DALLAS, Jan. 28, 2013 /PRNewswire-iReach/ -- The US agricultural sector will be happy to see the end of the 2012 calendar year: The combined production growth of the country's major grains and animal products is expected to be the worst in two decades. This research shows somewhat optimistic view for the 2013 season, as it anticipates a strong rebound in corn and soybean production. It also forecasts growth in the poultry sector due to moderating corn prices. The report is particularly bullish on cotton due to a higher area planted. It expects the beef sector to be the laggard in the livestock complex, and see strong downside risks to the 2013/14 US wheat crop. The research expects US to remain the world's largest food exporter over the coming years.
Key trends discussed in this report on United States agribusiness market include Soybean production growth to 2016/17: 27.4% to 105.7mn 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 feed export demand. Corn consumption growth to 2017: 6.9% to 298.7mn tonnes. This will be driven by increases in ethanol production – though this growth will be less steep than in the past few years – and an increase in feed use in the later years of our forecast period as the livestock sector picks up. Base effects are a key factor why the growth rate is not higher. Poultry production growth to 2016/17: 20.1% 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. 2013 real GDP growth: 2.1% year-on-year (y-o-y), down from 2.3% in 2012; predicted to average 2.2% from 2012 until 2017. Consumer price inflation: 2.2% ave in 2013, up from 1.8% in 2012.
2012 US Farm Bill is expected to be extended for several months, which has occurred with previous bills, but see little chance that the bill will expire outright. If the current bill were extended, the US Congressional Budget Office forecasts that food stamps would comprise 78% of all spending (US$772bn) over 10 years. This research continues to forecast lower US beef production and consumption in 2013, as poor pasture conditions and high grain prices lead to record low cattle inventories. It expects major beef producers in the US to continue underperforming the S&P500 over the next few months.
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The Central America coffee sector is set to see strong production in 2012/13 on the back of large plantings and better investment capacity. However, low global prices could discourage production in the coming years, putting downside risks to the development of the sector in the medium term. The region is generally dependent on imports for corn, and this Central American agribusiness market research expects the production deficit to widen over the forecast period. That said, the region is expected to remain self sufficient in sugar and even increase its potential for sugar exports, with the industry having potential to attract investment in over the medium term.
Over the long term, there could be some consolidation in the coffee industry and private investment help to close the gap between Central America and the rest of South America. Indeed, yield growth in other major producers in South America will eventually reach its limit, while land constraints will restrict plantings. As a result, investors could turn towards more frontier markets with higher risk but potential for higher returns, especially as we are positive about the domestic consumer story in Central America.
Panama has agreed a free trade agreement with the US, granting the North American country free access to export high quality beef cuts. For all other beef muscle cuts, Panama's import duties fall from 30% to zero, and beef variety meat sees duties fall from 15% to zero. Pork duties have been eliminated, too, and a duty-free tariff quota begins at 1,600 tonnes.
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