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US farming sector seen fruitful in 2009
Although the tightened global credit market prompted companies across sectors to trim sales guidance, the farming sector is expected to remain fertile since global food stocks are low and demand is expected to be robust in 2009.
The agriculture sector sprouted staggered profits in the midst of last summer's global commodity boom and even though crop prices have come down from record highs after investors worried that the global economic slowdown would stem demand, Analyst P.J. Juvekar at Citigroup said farmer purchasing trends are expected to be strong in the first quarter of 2009, in line with healthy fundamentals. "Global corn and soy stocks are near historic lows," Juvekar said. Although U.S. farmers have been delaying purchases of fertilizers and chemicals in the fourth quarter, Juvekar said he believes the trend is a result of a delayed harvest and that demand is likely to return in 2009's first quarter, when farmers will have to come back into the market."
Furthermore, the credit crunch isn't expected to affect U.S. farmers as much as it is doing to other industries since there are numerous credit sources available via the U.S. Farm Credit System and regional bank programs, Juvekar said. As well, farmers aren't typically strapped for cash since in 2008, farm income rose 9.0%, to $96.0 billion--although input costs also rose from the prior year.
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