Some highlights from the Doane Outlook Conference
Doane held its annual outlook conference in St. Louis. A wide variety of topics were covered and the presentations from the conference are available on the Doane website. Here are just a few of the highlights.
There is a lot of uncertainty about the future of the farm bill. Dr. Pat Westoff, from FAPRI, provided a comparison of the House and Senate farm bills and discussed some of the budget issues that will drive the debate. He pointed out that the commodity programs that people tend to focus on are a very small part of the cost of the farm bill and an even smaller part of the overall food industry expenditures. The House and Senate differences over the support for crop producers are fairly minor and might be worked out quickly if the bill gets to a conference committee. However, the differences over food stamp spending are much biggher and could cause the whole farm bill to bog down. Dr. Westoff also went through FAPRI’s analysis of the request for an RFS waiver and why he thinks a waiver might have very little impact in 2012/13 but a bigger impact for 2013/14.
Dr. Kevin Kliesen from the St. Louis Federal Reserve discussed the outlook for the U.S. economy. He went through the headwinds and tailwinds that might impact the outlook, but concluded that the most likely path is more of what we are seeing now. Relatively weak economic growth with slow reductions in the unemployment rate. Interest rates will almost certainly stay low, probably for the next couple of years and the housing sector is beginning to recover. Some of the risks to the forecast include the possibility of oil price spikes, Congress not dealing with the “fiscal cliff ” and no deal on the federal budget. In the Farm Policy Presentation, Dr. Wetoff pointed out how impossible balancing the budget is, at least in the short term.
click image to zoom The Doane economists went through the issues and outlook for the corn wheat and soybean sectors. The key points are that supplies of all three crops are very tight, both in the U.S. and in the rest of the world. In general, we still have a lot of demand rationing to do, especially for soybeans. Early season soybean export sales are very strong and prices could rise dramatically by next spring if crops in Brazil and Argentina fall short of the record highs currently projected. Weather forecasts that had been suggesting a shift to an El Nino pattern this fall and winter are now at least raising the possibility of another La Nina. Corn demand needs to be cut by about 1.2 billion to 1.3 billion bushels this year compared to 2011/12 and export sales are off to a slow start. But it appears that both Argentina and Brazil may be out of export supplies by early next year, forcing importers to turn to the U.S. Wheat supplies are also tight and may get tighter unless foreign yields rebound in 2013. Acreage of all three crops should be higher in 2013 than they were in 2012.