - though these will be less significant than in the past few years - and increasing feed use in the later years of our forecast period as the livestock sector picks up.
- Poultry production growth to 2015/16: about 3% annual average to 22.4mn tonnes. The US is the world's second largest poultry exporter behind Brazil. As such, increased global demand for poultry, particularly from emerging markets, will serve as a powerful production incentive.
- 2012 real GDP growth: 2.0%, forecast to average 2.2% from 2011-2016.
- Consumer price inflation: 1.7% year-on-year (August 2012), up from 1.4% in August 2011.

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Industry Outlook

We have revised down our US corn and soybean production forecasts for the 2012/13 season, as dry weather has led to the worst soil conditions in decades. Specifically, we have revised down our corn production estimates to 290mn tonnes, from a previous forecast of almost 330mn tonnes. By the end of August, nearly all major corn- and soybean-growing areas were under at least extreme drought levels (only exceptional droughts are considered more intense). We maintain our view that US wheat prices will fall slightly for the 2013/14 season (plantings for which begin in the coming months), although we see upside risks in the form of high prices that could encourage farmers to plant more, and good weather that has allowed corn harvests to accelerate.

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