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CoBank Releases Quarterly Rural Economic Review

Increased Supplies and Falling Prices Shift Benefits Away from Grain Growers in 2014

DENVER, Jan. 7, 2014 /PRNewswire/ -- An improving outlook for economic growth and declining crop prices will generate mixed effects for rural America in 2014, according to CoBank's new Quarterly U.S. Rural Economic Review.

A growing economy should bolster demand for agricultural products, power and energy, and communication services. However, greater supplies of grain and other crop commodities will pressure prices and re-direct market forces in favor of processors and consumers. In previous years, limited supplies had elevated prices, which have benefited grain producers but penalized grain buyers. In the coming year, the animal protein and dairy sectors, grain handlers, and ethanol producers will benefit most from the transition.

Globally, supplies for most grain, fiber and oilseed commodities are hovering near record highs as well, with record output soon expected in South America. As world inventories grow, domestic agricultural markets will look increasingly to China, and other Asian importers, to determine if rising demand there for grain, dairy, and meat products can bridge or slow the widening gap between supplies and use. 

CoBank's report, titled "Forward Progress Instills Guarded Optimism," also highlights major structural shifts unfolding in the rural infrastructure industries in 2014. Seemingly insatiable demand for cloud and broadband services are driving the entire communications industry toward an all-IP network.  Also, steady increases in natural gas production have maintained downward pressure on natural gas prices, with far-reaching implications for the nation's electricity prices, the economics of coal-fired generation, and the competitiveness of renewable energy technologies over the long run.

"The global economy is not out of the woods yet but it's headed in the right direction," said Leonard Sahling, director of CoBank's Knowledge Exchange Division, which issued the report. "Incomes will steadily rise in 2014, and so will the demand for commodities and services. However, the rising economic tide will lift most ships, but not all. Crop supplies will increase, despite greater use, and will provide relief to some, while challenging others."

CoBank's Knowledge Exchange Division is a knowledge-sharing practice that provides strategic insights regarding the key industries served by CoBank. Knowledge Exchange draws upon the internal expertise of CoBank, deep knowledge within the Farm Credit System and boots-on-the-ground intelligence from customers and other stakeholders to enhance the collective understanding of emerging business opportunities and risks.

For a full copy of the report, click here.

About CoBank

CoBank is a $94 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture and the nation's rural economy. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

For more information about CoBank, visit the bank's web site at www.cobank.com.

SOURCE CoBank

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