Factors affecting livestock and poultry – recession, poor holiday season sales and poor job market present negative factors while low inflation rate and declining interest rates prove positive effect – U.S. Dept. of Agriculture, Economic Research Service report
The economy has stalled. Retail sales during the holiday shopping season were lackluster. The number of nonfarm payroll jobs and housing starts have slipped in recent months. On the positive side, the inflation rate remains low and interest rates continue to decline. Short-term interest rates reached their lowest level in more than two decades at the end of 1991. The inflation rate is expected to remain moderate because commodity prices, wage increases, and other measures of underlying inflationary pressures are not suggesting any significant increases. Inflation as measured by the GDP deflator is expected to be about 3 percent in 1992, down from nearly 4 percent in 1991. Interest rates are likely to be little changed from end of 1991 levels. Declining interest rates and low inflation should spark a recovery over the next several months. The gross domestic product (GDP) is expected to increase around 2.5 percent in 1992 over 1991, compared with a decline in 1991. Should the economy continue to weaken, low inflation could prompt the Federal Reserve to further reduce short-term interest rates. However, uncertainty about fiscal policy actions add risk to the outlook. Feed costs are projected to be sightly higher in 1992 than in 1991, due to tighter corn stocks. Ending 1991/92 stocks for corn are expected to be 1,076 million bushels, compared with 1,521 million bushels in 1990/91. Farm corn prices in 1991/92 are projected to average $2.35-$2.65 per bushel, compared with $2.28 in 1990/91. However, with relatively small ending stocks expected, corn prices will be sensitive to weather and trade developments this year. Soybean meal prices (44 percent, Decatur) are expected to average $165-$180 per short ton in 1991/92, about the same as in the 2 previous years.
COPYRIGHT 1992 U.S. Department of Agriculture
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