Apples&emdash;The 1998 U.S. apple crop was estimated by the USDA in August to be about 269 million bu. That estimate was reduced slightly in October due to adverse growing conditions in the PNW and a major weather problem in New York over Labor Day weekend. However, weather conditions in the PNW improved substantially during harvest, adding size to the fruit and increasing yield. As a result total crop estimates are somewhat less accurate this year.

In the PNW, Idaho was expected to have a more normal crop after the very short crop in 1997. Production in that state was estimated at 4.5 mil. bu. The Oregon crop was also somewhat expected to be larger at 4.3 mil. bu., up 13%. The Washington crop was also improved over 1997, up 22% to 145 mil. bu. The December 1 storage report in Washington indicated that the Washington industry had the potential to ship 100 million cartons fresh this season. This would be a new record, however, there is an increased likelihood of higher than normal cullage this year. Actual total shipments will probably be much closer to the 1996 season (94 mil. cartons).

The increase in the PNW was more than enough to offset somewhat shorter crops in other major growing areas. Since PNW apples are produced for the fresh market, the larger crop will place additional pressure on the fresh market this year.

The domestic market is viewed as having been rather stagnant for the past several years. Domestic per capita consumption has been flat for several years. The expected very large crop in the PNW, combined with the domestic consumption situation as well as export market problems was apparently sufficient to induce Washington growers to vote to assess themselves another $0.15 per carton for promotion of apples. Given the recent poor grower returns, approval of the increased assessment was remarkable. This additional assessment will allow the industry to reach more consumers and more often through the market year. This additional effort is expected to improve domestic movement. vThe export market, until last year the "darling" of marketers, appears to be stabilizing and will likely take more fruit than last year. At the time of this writing, the Mexican market was expected to open on a timely basis. Recall that last year that market was not opened until mid-season. Movement to that market will be significantly better than last year. Unfortunately, the artificially high entry price will deny Mexican consumers the opportunity to consume apples at truly attractive prices.

The Asian markets, while still suffering from the economic setbacks that occurred last year, are expected to take more fruit than last year. Indonesia is the only country with such severe problems that sales there will be very difficult. However, stiff competition will be provided by Chinese apples in those markets. Much of the Asian market tends to be very price sensitive and the Chinese are able to deliver satisfactory quality at bargain basement prices. Fruit from Europe, particularly France, is also available. Competition from China will decline as the season progresses as they do not yet have adequate storage for the crop.

The Russian Far East is considered part of this market and conditions there are very difficult. The dire predictions of major food shortages in that country suggest that maintaining the status quo in shipments may be very difficult.

Season average prices for apples will be below 1997 levels. Prices during fall 1998 are indicative of expected season averages, but because of the potential for price improvement later in the market year, probably overstate the actual year to year decline.

Pears&emdash;The 1998 winter pear crop is down 11% from 1997. It is estimated to be 14.6 million cartons. The shorter crop helped early season prices, with F.O.B. prices averaging about 9% higher than last year. Early season movement, however, was significantly slower this year. The international economic problems in Asia and Latin America have caused a dramatic reduction in exports. The early season optimism about better prices due to the shorter crop will likely diminish as growers start to realize that those reduced exports caused inventories to approach year earlier levels by late November. In addition, there are fewer fruit suitable for the fresh market. Cullage is reported higher in some districts and the proportion of fruit grading No.1 is lower.

The current inventory position and the very ample supplies of apples will reduce prospects for a significant increase in season average prices. It is quite likely that industry returns this season will fall below 1997 crop levels.

What kind of year was 1998 for the PNW grass seed industry? That depends on the comparison made. If performance is compared to previous years, 1998 was a solid but unspectacular year for the industry. However, grass seed performance was outstanding compared to other crops that compete for the same production acreage. While these other crops (grains, mint, and row crops) floundered, grass seed production generally provided growers with profitable returns.

The U.S. economy remained surprisingly strong throughout most of 1998 and the construction of new houses (up a robust 10 per cent) and golf courses continued to support domestic grass seed markets. The relatively small percentage of grass seeds (about 10 per cent) sold in international markets suffered from the massive disruptions in international trade and the strength of the U.S. dollar. The volume of PNW grass seed exports fell 8 per cent for the year while the value of sales rose a modest 2 per cent. U.S. grass seed imports declined by about 20 per cent in volume and value. Once again the threat of increased competition from production areas elsewhere in the world remains just a threat. The grass seed industry continues to be a net foreign exchange earner.

Preliminary estimates show that Oregon grass seed acreage increased both in the Willamette Valley (the primary production area) and elsewhere in the state. This increase in grass seed acreage was offset by yields that were lower than in 1997 so the total crop was stable to slightly down. Still the yields obtained for all the major seed types were similar to average yields for the past five years. Prices for the 1998 crop, the final part of the profitability equation, have been stable to slightly lower than for the 1997 crop. But these prices are higher than the average price levels for the previous five years. Annual ryegrass prices remained quite strong at nearly 25 cents per lb. Perennial ryegrass prices of just under 60 cents per lb. and tall fescue prices of nearly 55 cents per lb. were at levels that are profitable for most in the industry.

In the inland production area, the overall size of the 1998 bluegrass crop (estimated at 81 million pounds) and the large carryover from the previous year puts the total available supply at record levels. As with the other grass seeds, this resulted in a softening of prices. Reports from Washington indicate that irrigated producers handled the ban on field burning more successfully than producers in dryland areas did. Poor grain prices limit the production alternatives available to dryland growers so much of this acreage may stay in bluegrass.

Danger signs are on the horizon for the grass seed industry as a whole. Seed movement has slowed and stocks are beginning to build. Total ryegrass movement was lower in the 1997-98 marketing year than in any of the previous 4 years and continued at a relatively slow pace in the first quarter of the new marketing year. These increasing stocks foretell lower prices in the future. To further aggravate this situation weak prices for alternative crops continue to encourage growers to expand grass seed acres with an additional 5 to 10 per cent expected in 1999. Given the anticipated 1998 crop carryover and the expected 1999 crop (assuming normal weather), the total supply available to the market is likely to weigh on prices. Any slowdown on the demand side would only further reduce prices. Many in the industry fear that 1999 will mark the end of a string of relatively successful years dating back to 1993.

As the market for grass seeds shifts towards excess supply, other changes in addition to lower prices are occurring in the industry. The seed companies have initiated a "quality creep" through the establishment and/or enforcement of additional discounts based on meeting specific standards. Growers have responded by shouldering the economic burden of providing a cleaner product to the seed companies. Another noticeable trend in the last year was an increase in certified acreage (especially tall fescue and perennial ryegrass) that exceeded the growth in total acreage. Both of these trends increase grower costs but also help to maintain or expand the competitive edge of the PNW industry versus alternative suppliers to domestic and world markets. Other suppliers may be able to match or beat PNW prices, but they still can not match PNW quality.

On a separate front, the continuing consolidation within the industry remains a dominant theme. The grass seed industry is moving toward uncharted territory and the full range of implications for consumers, producers, and existing firms will only become clear over time.

Review of 1998
1998 is shaping up to be a better year than most forecasters anticipated. Inflation-adjusted GDP growth looks to come in around 3.5 %. This is truly remarkable growth for the eighth year of an economic expansion. Unemployment is well below 5 %. With commodity prices falling, there is very little overall inflation.

American consumers get most of the credit for the surprisingly strong showing of the U.S. economy. Consumer spending appears to have risen 4.5 to 5 % for the year, after adjustment for inflation. Spending on durable goods climbed between 8.5 and 9 %. Housing starts exceeded 1.6 million for the year. Light-vehicle sales came in well above 15 million units.

Consumer spending has been fueled by low unemployment, healthy wage gains, low import prices, tax cuts (state and federal), low interest rates and gargantuan capital gains from the stock market. These factors have pushed consumer confidence readings to the highest level since the 1960's.

Consumers account for 2/3 of overall spending. Their impact on the overall economy is huge. However, the year does not look so strong outside the consumer sector. Business capital spending is slowing due to lower corporate profits. Exports were essentially flat for the year while imports grew over 10 %. This has pushed the merchandise trade deficit up near $250 billion.

Recessions in Asia and a strong dollar are the primary causes of weak U.S. exports. U.S. manufacturers and farmers have born the brunt of the global slowdown. Manufacturing payrolls declined throughout the year. Farm income was down for the year.

Concerns over a growing credit crunch, both domestically and internationally, prompted the Federal Reserve to lower interest rates three times in 1998. Despite low unemployment, the Fed aggressively lowered interest rates during the fourth quarter of the year. The federal funds rate target was reduced to 4.75 percent on November 17.

The strong economy has brightened the fiscal picture of the federal government and the states. Personal income taxes have jumped in response to solid wage growth and capital gains. The federal government's fiscal year ended September 30. Tax receipts exceeded expenditures by $70 billion. The surplus is being used to pay down past debt. On net, state and local governments are also running a large surplus. The government surplus has helped push interest rates lower.

Outlook for 1999
Deteriorating foreign trade, softer corporate earnings and eventually a slowdown in consumer spending all point toward a weaker 1999. Nonetheless, the U.S. will probably avoid recession for another year. This would mean that fifteen of the past seventeen years have been recession free.

Inflation-adjusted GDP growth is projected to slow to 1.9 percent in 1999. The annual growth rate is expected to fall below 1.5 percent in the first half of the year. The consumer price index is projected to rise 2.3 percent in 1999, up slightly from the 1998 estimate. The unemployment rate is expected to average 4.6 percent in 1999. These figures come from Standard & Poor's DRI forecast. This is the national forecast used for the December economic forecast produced by the Oregon Office of Economic Analysis.

Inflation-adjusted growth in consumer spending is expected to slow to 3.0 percent in 1999, down from nearly 5 percent in 1998. The savings rate is expected to rise slowly. Consumer durable goods spending growth is projected at 4.7 percent. Light vehicle sales are forecast to be 15.1 million units.

U.S. consumers have shown remarkable resilience. However, going into 1999, they are particularly vulnerable to the economic environment because the savings rate is the lowest since the Great Depression. Saving out of disposable income fell below zero late in 1998. The low savings rate appears to be linked to the stock market. Capital gains from the sale of stock are not counted as current income. However, taxes paid on capital gains are subtracted to get disposable income. This means that when consumers make purchases out of stock market related gains, the measured saving rate declines. This also means that consumer spending is vulnerable to a downturn in the stock market.

The housing market should level out in 1999 after a robust 1998. Continuing high levels of housing affordability is the basis of this forecast. Inflation adjusted residential investment spending is projected to hold even following a gain of nearly 10 percent. Housing starts are pegged at 1.53 million in 1999, down slightly from 1998.

Weak foreign demand and lower corporate earnings should slow the rate of business capital spending from the frenetic pace of recent years. Producer durable equipment spending is expected to rise 4.8 percent in 1999, after adjustment for price changes. The estimate for 1998 is 11.3 percent. Corporate earnings are projected to be down slightly. Following a 2.3 percent estimated decline in 1998, profits are expected to decrease another 1.7 percent in 1999.

Despite slower sales growth, businesses continue to have strong incentives for investing in new capital. Capital is cheap relative to labor. The unemployment rate is low, making labor scarce and putting upward pressure on labor costs. Interest rates, which measure the cost of capital, are the lowest since the 1960's. Businesses are also under intense pressure from foreign competition to keep prices low. This encourages automation to lower costs. Finally, firms are spending to update their computer systems to avoid any technical problems associated with the year 2000.

Foreign trade was the major drag on the economy in 1998. It is likely to remain so in 1999. Following a flat 1998, exports are expected to increase 2.6 percent in 1999. However, imports are expected to grow at a much faster rate of 7.4 percent in 1999.

The merchandise trade deficit is projected to hit $293 billion in 1999. The forecast assumes that the growing trade gap will knock 0.7 percent off U.S. GDP growth.

With household and business spending slowing and the trade gap widening, what is likely to keep the U.S. out of recession? The answer is interest rates. Every post World War II recession has been preceded by rising interest rates. Interest rates fell throughout 1998 and they are expected to trend down in the first half of 1999.

The Federal Reserve appears determined to pursue an aggressive anti-recession policy. The slowing U.S. economy and continued weakness in Asia and Latin America give the Fed the motive to lower rates further. The absence of inflation gives them the flexibility. The Fed is expected to move at least one more time, perhaps two, to lower short-term interest rates. Long-term interest rates are expected to remain near their current low levels.

Economists estimate that interest rate changes take 6 to 12 months to fully impact the economy. This means that the rate cuts, which occurred near the end of 1998, will provide a cushion for consumer and business spending throughout most of 1999.

In a change from recent years, the federal budget is expected to provide some mild stimulus for the economy. The 1999 fiscal year budget contains aid for farmers, grants to state and local governments for more teachers and higher defense spending. The budget also has a large appropriation for highway construction. Despite higher spending and a slowdown in tax revenue, the budget is expected to show a surplus at the end of the year.

Alternative Scenarios
This forecast is intended to be a middle-of-the-road projection. It suggests a slowing economy but no recession. However, the economy is more vulnerable to a recession than any time since the early 1990's.

What is likely to be the cause of a recession? The most probable cause of a recession would be declining exports. More weakness in Asia, especially Japan, is one clear risk to U.S. exports. Another is the prospect of recessions in Latin America. Declining currency values in the affected countries would surely follow these developments. Both falling world demand and a higher valued dollar would hit exports harder.

A strong negative domestic reaction to world events is a necessary part of the recession scenario. Declining exports and a stronger dollar mean lower corporate earnings. This could mean a substantial decline in stock prices. This in turn could force households to curtail spending and increase savings. Lower stock prices and less consumer spending would translate into reduced capital spending. Layoffs would inevitably follow.

If a recession were to develop, the Fed could be expected to lower interest rates even more aggressively. This would likely mean a relatively mild downturn.

A plausible case for a stronger economy can also be made. The strength of the economy going into 1999 appears to be greater than expected several months ago. Consumers may continue to save at extremely low rates. It is also possible that European monetary union and Asian recoveries make export growth stronger than anticipated.

As always there are upside and downside risks. At this point, the downside seems to outweigh the upside risks. This suggests that 1999 will probably turn out to be a weaker year than the past several. Nevertheless, it is important not to lose sight of the big picture. The odds favor continued economic growth into 2000. If this happens it would mark the longest expansion in U.S. history.

Supply
According to USDA, the 1998 U.S. fall potato crop is 429 million cwt, up 1.5% from last year. Potato growers in the Pacific Northwest, who produce 60% of the U.S. fall crop, cut production one percent. Oregon production dropped 4% to 26 million cwt. Washington growers produced nearly 90 million cwt, which is up 2% from a year ago. Idaho potato production is 138 million cwt, down 2% from last year. Growers in the Central states increased production more than 10%.

In spite of low prices for the 1997 crop, PNW growers increased potato acreage 5% in 1998. Oregon growers harvested 58,000 acres, up 8% from 53,500 acres in 1997. Washington growers increased acreage 5% from 152,000 to 160,000. Idaho potato growers harvested 413,000 acres, up 15,000 acres and 4% from a year ago. Potato growers across the US harvested 41,000 more acres than in the previous year.

Weather and pest problems reduced PNW potato yields 5%. Washington growers, who produce the highest yields in the world, produced a yield of 560 cwt/acre compared to 580 a year ago. Idaho yields dropped from 353 to 333 cwt/acre and Oregon's from 508 to 450 cwt/acre. U.S. fall crop yields are down 2%.

In addition to lower yields, many growers harvested a lower quality crop. USDA reports rougher shape and lower solids in most of the Western potato areas. Processing recovery rates will decline, requiring more raw product and reducing the quantity of potatoes that would normally go into the fresh market. Potato storage quality is generally good in the PNW and across the U.S. A few stored potatoes showed early trouble spots, but most grower marketing opportunities should not be limited by storage problems.

Due to global markets and the North American Free Trade Agreement (NAFTA), Canadian potato production increasingly influences U.S. potato markets. Canadian production is up 3% from 91.0 to 93.4 million cwt, setting its fifth consecutive record. The Prairie Provinces posted the biggest increase, much of which will go into the international french fry trade.

The potato crop harvested in northern Europe is much smaller. Excessive rain followed by hard frost caused a large part of Holland's crop to be lost in the field. Amsterdam's April potato futures exceeded $21/cwt (U.S. equivalent) because of the losses. Although the U.S. does not normally export many potato products to Europe, that could change with this crop. The lack of European competition also allows U.S. processors to gain market share in other parts of the world.

Demand
Frozen potato processing, mainly fries for fast food restaurants, provide the largest market for PNW potatoes. Market analyst Bruce Huffaker expects U.S. frozen potato processors to use 10% more potatoes from the 1998-99 crop. His reasons include reduced recovery rates and increased exports. In spite of the financial crisis in the important Asian market, frozen potato exports continue to increase. A small crop in Europe will open more global marketing opportunities for U.S. processors.

Demand for dehydrated potatoes will also play a key role in the 1998-99 PNW potato market. Dehydrators use potatoes that do not meet grade standards for the fresh market. PNW fresh-market growers typically send one-fourth to one-half of their crop to dehydrators. Potato shippers' sales of off-grade potatoes to dehy processors strongly influence the price they pay growers.

PNW dehydrated potato flakes are used to make some popular potato snacks. U.S. demand for Frito-Lay's Baked Lays and Proctor & Gamble's Fat Free Pringles has fallen behind company projections, reducing demand for PNW dehydrated potatoes. Positive dehy-market factors are increased exports of potato snack foods and the small crop in Europe.

Fresh potato prices are quite sensitive to changes in supply. Many PNW potato growers can sell their potatoes to either fresh shippers or frozen potato processors. Although processors contract for much of their raw product needs, they also purchase some potatoes in the open market. If demand for frozen potato products increases more than expected, processors will buy more open market potatoes that would have otherwise gone into the fresh market. Reduced supplies going to the fresh market boosts prices.

Prices
With little change in supply, we can expect little change in average prices for PNW growers. Open-market prices for the 1997-98 crop were about $4.00 per cwt for most of the season, with early sales a bit higher and late-season prices lower. Fall prices for the 1998-99 crop are lower than a year ago, leading some to expect another year of prices below production costs. According to University of Idaho research, the cost of producing potatoes in Eastern Idaho and storing them for five months is nearly $5.00 per cwt.

The range of prices is another matter. On average, open-market potato prices rise between October and July. Growers who expected that pattern in recent years have been disappointed. Harvest-time prices have been the top of the market during the previous two marketing seasons. The 1994-95 crop is the last one that had a substantial increase in price during the marketing season, with the Idaho open market increasing from $3.50 at harvest to $8.00 - $10.00 in June and July.

Will the 1998-99 PNW pricing pattern be like the last two crops, like the 1994-95 crop or somewhere in between? It is too early to tell in December when this article is written. The main market forces to watch are fryer open-market buying, stocks in storage and international trade.

World Situation
World wheat and coarse grain markets started the 1998/99 marketing year with prices reaching some of the lowest levels of the 1990's. More than adequate supplies and the Asian economic downturn continue to pressure world grain prices.

Wheat: The 1998/99 world wheat crop is currently forecast as the third largest world wheat crop at 585.8 million metric tons (MMT). The 1997/98 world wheat crop of 611.0 MMT is the largest on record. Although world use has also expanded rapidly (averaging almost 3 percent per year over the last three years), ending stocks increased as a result of record production levels. World ending stocks for wheat were 136.6 MMT for the 1997/98 marketing year, providing a stocks to use ratio of 23.3 percent. The current marketing year (1998/99) is projected to provide a decrease in world wheat production, although still a large crop by historical standards. The projected decline in world ending stocks to123.0 MMT puts the stocks to use ratio back down to 20.5 percent. The decline in world wheat production for 1998/99 is primarily accounted for by a smaller crop for the major importing countries (down by 8.7 MMT or 4.6 percent), and the Former Soviet Union (down 23.6 MMT or 29.3 percent). The major exporting countries and the U.S. are projected to increase wheat production for the 1998/99 marketing year. Australia (up 8.1 percent) and the European Union (up 9.7 percent) are leading production increases for the major exporting group.

Coarse Grains: World production of coarse grains is projected to decrease slightly (4.3 MMT or 0.5 percent) in 1998/99. The decrease in world coarse grain production represents lower foreign coarse grain production (down 12.6 MMT or 2.0 percent). The world decrease is mostly offset by an increase in the U.S. (up 8.25 MMT or 3.1 percent). World coarse grain use and trade are expected to remain relatively constant in 1998/99. World coarse grains stocks for 1998/99 are projected to increase 2.4 percent. Foreign coarse grain stocks are projected to decline, and U.S. feed grain stocks are projected to increase to their highest levels since the 1992/93 marketing year.

U.S. Wheat and Feed Grain Situation
Historically tight supplies for U.S. grains (especially feed grains), was a key factor in setting record high farm level prices for corn and wheat during the mid-1990's. However, recent increases in U.S. grain production have continued to pressure prices. Both wheat and corn have experienced two successive years of relatively high production. U.S. wheat and feed grain stocks have increased substantially over the last two marketing years.

Wheat: The 1998 U.S. wheat crop is forecast at 2.557 billion bushels, slightly above 1997's crop of 2.527 billion bushels. Slightly higher domestic use in 1998/99 (primarily due to higher feed use) and increased exports will not offset the higher beginning stocks and production. Thus, 1998/99 U.S. wheat carryover is projected to increase by 14.5 percent (105 million bushels). The U.S. projected wheat carryover of 827 million bushels is close to the largest carryover of the decade, exceeded only by 1990/91's carryover of 868.1 million bushels. Farm level wheat prices for 1998/99 are currently forecast in the $2.60 to $2.80 range, which is just above the 1990/91 level of $2.61.

U.S. white wheat production totaled 298 million bushels in 1998, well below the previous two years. More than adequate supplies of other wheat classes (particularly hard red winter and soft red winter) continue to pressure white wheat prices. This pressure was most acute early in the marketing year when Portland prices dropped into the $2.50-$2.60 range during September. Although Portland prices recovered substantially during October, the average Portland price for July through November of 1998 was $2.87 per bushel.

Feed Grains: Harvested 1998 U.S. corn acreage is currently estimated at 73.8 million, which is comparable to the 73.7 million acres harvested in 1997. However, a near record yield of 133.3 bushels per acre puts the estimated U.S. corn crop at 9.836 billion bushels, the second largest U.S. corn crop on record. After three years of over 9 billion bushel crops, US 1998/99 corn stocks are projected to reach 1.72 billion bushels, the highest level since 1992/93. Farm level corn prices for 1998/99 are currently projected in the $1.80 to $2.20 per bushel range, substantially below last year's $2.45 and the five year average of $2.63.

Prices for other major feed grains are projected to follow a similar pattern. Farm level barley prices are projected at $1.95 per bushel ($81.26/ton) for 1998/99, well below last year's farm level price of $2.38 per bushel ($99.17/ton). U.S. barley production for 1998 is currently forecast at 358 million bushels, about 4 percent below 1997. In spite of lower supply levels, barley prices remain pressured from low corn prices.

Outlook for 1999
The world has demonstrated its capacity for increasing grain production when prices are strong and weather cooperates. How the world's grain producers respond to significantly lower grain prices and weather are key factors for 1999. The relatively large grain stocks, especially for the U.S., suggest production decreases will need to be substantial for a major market recovery. As spring approaches, 1999 world grain crop conditions will become the dominant market force.

Wheat: U.S. wheat supplies are now at relatively high levels following several years of historically tight world supplies. The 1998/99 drop in world ending stocks to 123.0 MMT (Table 1) provides some encouraging news. However, keep in mind the market will not be terribly excited until world stock forecasts get down into the 105 to 110 MMT range. Market fundamentals provide little encouragement for a substantial price rally for the remainder of the 1998/99 marketing year. For the next couple of months, U.S. exports need to remain at projected levels to sustain current price levels. Current wheat export inspections for 1998/99 are at 92 percent of 1997/98, while projected exports for 1998/99 are 11 percent above last year. Stronger weekly export levels are needed if U.S. wheat exports are to reach projected levels. Wheat market price forecasts for the remainder of the marketing year suggest average to slightly below average seasonal increases. This projection is based upon U.S. wheat exports reaching projected levels.

The market begins to focus on the 1999 crop early next spring, which provides the primary source of market optimism. Although it is early to predict the 1999 crop, three factors are relevant. First, the world wheat crop has been at record or near record levels for three consecutive years. The law of averages suggests that favorable weather patterns may not continue and a smaller world wheat crop is the likely outcome. Second, this year's price levels should discourage wheat plantings and reduce world wheat production. World wheat production for 1999/00 is currently projected by the author at 575 MMT. Total world use is also projected to fall below the record 1998/99 level due to slightly higher prices, adequate feed grain stocks, and a continuation of income problems in some major importing countries. The final factor involves the U.S. wheat crop specifically. Planting conditions for winter wheat started off a little rough, but conditions have improved. The 1999 winter wheat crop is rated above average, although lower than condition levels for the 1998 crop. However, an expectation of lower acreage and some decline in last year's record yield both suggest a smaller U.S. winter wheat crop. Projected U.S. 1999 wheat production of 2.30 billion bushels represents about a 10 percent drop from 1998 production. White wheat production is forecast at 325 million to reflect favorable planting conditions and a smaller reduction in acreage. Slightly stronger U.S. exports for the 1999/00 marketing year are projected based upon the reduction in world wheat production.

Given projections for U.S. and world wheat production, world and U.S. wheat ending stocks are projected to decline. Although some price improvement is expected, adequate world carryover and relatively high U.S. carryover are likely to lessen the impacts of lower production. The U.S. farm level price is expected to increase about 40 cents to the $2.90 to $3.30 range. Portland prices should range between $3.40 and $3.70, averaging about $3.65. Obviously, these price projections for 1999/00 are based upon expected declines in both world and U.S. wheat production. Any indication of production being higher than projected will reduce projected wheat prices. Conversely, additional reductions in world or U.S. wheat production will increase projected prices. However, keep in mind it would take a major production loss to get price levels back to mid-1990 levels. The Winter Wheat and Rye Seedings report is due out in January, providing the first official estimate of US winter wheat acreage.

Feed Grains: U.S. feed grain prices are in a situation similar to wheat. World production of coarse grains should decline following two big production years coupled with lower prices. Prices for the remainder of the marketing year should follow normal seasonal price increases. Any price improvement for the 1999/00 is based upon lower production and reduced ending stocks. Corn prices for 1999/00 are predicted to be 10-15 percent higher, with comparable increases for barley.

Grain price levels for the upcoming marketing year show some promise for improvement. World production levels for both wheat and feed grains are the critical variables to watch. Reductions in world production are expected, so evidence to the contrary will likely put downward pressure on prices. Although higher prices are expected, don't let record high levels of the mid-1990s be the guiding light for price projections. A couple of years were required to get market fundamentals to current levels and it will likely take a couple of years for a return to more favorable price levels. Any indication of an increase in U.S. stocks (a reduction in grain exports or domestic use), or favorable 1999 production of wheat or feed grains, changes current price projections quickly.

Agriculture Secretary Dan Glickman has announced that 26 U.S. trade organizations will receive $33.5 million for export promotion activities under the Foreign Market Development Program for fiscal year 1999.

"With the economic troubles in Asia, Russia, and other markets, and increasingly competitive world markets, we're determined to provide American agricultural exporters with resources to help them compete aggressively in overseas markets," Glickman said.

The FMD is designed to develop, maintain, and expand long-term export markets for U.S. agricultural, fish, and forest products. Program activities focus on reducing historical or infrastructural market impediments, improving the processing capabilities of importers, modifying restrictive regulatory codes and standards, and identifying new markets or uses for U.S. products in foreign markets.

Under the program, FAS enters into agreements with nonprofit U.S. trade organizations with broad producer representation to foster a trade promotion partnership. Priority is given to organizations that are nationwide in membership and scope. In 1999, cooperators and U.S. industries will contribute resources totaling about 110 percent of the funds provided by FAS.

Last year, USDA streamlined FMD guidelines to reduce paperwork and make it easier for cooperators to make mid-course adjustments in the face of changing market conditions. Fiscal 1998 was also the first year in which FMD applications were submitted as part of the Unified Export Strategy, allowing applicants to submit a single, consolidated proposal for several export programs.

The FMD has mobilized private sector support and funding for market development activities in more than 100 countries worldwide. Trade organizations compete for FMD funds on the basis of the following allocation criteria: past export performance, past demand expansion performance, future demand expansion goals, and contribution levels.

For more information on the program, visit the FMD Web site at http://www.fas.usda. gov/mos/programs/fmd.html, or call the Marketing Operations Staff at (202) 720-4327.

Cardiovascular diseases kill moe than 950,000 Americans every year, says the American Heart Association. That's nearly twice as many deaths as from all forms of cancer&emdash;a life every 33 seconds.

Some people think life begins at conception, while others think life begins at birth.

But, some believe that life begins when the kid moves out and the dog he left behind dies.