Wednesday, January 16, 2013

Drought will continue; corn and beef will suffer most, experts say

The 2012 drought that nearly crippled the Midwest Corn Belt will continue through this year in the region, according to a crop outlook presented by Iowa State University economist Chad Hart at the American Farm Bureau Federation annual convention this week.

There was significant demand for corn last year because it was in such short supply, but the big question for 2013 is whether that level of demand will be experienced again, Agri-Pulse reports. "When we saw the drought coming, the market went into action: prices rose and we dropped demand down to match that supply," Hart said. The U.S. is likely to see a bump in yield compared to last year, but "we're likely going to remain below trend line again here in 2013. Mother Nature's not done with us yet."

The livestock sector will also face problems with demand this year, especially with beef, Texas A&M University economist David Anderson said during the Farm Bureau meeting. U.S. beef consumption is projected to fall from 65 pounds per person in 2007 to 55 pounds this year, and Anderson said that decline will continue because of high prices. People are eating less meat, but declining production and a booming export market are having the biggest impact on U.S. beef production. "In 2013 and 2014, you're going to start to really see the effects of a declining cow herd on beef production," Anderson said. "Fewer cows, fewer calves, less beef."

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