U.S. agriculture : another solid year in 1998?

U.S. agriculture had a very good year in 1997, with profits widely shared among the nation's farmers. While few producers could boast of bell-ringer profits, as they did in 1996, nearly all could claim a good year. The year was especially welcome to the nation's cattle producers, who had struggled through an extended period of losses. The cattle industry rebounded much faster and further than anyone expected. While Mother Nature did bring major flooding to the Northern Plains states in late spring, most parts of the nation had good growing conditions in 1997. The result was an abundant harvest of the major crops and a moderate slide in crop prices. All in all, farm income was strong, but not as strong as the year before, and agriculture's balance sheet was bolstered further by gains in farmland values.> Drabenstott and Lamb review the year just passed for U.S. agriculture and suggest the year ahead will be another solid one, although income will probably slip from 1997 levels. After a big harvest last year, U.S. grain bins are fuller than they have been in three years. Moreover, the turmoil in Asian financial markets is likely to trim export demand for U.S. food and agricultural products in the year ahead. Profits in the livestock industry should continue, but fall somewhat from last year's level. Pork prices, in particular, may be under some downward pressure due to a buildup in pork supplies and a tailing off in export demand. One major wild card in the 1998 outlook is El Nino. While current forecasts suggest little impact on 1998 crop production, much depends on when and how quickly El Nino weather conditions fade. World grain stocks are still small enough that any crop shortfall could send prices sharply higher. Barring a major weather disruption, however, U.S. agriculture appears headed toward a solid year in 1998.