UPDATE 1-U.S. farm '07 income seen at record $87.1 bln-USDA

(Recasts, adds detail from USDA report)

By Christopher Doering

WASHINGTON, Aug 30 (Reuters) - Rising prices for livestock should push U.S. net farm income to a record high in 2007, the Agriculture Department said on Thursday, forecasting that farm income would rise to $87.1 billion.

That would top the previous record for net farm income of $85.9 billion set in 2004.

"The current farm income forecast has net farm income rising $28.1 billion, due to the livestock sector faring much better financially than previously forecast due to improving market conditions, including increased demand for exports," USDA said in its report.

Cash receipts for beef producers are expected to rise by more than $1 billion to a new high of $50 billion. Beef supplies will be impacted by dry pastures, floods in the Southern Plains, rising corn and soybean prices, peaking of feedlot inventories, and continued above-normal cow slaughter.

The value of production in the farm sector is forecast to rise $47.7 billion in 2007 due to large increases in the value of both crop output, up $23.5 billion, and livestock production, an increase of $20.4 billion.

"The value of crop production is forecast to be up by nearly $24 billion in 2007 (to $141.5 billion), with more than two-thirds of this increase from rising cash receipts. For most field crops, 2007 cash receipts are forecast to be a record high," USDA said.

USDA said farmers also were benefiting from higher market prices for corn, soybeans and wheat.

Wheat prices have risen in 2007 due to drought conditions that reduced supplies in several wheat producing countries while rains in the United States cut both the quantity and quality of wheat. Corn and soybean prices rose due to increased demand fueled largely by escalating biofuel production.

Corn cash receipts in 2007 should exceed $31 billion and soybeans $19 billion. Wheat and rice are expected to rise to an all-time high of $9.7 billion and $1.9 billion, respectively. Cash receipts for cotton and for fruits and nuts are expected to drop, with each slipping close to $1 billion.

Overall, in 2007 the farm sector's net value added to the national economy is forecast to be $135.4 billion, up $31.1 billion from 2006.