13 August 2009

13 minute read

LIVESTOCK, POULTRY, AND DAIRY: Total US red meat and poultry production for 2009 is reduced as lower beef and poultry output more than offset higher pork production. The 1 July Cattle report, which was released on 24 July indicated lower cow numbers, a smaller calf crop, fewer cattle on feed, and fewer cattle outside feedlots than last year, all implying smaller feedlot placements through the balance of 2009 and into 2010. This also implies lower feedlot marketings and cattle slaughter and hence lower beef production than forecast last month. Partly offsetting the lower beef production is higher forecast pork production due to larger expected slaughter and higher carcass weights in the third quarter of 2009. Poultry production is forecast slightly lower as fractionally higher second quarter broiler production is more than offset by weaker turkey production. Egg production for 2009 is reduced slightly. Changes in the meat production forecast for 2010 reflect tighter supplies of fed cattle due to smaller cattle feedlot placements and lower cow slaughter. There are no changes to forecast pork and poultry production for 2010 as lower feed prices provide some support to producers. Egg production forecasts are unchanged from last month.

Export forecasts for 2009 and 2010 are reduced largely because of lower expected beef shipments. Weak economic growth in 2009 and tighter beef supplies for both 2009 and 2010 are expected to result in lower exports. Broiler exports are raised slightly but turkey export forecasts are reduced. Pork forecasts are unchanged.

Price forecasts for cattle, hogs, and broilers are lowered for 2009. Weak demand is pressuring prices. Egg prices are forecast slightly higher. Prices for hogs and broilers are lowered for 2010, but cattle prices are raised as tighter fed cattle supplies support prices. Egg and turkey price forecasts are unchanged for 2010.

The milk production forecast is raised for 2009 and 2010 as the reduction in cow numbers is slower than expected and growth in output per cow is higher. Fat and skim-solids basis imports are raised as cheese imports have been stronger than expected; the commercial export forecast for 2009 is adjusted as higher exports in the first half are offset by lower second half exports. Exports for 2010 are lowered as higher domestic prices and larger exportable supplies in competitor countries limit export opportunities into 2010. CCC removals are adjusted to reflect changes in support prices for cheese and nonfat dry milk (NDM). Cheese and NDM price forecasts are raised for 2009 as higher support prices and increased net removals support domestic prices. Forecast cheese and NDM prices for 2010 are lowered as higher forecast production and weaker commercial exports increase domestic supplies. Butter and whey price forecasts are unchanged from last month. Both Class III and Class IV prices are forecast higher for 2009 reflecting higher forecast prices for cheese (Class III) and NDM (Class IV). Class price forecasts for 2010 are reduced as cheese and NDM prices are lowered. The all milk price is forecast at $12.10 to $12.30 per cwt for 2009 and $14.65 to $15.65 for 2010.

WHEAT: US wheat ending stocks for 2009/10 are projected 36 million bushels higher this month as higher forecast production more than offsets an increase in projected use and lower imports. Wheat production is forecast 71 million bushels higher with increases in all classes of wheat except soft red winter. The largest increases are for hard red spring wheat and durum reflecting sharply higher expected yields in the Northern Plains. Feed and residual use is raised 5 million bushels with the larger crop. Exports are projected 25 million bushels higher with reduced production prospects in Canada and Argentina, which are major competitors in the western hemisphere wheat market. The 2009/10 marketing-year average farm price is projected at $4.70 to $5.70 per bushel, down 10 cents on both ends of the range. Small revisions are also made this month to 2007/08 and 2008/09 imports, exports, and food use based on the latest trade and mill grind data from the US Bureau of Census.

Global wheat supplies for 2009/10 are projected 5.0 million tons higher with higher beginning stocks and increased prospects for global production. World wheat production is raised 2.8 million tons for 2009/10 with major increases for India, United States, EU-27, China, and Ukraine partly offset by reductions for Russia, Argentina, Canada, and Kazakhstan. India production is raised 3.0 million tons to a record 80.6 million based on the latest revision to the official government estimate. EU-27 production is raised 1.6 million tons mostly on higher reported yields for Germany, but also on better-than-expected yields for France and rising prospects for harvested area and yields for Poland. Partly offsetting are cuts for Spain, Romania, Bulgaria, and Austria where persistent dryness reduced yields. China production is raised 1.0 million tons reflecting the first official indications for the harvested summer crops. Ukraine production is raised 1.0 million tons on higher winter wheat area and harvest reports.

Production forecasts for 2009/10 are lowered for several major wheat exporting countries. Production for Russia is lowered 4.5 million tons as dryness and extended heat during July sharply reduced yields in the Southern and Volga Districts. Kazakhstan production is lowered 0.5 million tons as western growing areas suffered under weather conditions similar to those in Russia. Argentina production is lowered 1.0 million tons as continued dryness in the central and western growing areas limited plantings. Production is also lowered 1.0 million tons for Canada as July rains came too late in some areas of Alberta and Saskatchewan and crop development remains delayed raising the potential for late season frost damage.

Global wheat imports and exports for 2009/10 are projected slightly lower. Small import reductions are projected for Afghanistan, Brazil, Egypt, Japan, and Azerbaijan. Partly offsetting is an increase for Sudan. Larger country changes are forecast for exports, but they are mostly offsetting, leaving global exports down just 0.6 million tons. Exports are lowered 2.0 million tons for Russia, 1.8 million tons for India, 1.0 million tons for Argentina, and 0.5 million for Kazakhstan. Exports are raised 2.0 million tons each for EU-27 and Ukraine and combine with higher expected US exports to limit the decline in global trade. Global consumption is raised 2.7 million tons as a 4.4-million-ton increase in India food use is only partly offset by reductions in food use by Ukraine and Canada, and lower wheat feeding in EU-27 and Canada. Global ending stocks for 2009/10 are projected 2.3 million tons higher boosted in part by the rise in 2008/09 carryout.

COARSE GRAINS: US feed grain supplies for 2009/10 are projected higher this month with sharply higher forecast corn production more than offsetting a reduction in carryin as 2008/09 corn exports are raised 50 million bushels. Corn production for 2009/10 is projected at 12.8 billion bushels, up 471 million as higher forecast yields more than offset a small reduction in harvested area as updated from the June 30 Acreage report. US corn supplies are projected at a record 14.5 billion bushels, up 134 million from the previous record in 2007/08.

Corn use for 2009/10 is projected higher with rising supplies and lower expected prices. Despite reduced prospects for livestock production, feed and residual use is raised 100 million bushels with the higher yield and production expected to add to residual loss. Food, seed, and industrial use is raised 100 million bushels with higher expected use for ethanol supported by favorable ethanol producer returns and strong incentives for ethanol blending. Exports are projected 150 million bushels higher reflecting reduced foreign production prospects and stronger expected import demand from Mexico and Taiwan. Ending stocks are projected up 71 million bushels with higher expected use partly offsetting the increase in production. The 2009/10 marketing-year average farm price is projected at $3.10 to $3.90 per bushel, down 25 cents on both ends of the range. The marketing-year average reflects higher prices for corn sold for forward delivery over the past several months ahead of the sharp downturn in futures and cash market prices since early June.

Other feed grain changes include slightly higher 2009/10 production forecasts for sorghum, barley, and oats, as well as minor revisions to 2007/08 and 2008/09 imports and exports based on the latest data from the US Bureau of Census. Oats imports are projected 15 million bushels lower with reduced crop prospects in Canada. As a result, projected feed and residual use for oats is lowered 10 million bushels.

Global coarse grain supplies for 2009/10 are projected 8.3 million tons higher this month. Rising production prospects for US corn, Ukraine barley, India sorghum, and EU-27 rye and mixed grains are partly offset by reductions in expected coarse grain output elsewhere. Corn production prospects are reduced for Mexico, Russia, South Africa, Ukraine, and EU-27. Barley production is lowered for Turkey, Canada, and EU-27.

World coarse grain imports and exports are both projected higher for 2009/10 mostly reflecting higher expected corn exports, up 2.6 million tons this month. Corn imports are raised 1.5 million tons for Mexico and 0.3 million tons for Taiwan. The 3.8-million-ton increase for US corn exports is partly offset by a 0.5-million-ton reduction each for South Africa and Ukraine, and a 0.2-million-ton reduction for Russia. Barley exports are raised 0.4 million tons with a 1.5-million-ton increase for Ukraine, partly offset by smaller reductions for Australia, Canada, EU-27, and Kazakhstan. Oats exports are cut 0.2 million tons with a reduction in Canada. Global coarse grain feeding is raised 1.7 million tons as increased US corn feed and residual use and higher barley feeding in Australia is partly offset by reduced corn feeding in Russia and reduced barley and oats feeding in Canada. Global coarse grain ending stocks are projected higher, mostly reflecting a 2.3-million-ton increase in corn stocks.

RICE: USDA's first survey-based forecast of the 2009/10 US rice crop is 211.2 million cwt, up slightly from last month's projection, and up 7.4 million from 2008/09. Average yield is forecast at 7,039 pounds per acre, up 6 pounds per acre from last month, and an increase of 193 pounds per acre from last year. Area harvested at 3.0 million acres is unchanged from a month ago. Long-grain production is forecast at 150.4 million cwt, down 0.6 million from last month, while combined medium- and short-grain production is forecast at 60.8 million cwt, up 0.8 million from a month ago.

All rice 2009/10 domestic and residual use and exports are unchanged from last month. However, combined medium- and short-grain exports are raised 2.0 million cwt to 28.0 million, while long-grain exports are lowered the same amount to 71.0 million. The rough rice export projection is raised 1.0 million cwt to 35 million, while exports of milled and brown rice (on a rough-equivalent basis) are lowered 1.0 million cwt to 64 million. Ending stocks are projected at 23.9 million cwt, 1.2 million above last month and 5 per cent above a year earlier.

The season-average farm price range for all rice in 2009/10 is raised $0.40 per cwt on each end to $13.65 to $14.65 per cwt, compared to a revised $16.25 per cwt for 2008/09. The higher US price forecast is due to a larger share of US marketings of higher-priced medium-grain rice and an expected firming of global prices due to tighter world supplies. The long-grain season-average farm price range for 2009/10 is projected at $12.00 to $13.00 per cwt compared to a revised $14.90 per cwt in 2008/09. The combined medium- and short-grain farm price range is projected at $19.50 to $20.50 per cwt, compared to a revised $21.30 per cwt in 2008/09.

Projected global 2009/10 production, consumption, and ending stocks are lowered from a month ago, while trade is nearly unchanged. World 2009/10 rice production is projected at 433.5 million tons, 15.5 million tons below last month, 11.4 million below the record 2008/09 estimate, and nearly the same as 2007/08. This month's lower crop forecast is primarily due to the effects of a below-normal monsoon on India. India’s 2009/10 crop is projected at 84.0 million tons, 15.5 million or 16 per cent below last month, 15 per cent below 2008/09, and the lowest crop since 2004/05. Other notable revisions in 2009/10 production included an increase for Cambodia which is nearly offset by a decrease for Brazil. World consumption is lowered 5.3 million tons mostly due to decreases for India, Thailand, Burma, and Cambodia. Global 2009/10 ending stocks are projected at 84.0 million tons, down 10.5 million from last month, and down 4.7 million from revised 2008/09.

OILSEEDS: US oilseed production for 2009/10 is projected at 94.5 million tons, down 1.8 million from last month as lower soybean and cottonseed production are only partly offset by higher peanut production. Soybean yields are forecast at 41.7 bushels per acre, 0.9 bushels below last month=s trend yield projection, but 2.1 bushels above last year's yield. The first survey-based forecast of US soybean production is 3.2 billion bushels, 61 million below the July projection, but 240 million bushels above last year's crop. Soybean stocks are projected at 210 million bushels, down 40 million from July as reduced supplies are only partly offset by reduced crush and exports. Soybean crush is reduced 10 million bushels to 1.67 billion due to lower soybean meal exports. Soybean exports are reduced 10 million bushels to 1.265 billion. Lower US soybean and soybean meal exports are offset by increased shipments from Argentina.

Soybean and product prices are all increased this month. The US season-average soybean price for 2009/10 is projected at $8.40 to $10.40, up 10 cents on both ends of the range. Soybean meal prices are projected at $260 to $320 per short ton, up $5.00 on both ends of the range. Soybean oil prices are projected at 32 to 36 cents per pound, up one cent on both ends of the range.

Global oilseed production for 2009/10 is projected at 422.6 million tons, down 0.9 million tons from last month, but still record high. Soybean production for China is reduced 0.2 million tons to 15.4 million due to lower yield resulting from excessive moisture in the northeast. Offsetting increases are projected for soybean production in EU-27 and Ukraine. EU-27 rapeseed production is projected at a record 19.5 million tons, up 1.2 million due to better-than-expected yields reported during harvest, especially in Germany and Poland. Other changes include higher sunflowerseed production in EU-27, lower peanut production for India, and a small reduction in cottonseed production for Brazil.

US changes for 2008/09 include increased soybean crush and exports and an offsetting reduction in residual, leaving projected ending stocks unchanged at 110 million bushels. Crush is raised 5 million bushels to 1.66 billion reflecting a small increase in domestic soybean meal disappearance. Soybean exports are increased 5 million bushels to a record 1.265 billion.

SUGAR: Projected 2009/10 US sugar supply is increased 350,000 short tons, raw value, from last month. Sugar production is increased 200,000 tons and beginning stocks are increased 150,000 tons while imports are decreased 50,000 tons. The increase in sugar production is based on higher-than-expected forecast production of US sugarbeets and Florida sugarcane, which more than offsets lower Louisiana sugarcane. The reduction in 2009/10 imports is due to prospects for sharply higher world market prices increasing shortfall in filling the tariff rate quota.

Estimated 2008/09 US sugar supply is increased 250,000 tons, based on larger early harvest of 2009-crop sugarbeets and continued strong imports from Mexico. Sugar use is increased 100,000 tons to reflect the refined portion of the increase in imports from Mexico.

COTTON: The US 2009/10 cotton forecasts are virtually unchanged from last month, with slightly larger beginning stocks offsetting marginally lower production. Production is lowered 43,000 bales, based on the National Agricultural Statistics Service’s first crop survey of the season. Harvested acres are estimated at 7.8 million, reflecting abandonment of 14 per cent, and the yield per harvested acre is estimated at 816 pounds. Domestic mill use, exports, and ending stocks are unchanged from last month. The forecast range for the marketing-year average price received by producers is narrowed 1 cent on each end to 49 to 59 cents per pound.

The 2009/10 world cotton forecasts are also virtually unchanged from last month. Production is forecast at 105.9 million bales, reflecting an increase for China, offset by reductions for Greece, Brazil, and Australia. World trade is raised marginally, due mainly to increases in imports by Turkey and Vietnam. World ending stocks of 57.5 million bales are lowered by less than 1 per cent.

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