"United States Agribusiness Report Q3 2016" now available at Fast Market Research

From: Fast Market Research, Inc.
Published: Wed Jul 20 2016


Corn and soybean production will decline year-on-year in the upcoming 2016/17 season , yet will still count among the largest crops in US agricultural history. Livestock will see some mild improvem ent in production growth in 2015/16 , mainly owing to the poultry and beef sectors. Over the long term, the poultry sub-sector will remain the outperformer in the livestock complex and we see the strongest producti on growth potential for soybean among the grains complex. We believe grains production will stagnate overall due to a lower planted area on the back of lower prices.

Key Trends

Beef production growth 2014/15 to 2019/20: 8 .2 % to 12.3 5 mn tonnes. Production will improve over our forecast period due to heavier animal weights and as the sector's rebuilding phase is largely complete.

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Poultry production growth to 2019/20: 9 .3 % to 23.3 4 mn 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.

Corn production growth to 2019/20: 3 .3 % to 373 .2 mn tonnes. Corn production growth will slow over the next five years as opportunities to increase yields (such as through the adoption of genetically modified seeds) are waning.

Soybean production growth to 2019/20: -1.4 % to 104 .8 mn tonnes. We have revised down our soybean production growth forecasts as low prices will lead to reduced growth in plantings, while yields will suffer due to reduced input usage.

2016 real GDP growth: 2.2% y-o-y, down from 2.4% in 2015.

Industry Developments

The Trans-Pacific Partnership (TPP), which will come into force in late 2017, will have significant implications for the agricultural sectors of the 12 signatories, as the deal will liberalise trade for a large number of bulk and value-added commodities. US, Canadian and Australian producers will be the main winners of the deal, along with Vietnamese and Chilean exporters, as they gain market share at the expense of non-TPP members. EU, Indonesian and Japanese farmers will be the main losers.

Food package labelling will be a key issue in the US agribusiness sector over the coming quarters, particularly in the context of the World Health Organization's declaration that several red meat products are to some extent carcinogenic. More narrowly, we see downside risks to red meat consumption in the US over the coming years, especially if state governments attempt to restrict red meat consumption through taxes or marketing campaigns.

Sugar prices in the US will decline from current levels owing to strong global supply and abundant imports from Mexico. This will cause US sugar production to stagnate over the coming few years, though we expect the global ICE benchmark price to outperform the domestic US price.

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