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"Inventories at the beginning of this
year were large enough to compensate for the declines in production
in 2002," said Darrel Good. "Inventories will not be large enough to
buffer the impact of another small crop in 2003. Once the market
absorbs the coming USDA reports and South American production
prospects become clearer, attention will turn toward next year's
crop."
Good's comments came as he reviewed
recent actions in the corn and soybean markets. Both have been
responding to the rate of exports and progress of Southern
Hemisphere crops. Upcoming USDA reports will provide some added
perspective on both the supply and demand side of the price
equation.
The Dec. 30 Quarterly Hogs and Pigs
report will provide an update on prospective feed demand for corn
and soybean meal through the remainder of the 2002-03 crop year.
"Declining numbers of hogs and cattle
reported to date suggest some softening of feed demand this year,"
said Good. "The USDA has projected the largest year-over-year
decline in pork production -- 3 percent -- for the second quarter of
2003. Beef production is expected to be down 7 percent in the third
quarter and 11 percent in the fourth quarter of 2003. Poultry
production in 2003 is expected to be only 1 percent larger than in
2002."
The Dec. 1 Grain Stocks report, to be
released on Jan. 10, will provide an estimate of feed and residual
use of corn for the first quarter (September-November) of the
2002-03 crop year.
"It is expected that report will show
only a modest reduction in feed and residual use compared to the
same quarter last year," said Good. "Year-over-year reductions
should be larger during the last nine months of the crop year. Corn
supplies are large enough that a large decline in use is not
required this year."
In addition to the Grain Stocks report,
the USDA will release the final U.S. corn and soybean production
estimate for 2002. In each of the past four years, the January corn
production estimate was smaller than the November projection. In the
previous 17 years, the January estimate was below the November
projection only three times. Except for 1988, the difference between
the January and November figures over the last 20 years has ranged
from zero to 159 million bushels.
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"The difference was 250 million in
1988," said Good. "The difference has not exceeded 100 bushels since
1993. A relatively small difference is expected this year. With a
smaller estimate of harvested acreage, the January figure may be
marginally below the November 2002 projection."
The January soybean production estimate
was below the November projection in each of the past seven years,
in eight of the past nine years and in 13 of the past 20 years. The
difference, whether up or down, ranged from two million bushels to
60 million bushels. The difference has not exceeded 35 million
bushels since 1987. The late harvest in parts of the southern United
States is expected to result in a marginally smaller estimate in
January 2003.
"The USDA will also release a Winter
Wheat Seedings report on Jan. 10," said Good. "Typically, this
report has minimal implications for corn and soybeans. This year,
however, the higher wheat prices may have resulted in a sharp
increase in winter wheat seedings. If so, there will be fewer acres
available for spring-planted crops.
"The estimate of the total area seeded
to winter wheat, as well as the geographic distribution of seedings,
may provide an early look at potential changes in oilseed and feed
grain acreage in 2003. At this earlier stage, there is still some
expectation that the increase in corn acreage and decline in soybean
acreage in 2002 will be repeated in 2003. The magnitude of the
switch in acreage will continue to be debated."
Good added that, for now, corn and
soybean prices appear to have established a trading range that may
persist until some new fundamental information appears. March corn
futures are finding support near $2.35 and should have excellent
support at $2.30 for now.
"The $2.50 area is the recent high and
may be difficult to exceed without a few surprises in upcoming
reports," said Good. "January soybean futures have apparently found
a trading range between $5.55 and $5.80. However, the contract high
is at only $5.93.
"With a
strong export pace and lingering concerns about the South American
crop, soybean prices may have more potential to exceed the recent
trading range than do corn prices."
[U
of I news release]
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"The farmdoc program encompasses a
broad spectrum of expertise and research-based education materials,
involving agricultural finance, marketing and outlook, farm
management, agricultural policy, and law and taxation," said Scott
Irwin, a professor of agricultural marketing and price analysis who
is the project's team leader. Other department faculty providing
leadership are Paul Ellinger, Darrel Good, Dale Lattz, Robert
Hauser, Gary Schnitkey, Bruce Sherrick, Donald Uchtmann and former U
of I professor Sarahelen Thompson. Joao Martines is the project
manager. A team of U of I Extension educators located throughout the
state also cooperate.
The address for the farmdoc website is
http://www.farmdoc.uiuc.edu/.
[to top of second column in
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Irwin noted that farmdoc has had a
measurable impact on decision-making and economic behavior in its
target audience. Usage has risen from an initial level of about
10,000 hits per month to nearly 100,000. There have been nearly
60,000 downloads of research reports on the performance of
agricultural market advisory services, nearly 4,000 downloads of
Farm Analysis Solution Tools spreadsheets on the site and
distribution of over 2,000 CDs of Farm Analysis Solution Tools.
A number of farm magazines have also
given the site a high rating.
"Farmdoc has
succeeded in meeting one of the most difficult challenges facing
contemporary extension and outreach programs," said Irwin. "A new
model for extension and outreach activities has been developed. This
is important because agricultural economics departments throughout
the country are all attempting to serve an increasingly diverse and
wide audience with fewer and fewer extension personnel."
[U
of I news release]
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"Because of the quality of U.S. food
production and the governmental standards that are in place, most
food safety hazards today are fairly modest in scope and severity,"
said Laurian J. Unnevehr.
However, she adds, a recent U.S. Court
of Appeals decision upholding a Texas court's decision blocking the
USDA from closing a beef processing plant that failed a series of
tests for control of salmonella raises questions about standards.
Unnevehr is the author of "Food Safety:
Setting and Enforcing Standards" in the latest edition of the
Illinois Rural Policy Digest, which can be accessed online at
http://www.farmdoc.uiuc.edu/policy/
digest/digest.html.
Today, food safety is receiving a great
deal of attention from the public for several reasons, she noted.
"Science can trace many food-borne
illnesses to specific pathogens found in food. As consumers live
longer and become more affluent, they demand higher levels of
quality and safety," she explained. "Changes in production practices
and new sources of food, such as imports, introduce new risks into
the food system. And more foods are purchased away from home or in
prepared form, giving consumers less control."
The food industry has responded to this
demand with many innovations to improve safety. But simply letting
the market determine food safety might not protect all consumers,
especially those susceptible to food-borne illness, such as the
elderly and small children. "Unregulated economic markets could fail
to provide a satisfactory level of safety from the consumer's
standpoint," she said.
Twelve government agencies have
authority over different aspects of food safety in the United
States, with the Food and Drug Administration and the USDA carrying
the brunt of the burden. Primary responsibility for food safety in
meat and poultry rests with the USDA; the FDA has primary
responsibility for all other foods.
A risk assessment approach to the
design of food safety regulation -- looking at where hazards enter
food during production and where it is easiest to control them --
has been advocated by the National Academy of Sciences and used by
USDA and FDA in their most recent regulations. Another new
development is the mandated use of Hazard Analysis Critical Control
Point systems of safety management.
"HACCP requires that processors
identify critical control points and develop procedures for
monitoring controls and addressing any failures that occur,"
Unnevehr said. "This reflects a growing recognition that it is
important to prevent and control hazards before they reach the
consumer."
Since the early years of the 20th
century, USDA has relied on meat carcass inspection at the point of
slaughter. While this system removed diseased animals from the food
supply and ensured sanitation procedures, it was not designed to
address microbial pathogens, such as E. coli and salmonella.
"Both of these can live in the
gastrointestinal tract of animals without harming them and may enter
meat during slaughter and processing," she said.
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It was an attempt to address this gap
that led to the Texas suit against USDA. The standards adopted
permitted no more than 7.5 percent of a plant's ground beef to
contain salmonella, and more than 90 percent of federally inspected
plants met that standard. However, after the Texas plant in question
failed salmonella tests three times over eight months, USDA moved to
shut it down.
"The Texas beef plant appealed,
contending that because salmonella is not an adulterant and because
it is destroyed during normal cooking, its presence is not a public
safety issue," said Unnevehr. "While the beef processor in question
eventually went out of business, its court victory left confusion
about the role of standards in the future. Now, salmonella tests
must be used in conjunction with other information to shut down a
plant and can no longer be the sole basis for that decision.
"This leaves several issues in how food
safety is regulated not fully resolved. These include USDA's legal
authority under current meat inspection laws as well as the
scientific validity of sampling and testing procedures."
One question that might be asked is if
it makes economic sense to set a microbial pathogen standard for
meat and poultry plants, she added.
While the appeals court decision said
that historically responsibility for reducing food pathogens rested
with the final food preparer, Unnevehr believes that changing habits
and products have complicated that assumption.
"Food preparation methods have changed
with the advent of more fresh foods and use of new technologies such
as microwave ovens, and food preparation has increasingly moved
outside the home," she said. "Clearly, consumer protection in this
changing food system means shifting more responsibility to the food
industry for food safety."
She noted that benefits from reducing
food-borne illnesses are potentially very large, ranging from $2
billion to $172 billion, reflecting the varying estimates of the
extent of food-borne illness and different methods for valuing life
and health.
The question becomes, in her view,
developing standards that are most effective and least burdensome to
industry for achieving improved food safety. Standards can be based
on outcomes, such as the 7.5 percent salmonella standard, or on
processes used in production, such as requiring specific sanitation
procedures.
"In practice, it is difficult and
expensive to test food products, so food safety standards are often
a mix of product outcome and process standards," she said. "It would
enhance the long-run efficiency of the meat industry if scientists
can agree on appropriate performance standards for microbial
pathogens in meat. This would encourage firms to find ways to reduce
the incidence of these pathogens in the food supply.
"All factors
point to the desirability of setting clear standards for microbial
pathogens. Both consumers and ultimately industry would be better
served by standards that are well understood. This may require
changes in the meat and poultry inspection laws, as well as further
research to determine the best sampling and testing methods."
[U
of I news release]
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The five members of the ag issues team, Matthew Wrage, Nick Alberts, Brittney Kavanaugh, Kyle Hoerbert and Kory
Leesman, presented pros and cons on the topic of "Upgrading the
Locks and Dams on the Illinois and Mississippi Rivers." The
participants role-played the major constituents involved in this
issue. The team
also met recently with U.S. Rep. Ray LaHood concerning the issue.
[Photos provided by
Hartem FFA]
[Left to
right: Kory Leesman, Nick Alberts, Kyle Hoerbert, Rep. LaHood,
Brittney Kavanaugh, Alyssa Moehring and Matthew Wrage]
As state
winners, the team will now represent the Illinois FFA Association at
the 2003 National FFA Convention. This is the third state-winning
team competing in the Ag Issues Career Development Event for the
Hartsburg-Emden FFA chapter.
[News release]
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section] |
[Members of the Hartsburg-Emden FFA ag issues team, which won in
state competition: (left to right) Matthew Wrage, Brittney
Kavanaugh, Kyle Hoerbert, Kory Leesman and Nick Alberts]
[Members of the Hartsburg-Emden FFA
state champion team in food science and technology are Alyssa
Moehring, Krista Ubbenga, Natalie Coers and Brittney Kavanaugh with
Drew Dediraemaker, state FFA president.] |
