Falling incomes curb U.S. farmers' ability to hold back supplies
By Nigel Hunt
LONDON (Reuters) - Falling incomes in the U.S. will make it more challenging for farmers to hold stocks as they wait for prices to recover from current depressed levels, U.S. Department of Agriculture chief economist Robert Johansson said.
"Now (U.S.) producers are holding more stocks waiting for a better price but we’ve seen that farm incomes are coming down so the ability to hold that crop without selling it is somewhat limited,” he told Reuters on the sidelines of a food conference at London's Chatham House.
U.S. farm incomes are expected to drop in 2015 to a 13-year low due to weaker crop and livestock prices, the U.S. Department of Agriculture said last month.
World food prices have been dragged down by a strong dollar and ample supplies. A monthly index of prices put out by the United Nations food agency earlier this month was 18 percent lower than a year earlier.
The strength of the dollar had added to the challenge faced by U.S. producers and exporters.
"If you look at the last year-and-a-half the dollar has appreciated remarkably against our competitor currencies. Our grains, oilseeds and livestock producers are really getting hammered by the high dollar value," Johansson said.
In contrast, local currencies in rival exporters such as Brazil and the European Union have been weak.
"In Brazil, producers of maize and soybeans are seeing prices (in local currency terms) that are similar to historic prices we had three of four years ago," he said. Continued...