Agricultural Forecast.

• Author: Watts, Myles
• Position: Statistical Data Included

While individual agricultural commodity markets continue to be volatile, total Montana agricultural receipts have been unusually stable for the past 10 years. As presented in Table 1, total agricultural receipts ranged from about $2.2 billion to $2.4 billion. Furthermore, the low years of 1991, 1995, and 1998 were well-spaced, with intervening years usually exceeding $2.3 billion.

Cattle, wheat, and barley comprise about 80 percent of the state's agricultural receipts. During the 1990s, Montana livestock market receipts ranged from a low of $836 million to a high of $1.2 billion, with cattle generating 80 percent of those receipts. The fluctuations in receipts are primarily a reflection of cattle prices.

Over the past 10 years, crop market receipts (generated mainly by wheat and barley) have ranged from $789 million to $1.2 billion, with the lows occurring in 1989 and the highs in 1996. These fluctuations reflect variations in prices and yields.

Unlike total agricultural receipts, the lower crop revenue years were bunched together. Between 1989 and 1993 and between 1998 and 2000, crops generated less than $1 billion per year. This clustering of low-revenue years causes financial stress and social hardship.

In the more recent years, higher government payments have offset much of the decline in crop receipts. Government payments in 1999 are expected to be about $500 million, or a little more than 20 percent of the total agricultural receipts. In 1998, 1999, and for year 2000, Congress provided supplemental payments beyond the transition payments.

Cattle, wheat, and barley will continue to dominate Montana's agricultural economy into the near future. Usually wheat and barley price movements are highly correlated since they are such close substitutes in production. Therefore, only wheat and cattle prices will be discussed.

Wheat

Wheat prices continue to be depressed by high production, high stocks, and weak export demands. Even though Kansas, a major wheat-producing state, is short of moisture, worldwide growing conditions are conducive to a third consecutive year of unusually strong yields and thereby, high production. As such, wheat prices will remain in the $2.50 range for standard-quality wheat. Montana raises high-protein wheat, and this past year, producers of particularly high-protein wheat received as much as $1 per bushel price premium. It is too early to predict whether similar premiums will be available in the fall of 2000.

In the...