The nation's equity markets rallied a bit this week on news that at least some companies are reporting earnings. But, there remains an underlying apprehension over the state of the U.S. economy. Some of that is attributable to the events of a month ago and the current response. But there were larger trends already in motion.
Retail sales remain weak. Major companies continue to announce layoffs. And in Rural America, the Agriculture Department says a sluggish world economy will restrain growth in agricultural exports. That is disheartening news to the nation's export–sensitive farm sector, especially in key commodity-growing regions that are in the midst of harvest.
The autumn harvest of the nation's grain, oilseed and fiber crops is moving forward albeit a bit behind the normal pace.
While 29 percent of the U.S. corn crop has left the field, corn giant Iowa, producer of about a fourth of the U.S. crop, has harvested only 9 percent. Last year the state had more than half its corn in the bin at this time.
With 40 percent completed, the nation's soy harvest is also slightly behind its normal pace. On average 43 percent of the crop has been harvested by now. In the South and Far West the cotton harvest is also slightly behind the historic pace. Twenty nine percent of the American cotton has been harvested. But, 88 percent of the U.S. rice harvest is complete, well ahead of schedule.
Despite the lag in harvest progress the government thinks there is more grain in the pipeline than earlier believed.
The USDA now anticipates a 9.4 billion-bushel corn crop. That figure is 2 percentage points above last month's guess. The new soybean projection, pegged at 2.9 billion bushels, is three points above last month's estimate. And the USDA projects the cotton harvest will yield more than 20 million bales. That's slightly higher than last month's estimate and 17 percent above last year's output.
Trading was cautious ahead of the Friday release of government harvest projections, and on Friday the markets greeted the new projections with a sharp sell-off.
The weakening export outlook is being exacerbated by news from Russia. There, officials are reporting a bumper wheat harvest, much of it high quality food-grade grain. Once large buyers of American grain, Russian officials now say their country may export as much as five and a half million tons of wheat over the course of the 2001-02 marketing year.