A new report from the University of Missouri's Food and Agricultural Policy Research Institute (FAPRI) finds slow price recovery for most agricultural products with some exports complicated by the European Union.

Exports by the European Union are expected to dampen U.S. wheat trade in 2006-2008, according to FAPRI which provides Congress with agricultural research results.  Early in the next century, China should become a net importer of corn, increasing trade prospects for the United States, the report says.  Soybean exports should increase at an average rate of 1 percent per year through 2008.

The report, presented to the Senate and House Agricultural Committees March 11,  also expects that the United States will not be a commercial exporter of nonfat dry milk through 2008.  It assumes the Dairy Export Incentive Program will be used to export nonfat dry milk to the extent allowed under the World Trade Organization rules.  The report assumes no policy changes during the period in which projections are made (fiscal 1999-2008).

Lower wheat production is expected this year as less acreage is planted, says FAPRI, and remains relatively flat through 2008.  Exports recover to 1.2 billion bushels by 2005; after that increased EU exports "dampen US trade," the report says.  US wheat prices recover from about $2.50 per bushel in 1998 to the $3.60-3.70 range by 2008.

Fewer corn acreage is expected this year with modest expansion for the longer term to a maximum planted acreage of 81 million by 2008.  A slowdown in global demand, along with increased competition pushed exports lower in 1997 and 1998, but "there is cause for optimism longer term" as China becomes a net importer, says FAPRI.  Only modest price strength is expected in the near term, the report adds.

US soybean acreage should expand this year since returns remain favorably comparable with competing crops.  Exports increase 1 percent per year, and prices should average below the loan rate in 1999 and 2000, then recover to average above that rate through 2008.

Cattle inventories should decline through 2002 to 95.4 million head from liquidation that began in 1997.  Modest expansion is expected after that with a total herd size of 97.2 million by 2005.  Weak domestic beef demand should offset stronger exports of beef for the next few years, and beef exports should expand only modestly this year as Asian countries remain limited in their imports.

Pork production should increase to more than 20 billion pounds by 2007, from 18 billion pounds in 2000, "implying the need for additional processing capacity," says FAPRI.  Economic difficulties probably will cause the industry to contract further.  Exports should total 1.4 billion pounds this year, increasing to 2.5 billion pounds in 2008.

Long-term US butter prices are expected to average near $1.30 per pound for the same period, a sharp decline from the $1.80 per pound that butter yielded in 1998.  Domestic cheese demand should increase another 3.6 percent on a per capita basis from 1999 to 2008, according to FAPRI.  Cheese consumption has shown a steady increase throughout the 1990s from almost 25 pounds per person.  By 2008, FAPRI expects that to increase to 33 pounds.

US milk production should exceed 160 billion pounds this year after a small increase in 1998.  The annual growth in milk production should average 1 percent through 2008, the report adds.  Milk price variability should continue over the next few years "as the industry continues to adjust to less government intervention," says FAPRI.