Noted economist and Washington observer, Jim Wiesemeyer, kicked off the 2006 Agribusiness Forum, November 14-15, in Kansas City. Wiesemeyer and Forum attendees looked at the Global Forces Shaping Agriculture.

What are some of the major factors shaping our ag market environment? Wiesemeyer stated that higher interest rates are here and it’s having an impact on the housing market and the consumer to a degree. There have been 17 consecutive rate increases that ended in June and now they’re on hold. Wiesemeyer believes the next move will be lower rates because of the somewhat weak economy, the dollar situation, etc. In addition, he says we are in a recession that is hopefully just a growth recession because of the global repercussions of our downward growth.

Wiesemeyer also discussed the progress and condition of the 2007 crops. “Acreage volatility is the biggest market factor and has been for the last 2 months,” says Wiesemeyer. He predicts it will be a roller coaster ride in the spring as the market tries to bid the adequate amount of corn acres, how few soybean acres we can deal with, and the price of wheat because of the considerable increase in the number of acres of wheat.

He predicts that the prospects for agriculture remain favorable over the next five years. Wiesemeyer says that agriculture as an energy crop is here to stay, but the renewable fuel demand will force significant realignment with energy prices remaining a wild card. He also predicts that ethanol production will increase 85% over the next five years and corn utilized for ethanol could increase 60%.

One fundamental change that should be watched is that for the first time foreigners will sell more to the U.S. than U.S. citizens provide revenue to the government. Within the next 15-20 years, China will surpass the U.S. on GDP.

Jim Wiesemeyer is Vice President of Policy and Trade Issues for Informa Economics Inc.’s Washington, D.C. office. He is also the Washington consultant to the Pro Farmer newsletter. Besides writing for Informa Economics’ daily Morning Comments, Jim has a column, Inside Washington Today, on AgWeb.com.