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Outlook for Montana agriculture.

Article Excerpt
General Financial Overview

Montana's agricultural sector had an excellent year, producing an estimated $3.2 billion of sales in 2008 and an estimated $1 billion in net farm income. Nationally, farm household income for 2008, which includes off-farm income, is projected to increase by 10 percent, substantially larger than the 2001-2007 average. The 2009 Montana agricultural outlook for both crops and livestock is promising with lower, but still relatively strong prices for crops and livestock.

Grain/Wheat Outlook

World and U.S. average grain prices increased by nearly 6 percent in the 2007-2008 marketing year compared to the previous marketing year (Vocke and Allen, 2008). Better planting conditions, more acres available for planting, and more moderate weather patterns during the summer of 2008 contributed to a substantial worldwide expansion in wheat production. Between 2007 and 2008, world wheat production increased by nearly 13 percent while U.S. wheat production increased by nearly 21 percent (Table 1). Montana and U.S. shares of world wheat production and sales have remained relatively constant at around 0.7 percent (world) and 7 percent (U.S.), respectively. The futures markets for wheat suggests that wheat prices will be lower in 2009, but well above the most recent five-year historical average price (2004-2008).

In Montana, wheat production increased by nearly 10 percent from 149.8 million bushels in 2007 to 164.7 million bushels in 2008 (National Agricultural Statistics Service for Montana, 2008). Forecasters were concerned about the Montana wheat crop in early summer. Lack of snow cover and relatively dry conditions meant that winter wheat, spring wheat, and barley crops were progressing more slowly than...