USDA chief economist Keith Collins paints a rather dismal picture for almost all of production agriculture through 2000.  He also notes that complicating any relief from Capitol Hill is the fact that money spent on farmers must be offset elsewhere in spending categories.

In an independent interview and to the National Association of Agricultural Journalists, Collins outlined a 1999-2000 outlook for the major farm commodities that held little hope for much price improvement with the exception of wheat.  And the prospects for wheat are improved only slightly from the 1998-99 marketing season.

Cattle: Collins will not be surprised by lower cattle prices this summer.  The expected turn around in the cattle cycle has not begun, he says; producers are not holding back heifers for expansion but are slaughtering heifers at "a high rate."  He says, "As a result we have unusually high placements of heifers in feed lots, and the beef supply continues to be large."  Six months ago, USDA thought there might be a 4-5% decline in beef production this year; now that has been reduced to a 1% expectation.  "The decline is coming, but it's been postponed," he says.  He now looks for price increases next year.  Prices will improve a little this fall "but not by very much."

Hogs: "Incredibly, despite the very low prices in the last half of 1998," Collins says, the United States will continue to have "very large pork production in 1999, almost as large as 1998."  Per capita consumption should decline a little this year.  "You cannot expect much of a price increase this year," he says.  The mid-$30s per cwt. for all of 1999 is about the best to expect.  Prices "should cross into the $40 range" by fall, he adds.  But there are hog producers who can realize break-even prices in the low $30s, adds Collins, "so they're going to limit what they cut back.  It would take a heck of a collapse in prices to get these producers to change" and reduce their herds, he says.

Wheat: The "general story" on grains "is not very good," says Collins.  Some dryness in North Africa, the Middle East and North China are about the only weather problems now apparent.  Wheat "probably is the best story of all the grains."  U.S. farmers' planting intentions are the lowest this year in the last 26 years, the European Union has an expected smaller crop coming to harvest, and Iran "should be a huge importer," says Collins.  That will help the United States "indirectly," since other countries' exports to Iran will draw wheat away from the market.  He did not "mean to imply" that the United States would export to Iran, something members of Congress and the wheat industry have been promoting for some months now.  But wheat prices should increase only about 10% because of "enormous carryover stocks."

Corn, soybeans:  For corn, there's just not much world demand to help prices.  South Korea may import more corn instead of feed wheat, and with an improving economy, that could help but on a general world basis.  The world market is "languishing," he says.  U.S. farmers should expect no more than $2 per bushel from the 1999 crop.
 U.S. producers will plant more soybeans this year despite a "very weak demand worldwide," large crops in Brazil and Argentina and more competition to soybean oil from Malaysian palm oil.  "Prices are on a strong down trend," says Collins, with $4.35 per bushel expected as a national average.  Carryover stocks could double by Sept. 1 and increase further by Sept. 1, 2000.  "The only thing that will help cushion that drop is loan deficiency payments," says Collins.  The national average loan rate is $5.26 per bushel.

The most financial stress will be on the major row crops -- corn, soybeans, cotton, rice and even wheat.  Poultry, greenhouse crops, fruits and vegetables should hold their own, he says.  Financial stress "will spread rapidly" this year into the Corn Belt and down through the Mississippi River corridor from low rice and cotton prices.

If Congress hopes to do much to help farmers, it will be a difficult task at best.  The emergency supplemental appropriations bill funds only another $1 billion in loans to help farmers with an aggregate $170 billion in outstanding loans, Collins notes.  "And the supplemental isn't moving, because they're trying to find an offset for the spending."  And the budget resolution provides $6 billion for agriculture over the 2001-2004 period with nothing for fiscal year 2000, the year that correlates with 1999 ag production.