January 15, 2009

Incomes of the US grain and livestock farmers are likely to fall this year, as world commodity prices continued to be pressurised, said an industry expert.

The global recession meant weaker demand for corn, soy and wheat this year, said Jim Sullivan, senior vice-president of Informa Economics.

"Last year was a good year for US farms. But declining prices cloud the 2009 horizon and volatility is still there," Sullivan said.

The only demand increase would be corn for ethanol production, said Sullivan, citing forecast figures that say 34 percent of total US corn output will go to ethanol, up 4 percent from 2008.

However, prices for corn and soy will still be down this year.

Livestock farmers may benefit from lower feed costs this year but the recession will continue to hit demand especially that of beef, warned Chris Hurt of Purdue University.

Beef prices had increased sharply and consumers were quickly switching to lower-end cuts and white meat, said Hurt, suggesting that beef supplies would have to decline if the sector wants to make any profit in 2009.

The health of the livestock industry is linked to the economy and livestock producers will have to wait for the global recession to end before they can expect any significant price improvement, Hurt said.

Sullivan said the one bright spot was that fertiliser prices were falling from last summer's record highs.

Farmers should delay their fertiliser purchases as continued price weakening is expected, according to Sullivan.