Boston, MA -- (ReleaseWire) -- 01/27/2014 -- BMI View: By some measures, the US farm sector is in the best financial conditions in decades. Farm and cash income in real terms are near 30-year highs, while financial leverage is at 50-year lows. The sector is also recovering from the droughts of 2012, although the grain sector should rebound faster than the livestock sector. However, the sector still faces concerns: Beef production will stagnate over the medium term, while we are forecasting a significant decline in cotton production for 2013/14. We have also revised lower our forecasts for pork production, beef consumption, and poultry production. The country's sugar sector is also suffering in the wake of lower average prices. Over the longer term, the sector will face some uncertainty as the Congress debates a new farm bill, and will have to adjust to a different subsidy program once a new bill is passed, along with lower crop prices. Nevertheless, we expect the US to remain the preeminent food producer and exporter in the world.
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- Beef production growth to 2016/17: 1% to 11.6mn tonnes. We have revised our beef production forecasts lower due to herd rebuilding in 2013, which should lead fewer cows available for slaughter. The length of the cattle cycle means we forecast 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 2016/17: 21% to 23.1mn 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 2.4% from 2013 until 2017.
- Consumer price inflation (avg): 2.1% ave in 2013, up from 1.7% in 2013.
- Beef production & consumption revised lower due to herd rebuilding and high prices.
- Cotton production revised lower due to lower area harvested.
- Corn consumption revised lower due to lower demand from livestock and ethanol.
- Pork production revised lower due to lower dressed weights.
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