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World Agricultural Supply and Demand Estimates

by 5m Editor
12 August 2008, at 12:00am

This report, released by the National Agricultural Statistics Service (NASS), covers US 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 raised as beef and pork production are forecast higher. A slower-than-expected pace of feedlot marketings earlier in the year is expected to result in more fed beef production in the second half. In addition, higher cow slaughter will support higher beef production. Pork production forecasts are raised from last month. Continued strong demand for pork is boosting hog prices and supporting increased slaughter at slightly heavier weights than expected last month. Broiler and turkey production forecasts are adjusted to reflect second-quarter slaughter data.

Production Forecasts for 2009

Red meat and broiler production forecasts for 2009 are raised from last month.

The beef forecast is raised primarily due to expectations of continued strong cow slaughter. The pork production forecast is raised as pork demand is expected to be strong in 2009, supporting increased slaughter. In addition, relatively weaker grain prices are likely to moderate previously expected hog production declines in 2009. Hog carcass weights are forecast higher than last month. Broiler production is raised slightly from last month as lower feed prices are partly offset by weaker broiler prices.

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

Export Forecasts

Cattle and hog price forecasts for both 2008 and 2009 are raised, but the broiler price forecast is reduced slightly. Cattle prices are increased as cattle supplies remain relatively tight. Strong pork demand, is expected to support hog prices through the forecast period. Broiler price forecasts are reduced slightly from last month as weaker demand for domestically consumed products limit price gains. Turkey price forecasts are unchanged from last month. Egg price forecasts are lowered for 2008 as prices recede from their recent records but forecasts for 2009 are unchanged.

Milk production forecasts for 2008 and 2009 are unchanged, as lower feed prices are partly offset by lower milk prices. Dairy trade forecasts are adjusted with lower forecast imports and higher forecast commercial exports. Imports to date have been weaker than expected as world supplies are tight and the U.S. dollar is relatively weak. Conversely, these conditions are expected to support higher forecast commercial exports. In the face of tighter supplies, forecast domestic disappearance is lowered. However, ending stocks are unchanged from last month.

Although cheese production growth has been relatively slow, recent prices have been lower than expected and the price forecast for 2008 is reduced from last month. However, reduced supplies are expected to support prices in 2009 and the forecast for that year is unchanged. Strong demand is boosting butter prices and nonfat dry milk (NDM) prices. As demand is expected to remain firm into 2009, price forecasts are raised for that year. The whey price forecast is reduced for both 2008 and 2009 as stocks are high and exports are expected to lag. For 2008 and 2009, the Class III and Class IV prices are adjusted to reflect changes in the make allowances, which are due to take effect in September 2008. For 2008, Class III prices are lowered but Class IV prices are raised reflecting higher butter and NDM prices. For 2009, both Class prices are lowered. The all milk price is forecast lower this month, averaging $18.85 to $19.05 in 2008 and $18.25 to $19.25 in 2009.

Wheat

U.S. 2008/09 wheat production is forecast 2 million bushels higher this month. Higher forecast hard red winter wheat and soft red winter wheat crops are nearly offset by reductions in forecast hard red spring wheat, white wheat, and durum. Feed and residual use is projected 35 million bushels lower as increased supplies of feed grains and sharply lower projected feed grain prices reduce prospects for domestic wheat feeding. The all wheat season-average farm price is projected at $6.50 to $8.00 per bushel, down 25 cents on each end of the range from last month.

Several small changes were made to U.S. supply and use estimates for the 2006/07 and 2007/08 marketing years based on recent revisions to import, export, and mill grind data by the U.S. Bureau of Census. Exports by class in 2007/08 were revised based on export inspections and export sales shipment data.

Global 2008/09 wheat production is projected at a record 670.8 million tons, up 6.5 million from last month and 60.2 million higher than last year. Increases for EU-27, India, Russia, Ukraine, and the United States more than offset reductions for Afghanistan and Argentina. EU-27 production is increased 1.5 million tons. India production is raised 1.6 million tons in line with government estimates.

Production for Russia is raised 3.0 million tons reflecting increased harvested area and higher expected winter wheat yields as indicated by harvest results to date. Ukraine production is raised 1.0 million tons despite a small reduction in harvested area as a result of recent flooding in western growing areas.

Harvest results indicate higher yields for winter wheat in Ukraine. Production is lowered 1.0 million tons each for Afghanistan and Argentina. Severe drought and lack of snow melt for irrigation have sharply reduced harvested area and yields in Afghanistan. In Argentina, continued dryness in central growing areas, as well as uncertainty about government export policies have reduced planted area. Other major production changes include a 0.5-million-ton reduction for Kazakhstan on drier-than-normal conditions for spring wheat; a 0.5-million-ton increase for Brazil mostly on higher indicated area; and a 0.5-million-ton increase for Canada on higher expected yields.

World imports and exports for 2008/09 are both raised this month. Increased imports for Afghanistan and South Korea more than offset reductions for Brazil and Russia. Higher exports for Russia, Ukraine, Canada, and Brazil more than offset reductions for Argentina, EU-27, Kazakhstan, and Turkey. Global wheat feeding is raised 2.0 million tons with increases for EU-27, South Korea, and Russia more than offsetting the U.S. reduction. World supplies of feed quality wheat are up sharply with higher production in EU-27, Russia, and Ukraine and early indications of quality problems, particularly in Ukraine, where heavy rains at harvest reduced crop quality. Global ending stocks are projected at 136.2 million tons, up 3.1 million from last month and the highest since 2005/06.

Coarse Grains

This month’s outlook for 2008/09 U.S. feed grains is for higher production and increased domestic use as higher forecast corn production boosts supplies. USDA’s first survey-based forecast for 2008 corn production is 12.3 billion bushels, up 573 million from last month’s projection with higher forecast yields and increased harvested area. Nearly ideal growing season weather across much of the Corn Belt since late June has supported crop development and increased yield prospects. Feed and residual use is raised 100 million bushels with the larger crop and lower expected prices.

Ethanol use is raised 150 million bushels as increased supplies and lower prices are expected to improve plant operating margins and capacity utilization rates. Exports are unchanged as increased competition from wheat feeding limits prospects for U.S. shipments. Ending stocks for U.S. corn are projected at 1.1 billion bushels, up 301 million bushels from last month. The season-average farm price is forecast at $4.90 to $5.90 per bushel, down 60 cents on both ends of the range.

The first survey-based forecast for 2008/09 sorghum production is 410 million bushels, down 10 million from last month’s projection. Projected exports for 2007/08 are lowered 30 million bushels with increased sorghum production in Mexico and reduced imports in the EU-27 from larger supplies of feed grains and feed quality wheat. The season-average farm price is projected at $4.40 to $5.40 per bushel, down 70 cents per bushel on both ends of the range.

This month’s report includes small U.S. supply and use changes for corn and barley for 2004/05 through 2007/08 and for sorghum and oats for 2006/07 through 2007/08. Changes reflect revisions to imports and exports based on data from the U.S. Bureau of Census. Revisions to corn ethanol use are based on updates from the Energy Information Administration. Revisions to barley food and industrial use are based on data from the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury.

Global coarse grain production for 2008/09 is projected 20.1 million tons higher with world corn production raised 14.3 million tons and world barley production raised 4.2 million tons. Higher forecast U.S. corn production accounts for most of the increase in global corn output as other changes are mostly offsetting. EU-27 corn production is raised 1.1 million tons on favorable weather across Europe’s corn growing belt. Corn production for Turkey is raised 0.5 million tons on indications of increased irrigation. Argentina corn production is lowered 1.5 million tons reflecting lower expected area with increases for oilseeds. India corn production is lowered 0.5 million tons on reduced area as the late start to the monsoon reduced plantings in south central growing areas. Barley production is raised 1.9 million tons for EU-27 and 1.5 million tons for Ukraine. Barley output for Canada and Russia is increased 0.5 million tons each. Increased millet production in India and rye production in Russia account for most of the rest of the increase in coarse grain output.

Global 2008/09 coarse grain imports and exports are both lowered this month. EU-27 imports are lowered 2.5 million tons for corn and 0.5 million tons for sorghum with increased domestic feed grain supplies and greater availability of feed quality wheat expected to replace imported feed grains in animal rations. Corn imports are also lowered 0.5 million tons for South Korea where wheat feeding is also expected higher. Corn exports are lowered 2.0 million tons for Brazil and 1.2 million tons for Argentina. Barley exports are lowered 1.0 million tons for EU-27 offset by increases of 0.5 million tons each for Russia and Ukraine. World barley exports, however, are higher reflecting a 450,000-ton increase for Canada.

World coarse grain feeding is up slightly this month with increased barley and oats feeding mostly offset by reduced sorghum feeding in EU-27. Higher U.S. corn feeding is partly offset by lower corn feeding in EU-27 and South Korea. Global coarse grain ending stocks are projected up 10.6 million tons with more than half of the increase on higher projected U.S. corn stocks. Global corn ending stocks are raised 7.1 million tons as higher projected corn stocks in Brazil, the United States, and South Africa are partly offset by reductions in EU-27, India, Argentina, and Ukraine.

Oilseeds

U.S. oilseed production for 2007/08 is projected at 89.1 million tons, down 1.1 million from last month as lower soybean and cottonseed production more than offset higher peanut production. Soybean yields are forecast at 40.5 bushels per acre, down 1.1 bushels from last month’s trend yield projection. The first survey-based forecast of U.S. soybean production is 2.973 billion bushels, down 27 million from the July projection, but 388 million bushels above last year’s crop. Soybean stocks are down 5 million from last month at 135 million bushels as reduced supplies are only partly offset by a lower crush. Soybean crush is reduced 15 million bushels due to lower domestic use and exports of soybean meal.

Soybean and product prices are all reduced this month. The U.S. season-average soybean price for 2008/09 is projected at $11.50 to $13.00, down 50 cents on both ends of the range. Soybean meal prices are projected at $330 to $390 per short ton, down $25 on both ends of the range. Soybean oil prices are projected at 54 to 58 cents per pound, down 5 cents on both ends of the range. Lower soybean, soybean meal, and soybean oil price projections in part reflect the sharp decline in oilseed and other commodity prices over the past month.

Global oilseed production for 2008/09 is projected at 416.1 million tons, down 1.2 million tons from last month, but still record high. Soybean production for Brazil is reduced 1.5 million tons to 62.5 million tons due to lower area projections reflecting sharply lower soybean futures prices. Argentina soybean production is raised 1.5 million tons due to a record 49.5 million tons on higher area. Projected area is raised partly due to the impact of dry weather on winter wheat planting in the main soybean producing areas. India soybean production is projected at 9.1 million tons, up 0.4 million based on higher area.

Planted area reported through late July indicates higher-than-expected soybean plantings this year. Ukraine rapeseed production is raised 0.4 million tons to 2.8 million based on higher yields reported during harvest. Global sunflowerseed production is projected higher due to increased harvested area for Argentina, Russia, and Ukraine. Other changes include lower peanut and cottonseed production for

India, lower cottonseed production for Pakistan, and lower EU-27 rapeseed production. China soybean imports are raised 0.5 million tons to 36 million tons compared with a revised estimate of 35.4 million tons for 2007/08.

U.S. changes for 2007/08 include lower soybean crush and higher ending stocks. Crush is reduced 10 million bushels reflecting a slowdown in domestic soybean meal disappearance. With lower use, ending stocks increase 10 million bushels to 135 million bushels.

Sugar

Projected 2008/09 U.S. sugar supply is increased 160,000 short tons, raw value, from last month. Carry-in stocks are up 151,000 tons. Production for 2008/09 is lowered 105,000 tons based on processor projections compiled by the Farm Service Agency. Imports are raised 114,000 tons, mostly as a result of the increased tariff rate quota (TRQ) announced on August 6. Total use is unchanged. Ending stocks are projected at 767,000 tons, down from 1.64 million in 2007/08.

For 2007/08, increased sugar production, higher imports, lower exports, and higher domestic use combine to increase ending stocks 151,000 tons. Processor projections for production are up 30,000 tons. Imports under the TRQ are increased 191,000 tons, mostly as a result of the August 6 announcement and increased imports under the re-export program. Exports are decreased 30,000 tons based on a slower-than-expected pace to date. Deliveries are increased 100,000 tons to reflect the recent strong pace of trade.

Further Reading

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


August 2008