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World Agricultural Supply and Demand Estimates

by 5m Editor
28 July 2008, at 12:00am

This report, released by the National Agricultural Statistics Service (NASS), adopts U.S. area, yield, and production forecasts for winter wheat, durum, other spring wheat, barley, oats and also livestock, poultry and dairy.

Production Forecasts for 2008

The total U.S. meat production forecast for 2008 is fractionally lower as reduced beef production offsets increased production of pork and broilers. Beef production is forecast lower as cattle placements and marketings have been lower than expected. Pork production is forecast higher as the June 27 Quarterly Hogs and Pigs report indicated larger available supplies of hogs for slaughter during the last half of the year. Forecast broiler production is raised from last month as slaughter data point to continued increases in broiler production through the rest of the year.

Production Forecasts for 2009

The meat production forecast for 2009 is lowered from last month as the sector responds to higher feed prices.

The beef forecast is unchanged from last month as producers are expected to respond to higher feed prices by placing cattle into feedlots at heavier weights. However, the July Cattle inventory report, scheduled for release on July 25, will provide an indication of producer intentions regarding breeding herd expansion and the availability of cattle for feedlot placement into 2009.

The pork production forecast is raised from last month. Although producers intend to farrow fewer sows during the second half of 2008 compared with 2007, higher-than-expected pigs per litter will partly offset farrowing declines and result in more available hogs for first-half 2009 slaughter compared to last month. Expectations of continued reductions in sows farrowing in first-half 2009 will likely result in lower slaughter in the latter part of the year. Hog carcass weights are expected to be lighter as producers respond to high feed costs by marketing hogs as quickly as possible.

The broiler and turkey production forecasts for 2009 are lowered from last month. Poor producer returns are expected to weigh on the sector and 2009 production is expected to dip below 2008. Egg production forecasts are unchanged from last month as high egg prices are expected to mainly offset higher feed prices.

Export Forecasts

Meat export forecasts for 2008 and 2009 are raised from last month, reflecting higher expected sales of both red meat and broiler meat in 2008, and higher beef and pork exports in 2009. The beef export forecast is fractionally higher, but pork exports in 2008 and 2009 are raised on expectations of continued strong sales to Asia.

Price forecasts for both 2008 and 2009 are raised as meat supplies are forecast tighter. Cattle prices are increased as cattle supplies remain relatively tight. Despite a larger pork production forecast, strong exports are expected to support hog prices at higher levels than forecast last month. Broiler meat and turkey price forecasts are higher for 2009 as production declines due to increased feed costs. Egg price forecasts are boosted due to a weak production response to record prices.

Milk production forecasts for 2008 are increased due to slightly higher forecast cow numbers and slightly stronger growth in milk per cow. However, higher feed prices are expected to largely offset higher milk prices and the production forecast for 2009 is unchanged. The July Cattle report, scheduled for release on July 25, will provide an indication of producer intentions for dairy heifer retention. Commercial exports of dairy products in both 2008 and 2009 are raised from last month as foreign demand remains strong. In light of relatively slow growth in milk production and strong demand in 2008, domestic disappearance on both a fat and skim-solids basis are raised and ending stocks reduced. With continued tight milk supplies in 2009, forecast domestic disappearance is lowered and stocks are reduced from last month.

Despite relatively slow growth in cheese production, recent prices have been lower-than-expected and the price forecast for 2008 is reduced from last month. However, strong demand is boosting butter and nonfat dry milk (NDM) prices. The whey price forecast is fractionally lower than last month as stocks are high. The 2008 Class III price is reduced, but the Class IV price is raised. For 2009, slow growth in milk production and expectations of relatively strong demand are expected to support a higher cheese price forecast. Butter, NDM, and whey price forecasts are unchanged. The Class III price forecast is raised to reflect higher cheese prices; the Class IV price forecast is unchanged. The all milk price is forecast higher this month, averaging $18.95 to $19.25 in 2008 and $18.60 to $19.60 in 2009. These forecasts, if realized, will result in milk prices at or near record levels since 2007.

Wheat

U.S. 2008/09 wheat supplies are projected higher this month on higher carryin and production. Beginning stocks are raised 52 million bushels based on June 1 stocks. Winter wheat production is forecast up 47 million bushels mostly on higher soft red production. The first surveybased production forecast for spring wheat (including durum) is 596 million bushels, up 8 percent from last year, but 18 million bushels lower than last month’s projection. Feed and residual use for 2008/09 is raised 30 million bushels with increased supplies, particularly for soft red winter wheat, and higher expected corn prices. Ending stocks are projected at 537 million bushels, up 50 million from last month. The first 2008/09 by-class wheat supply and demand projections indicate larger supplies of all classes of wheat except hard red spring. The 2008/09 marketing year average farm price is projected at $6.75 to $8.25 per bushel, unchanged from last month.

Global 2008/09 wheat production is projected at a record 664 million tons, up 1.3 million tons from last month and 53 million tons higher than the weather-reduced 2007/08 crop. This month’s increase reflects higher production in Australia, EU-27, and the United States, which more than offsets a reduction for Iran. Production for Australia is raised 1.0 million tons based on increased area in the latest government estimates. EU-27 production is projected 1.7 million tons higher on increased yields for France, Bulgaria, and Romania, which more than offset reductions for Germany and Poland. Favorable weather continues to boost EU-27 crop prospects despite May and late June dryness in parts of Germany and Poland. Recent rains in these countries, however, have been beneficial and helped stabilize conditions for affected crops. Production for Iran is cut 2.0 million tons as extreme, prolonged drought in the major rain-fed growing areas has sharply reduced output.

Global 2008/09 wheat imports, exports, and consumption are all raised this month with increased supplies. World imports are raised on increases for Iran and South Korea, up 2.0 million tons and 0.5 million tons, respectively. World exports are raised with a 1.0-million-ton increase for EU-27 and increases for Kazakhstan and Ukraine, each up 0.5 million tons. World wheat feeding is projected 1.9 million tons higher on increases for Canada, South Korea, and the United States. World wheat ending stocks are projected 1.0 million tons higher with increases for the United States and Australia only partly offset by a number of smaller reductions elsewhere.

Global 2007/08 wheat imports and exports are also raised this month. The largest import increases are for North Africa countries and the United States. The largest export increases are for Canada and the EU-27. Global ending stocks for 2007/08 are raised mostly reflecting higher stocks in the United States.

Coarse Grains

U.S. 2008/09 corn ending stocks are projected higher this month as higher carryin and reductions in food, seed, and industrial use more than offset lower production and higher feed and residual use. Harvested area is raised 100,000 acres based on the June 30 Acreage report. Production, however, is projected 20 million bushels lower at 11.715 billion as the projected yield is lowered 0.5 bushels per acre. As indicated in the Acreage report, heavy June rains and flooding reduced the share of harvested area in the higher-yielding Corn Belt states. Feed and residual use for 2008/09 is raised 50 million bushels based on higher expected pork and poultry production in the first half of the 2008/09 marketing year. Food, seed, and industrial use is lowered 65 million bushels, in line with changes to the 2007/08 marketing year. Ending stocks are projected 160 million bushels higher at 833 million. The 2008/09 marketing year average price received by producers is projected at $5.50 to $6.50 per bushel, up 20 cents on each end of the range. The tighter balance sheet for soybeans and higher soybean prices are expected to drive competition for 2009 Acreage keeping cash and futures corn prices relatively strong, but below recent record levels.

Ending stocks for 2007/08 are projected 165 million bushels higher with food, seed, and industrial use lowered 65 million bushels and feed and residual use lowered 100 million bushels. Ethanol corn use for 2007/08 is lowered 50 million bushels based on reported delays in plant startups and construction, as well as lower expected plant capacity utilization as indicated by the most recent ethanol production data. Feed and residual use for 2007/08 is lowered as June 1 stocks indicated lower-than-expected corn use during the March-May quarter. The 2007/08 marketing year price for corn is unchanged this month at $4.25-$4.45 per bushel.

Global 2008/09 coarse grain production is raised 1.5 million tons this month reflecting higher foreign corn and barley production. Corn production is raised 1.3 million tons for EU-27 on increased area in France. Prospects for India corn are raised 1.0 million tons on favorable early season monsoon rains. Corn production for Russia and Ukraine are lowered this month mostly on lower expected harvested area. Global barley production is increased for Argentina, China, and EU-27, which more than offsets a reduction for Canada on lower area. Area is raised for Argentina. Yield increases for China and EU-27 reflect very good weather in both countries for spring crop development.

World coarse grain consumption for 2008/09 is increased 3.5 million tons as higher expected foreign consumption, again this month, more than offsets reduced U.S. corn use. Increased foreign corn consumption accounts for more than half of the rise in coarse grain use with the rest accounted for by higher barley use, mostly for feeding. World coarse grain imports and exports are nearly unchanged this month with a number of small, mostly offsetting country changes. Corn imports are raised for Canada and North Korea, but lowered for EU-27 and South Korea. Barley imports are raised for Saudi Arabia. Barley exports are raised for Argentina and Russia, but lowered for Canada. Global coarse grain ending stocks are raised for both 2007/08 and 2008/09 reflecting higher corn stocks in the United States.

Oilseeds

U.S. oilseed ending stocks for 2008/09 are projected at 4.9 million tons, down 0.9 million tons from last month. Lower soybean stocks account for most of the reduction. Oilseed production is projected at 90.1 million tons, down 2.9 million tons. Reduced soybean and cottonseed production are only partly offset by increased sunflowerseed, canola, and peanut production. Soybean production is projected at 3.0 billion bushels, down 105 million bushels due to reduced harvested area and yield. Harvested area reported in the June 30 Acreage report is 1.7 million acres below the June projection and reflects a below-average harvested-to-planted ratio resulting from flooding and excessive moisture throughout much of the Midwest during the planting season. The soybean yield is projected at 41.6 bushels per acre, down 0.5 bushels from last month, due to delayed planting and crop emergence resulting from excessive moisture through June. Reduced exports and crush partly offset lower supplies, leaving projected 2008/09 ending stocks at 140 million bushels, down 35 million from last month.

Prices for soybeans and soybean products are all raised this month. The U.S. season-average soybean price for 2008/09 is projected at $12.00 to $13.50 per bushel, up $1.00 on both ends of the range. Soybean meal prices are projected at $355 to $415 per short ton, up $60 on both ends. Soybean oil prices are projected at 59 to 63 cents per pound, up 7 cents on both ends of the range. Global oilseed production for 2008/09 is reduced 2 million tons to 417.3 million tons. Foreign production is projected up 0.9 million tons to 327.2 million tons. Rapeseed production is projected at a record 9.8 million tons, up 0.4 million based on higher harvested area reported by Statistics Canada. Rapeseed production is also raised for Australia on higher area and yield. Other changes include increased sunflowerseed production for Moldova, and reduced cottonseed production for Brazil and India.

U.S. soybean exports for 2007/08 are projected at 1.145 billion bushels, up 35 million from last month. Increased exports are offset mainly by reduced residual use, leaving ending stocks for 2007/08 unchanged at 125 million bushels.

Sugar

Projected 2008/09 U.S. sugar supply is decreased 491,000 short tons, raw value, from last month. Production for 2008/09 is lowered 289,000 tons based on initial processor projections compiled by the Farm Service Agency. Total use is increased 175,000 tons, in line with the increased estimate for 2007/08. Ending stocks are projected to total 607,000 tons, down 666,000 tons from last month.

For 2007/08, lower sugar production, higher imports, and higher use combine to lower ending stocks 202,000 tons to 1.49 million. The increase in sugar use is based on the strong pace of deliveries during January to May 2008, and is supported in part by higher prices for corn-based sweeteners.

For Mexico, 2008/09 sugar production is projected at 5.85 million metric tons, raw value, about even with 2007/08. Along with lower beginning stocks and level imports, Mexico’s 2008/09 supply of sugar totals 7.6 million tons, down 200,000 tons from the estimate for 2007/08. Mexico’s total use of sugar is projected at 6.3 million tons, with exports mainly to the United States projected at 500,000 tons. Sugar stocks on October 1, 2009, are projected at 1.3 million tons.

Further Reading

- You can view the full WASDE report by clicking here.


July 2008