What is in this article?:
- Agriculture‚Äôs economic forecast is sunny... with a few clouds
- Softening alfalfa prices?
- Keys to feed the world
- Russ Tronstad, University of Arizona agricultural economist, predicts bullish demand and prices for western-grown tree nuts, fruits, and vegetables.
- He expects a possible softening in alfalfa prices in the near term, and a mixed future for western irrigated cotton.
Softening alfalfa prices?
The outlook for the nation’s corn industry will depend on the livestock industry, the largest user of corn. He says the cow-calf outlook is promising, following a heavy cattle selloff in recent years in Texas and Oklahoma tied to drought and high corn prices which caused many cattlemen to liquidate herds.
With stronger prices ahead for many farm commodities, Tronstad says output (producer) prices are just one part of the equation.
“As always, the outlook for commodities as a whole is not only what you can sell your commodity for but how efficiently you can grow it,” Tronstad said.
Looking at the hay outlook, current U.S. hay stocks are higher in than recent years due in part to the cattle selloff. In California, May 1sthay stocks for 2013 were about a third higher compared to last year. Arizona hay stocks have not changed much.
“Overall, I expect a softening in alfalfa prices for the next couple of years,” the economist said.
For western hay growers, Tronstad expects prices will be affected by the financial health of the western dairy industry.
On corn, U.S. corn growers produce about 30 percent of the world’s corn crop.
About 17 percent of the U.S. corn crop is converted to produce ethanol for transportation fuels. Tronstad says the U.S. corn-for-ethanol industry is at a crossroads. While production is expected to increase some, a major limiting factor is the “blend wall,” the current 10.2 percent limit imposed for ethanol use as fuel in many automobiles.
Some economic projections suggest that cellulose-based ethanol, derived from grasses and woody plants, might gain a small foothold in the ethanol market. The cellulosic ethanol industry is still in its infancy. Tronstad says cellulosic ethanol is not yet ready for prime-time production.
“The production of switchgrass for conversion to (cellulosic) ethanol is supposed to be a crop grown relatively inexpensively,” Tronstad said. “The current production and conversion processes, in my opinion, are not yet economical.”