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World Agricultural Supply and Demand Estimates - August 2010

by 5m Editor
13 August 2010, at 12:00am

Global wheat supplies for 2010/11 are reduced sharply with world production lowered 15.3 million tons, according to the USDA <em>World Agricultural Supply and Demand Estimates</em> for August 2010. Forecasts for poultry meat production for the remainder of 2010 and 2011 are unchanged.

Livestock, Poultry and Dairy

Total US meat production forecasts for 2010 and 2011 are reduced slightly from last month. Beef production for 2010 is reduced on slightly lower estimated second quarter output and forecast lighter average carcass weights in the third quarter that more than offset slightly higher slaughter. For 2011, beef production is unchanged but is shifted between quarters as more cattle are expected to be marketed in the first part of the year. Pork production in late 2010 and 2011 is reduced on lower expected imports of live swine from Canada. Broiler meat and turkey production for 2010 reflects slightly higher estimated second quarter production. Forecast poultry meat production for the remainder of 2010 and 2011 is unchanged. Cattle, hog, and poultry prices are little changed from last month.

Beef imports are raised for 2010 based on the current pace of imports and weakening domestic cow slaughter. Export forecasts for beef, pork and broilers are raised, partly reflecting strong recent shipments. Stronger demand from a number of markets is expected to support higher exports through the remainder of this year and into next year.

Forecast milk production for 2010 and 2011 is raised from last month. Producers continue to add cows to the herd and the rate of growth in milk per cow has increased. Exports for 2010 and 2011 are raised sharply as June exports were strong, global supplies remain relatively tight, and demand in a number of markets is expected to support higher than previously forecast sales. However, sales in 2011 will be dampened by increased competition.

Strong demand for butter and cheese resulted in higher forecast prices for 2010 but the prices for nonfat dry milk (NDM) and whey are lowered from last month. The Class III price forecast for 2010 is raised as the higher cheese price more than offsets the lower whey price, but the Class IV price forecast is reduced as the lower NDM price more than offsets the higher butter price. For 2011, cheese, NDM, and whey price forecasts are reduced but butter is raised. For 2011, the Class III and Class IV price forecasts are lowered. The all milk price is forecast to average $15.90 to $16.10 per cwt for 2010 and $15.55 to $16.55 per cwt for 2011.

Wheat

US wheat ending stocks for 2010/11 are lowered this month as higher expected exports more than offset an increase in forecast production and lower projected feed and residual use. Production is forecast 49 million bushels higher mostly reflecting higher yields for durum and other spring wheat, especially in the Northern Plains. Winter wheat production is also raised slightly as higher yields in the Northern Plains and Pacific Northwest more than offset reductions in the eastern Corn Belt. Feed and residual use is lowered 10 million bushels as rising values have priced wheat out of feed rations. Exports are projected 200 million bushels higher with declines in foreign production, particularly in the FSU-12, reducing global supplies and making US wheat competitive in key Middle East and North Africa markets. US ending stocks are projected 141 million bushels lower from last month, and down 21 million from 2009/10. The 2010/11 season-average farm price is projected at $4.70 to $5.50 per bushel, up 50 cents on both ends of the range.

Several changes are made to US supply and use estimates for 2009/10 based on the latest US Bureau of Census trade and mill grind data and revisions. Exports are raised 16 million bushels and imports are raised 4 million bushels. Food use is lowered three million bushels. Thus, feed and residual is estimated 10 million bushels lower.

Global wheat supplies for 2010/11 are reduced sharply with world production lowered 15.3 million tons, mostly on reductions for FSU-12 and EU-27 countries. Production for Russia is lowered 8.0 million tons as continued extreme drought and record heat during July and early August have further reduced summer crop prospects. Kazakhstan production is lowered 2.5 million tons reflecting the same adverse weather conditions as in Russia. Ukraine production is lowered 3.0 million tons as heavy summer rains damaged maturing crops and hampered harvesting in western and southern growing areas. Harvest results also support indications that producers reduced input use in response to limits on available capital. EU-27 production is lowered 4.3 million tons with yields reduced for northwestern Europe on untimely heat and dryness. Yields are lowered for southeastern Europe as heavy rains from the same weather pattern that affected Ukraine reduced output. Production is also lowered for Algeria, Brazil, Uruguay, Belarus and Croatia. Partially offsetting are increases for India, the United States, Australia and Uzbekistan.

World wheat imports and exports are reduced sharply as tighter supplies and higher prices reduce projected global consumption. Imports are projected 5.7 million tons lower as higher prices reduce demand in a number of countries. Exports are lowered 12.0 million tons for Russia partly reflecting the recent announcement banning exports through December. Also limiting Russia export prospects is higher expected wheat feeding with drought-reduced forage and coarse grain crops and policy goals aimed at increasing domestic meat production. Exports for Kazakhstan and Ukraine are lowered 2.0 million tons each with sharply lower production. Higher exports from other countries partly offset FSU-12 declines. Exports are raised 1.2 million tons for China, 1.0 million tons each for Australia and EU-27, and 0.9 million tons for Turkey. The 5.4-million-ton increase projected for US exports is expected to offset the largest share of the decline from FSU-12.

Global ending stocks are projected 12.3 million tons lower. At 174.8 million tons, world stocks are projected 49.9 million tons higher than in 2007/08 when prices soared to record levels.

Coarse Grains

Projected US feed grain supplies for 2010/11 are raised this month as higher forecast production for corn and sorghum more than offset lower corn carry-in. Beginning stocks for corn are projected 52 million bushels lower reflecting higher expected exports, corn use for sweeteners and starch, and a small reduction in projected imports for 2009/10. Corn production for 2010/11 is forecast 120 million bushels higher. The survey-based yield forecast of 165.0 bushels per acre is up 1.5 bushels from last month’s projection and 0.3 bushels above last year’s record.

Domestic corn use for 2010/11 is raised 30 million bushels reflecting higher expected corn use for sweeteners and starch. Exports are projected 100 million bushels higher as tighter foreign supplies of wheat and coarse grains raise prospects for US corn shipments. Despite higher production, ending stocks are projected down 61 million bushels at 1.3 billion, the lowest in four years. The season-average farm price is raised five cents on each end of the range to $3.50 to $4.10 per bushel. Similar price increases are projected for the other feed grains.

Other 2010/11 feed grains changes include higher sorghum and barley production with higher forecast yields. Sorghum feed and residual use is projected 15 million bushels higher with larger supplies. Sorghum exports are raised 10 million bushels with higher expected demand from Mexico.

Global coarse grain supplies for 2010/11 are projected 10.6 million tons lower with reduced foreign production more than offsetting higher US output. More than half of the reduction in foreign coarse grain production is for barley. Barley production is lowered 3.0 million tons for Russia as extended drought and extreme heat sharply reduce yield potential for spring barley. EU-27 barley production is lowered 1.5 million tons on untimely dryness and heat in northwest Europe and excessive rains in eastern Europe. Barley production is lowered 1.5 million tons for Ukraine, 0.6 million tons for Algeria, and 0.5 million tons for Kazakhstan. Global corn production is lowered 0.8 million tons with Russia and Ukraine each lowered 1.5 million tons and EU-27 lowered 1.0 million tons. These reductions more than offset higher production in the United States. Global rye and oats production are lowered 1.3 million tons and 0.7 million tons, respectively, on reductions for Russia, EU-27 and Ukraine.

Global coarse grain imports are raised this month with increases for corn in China, EU-27, South Korea and Israel, supporting higher expected corn feeding in each country. In EU-27, South Korea and Israel, corn is expected to replace higher priced wheat in feed rations. Barley feeding is also raised for EU-27 replacing wheat. By contrast, coarse grain feeding is lowered 3.7 million tons for Russia with wheat expected to partly replace barley, corn, oats, and rye in livestock and poultry feeding. Offsetting reduced coarse grain exports from Ukraine and Russia are higher barley exports from EU-27 and Australia and higher corn exports from the United States. Global coarse grain ending stocks are lowered 8.1 million tons with corn ending stocks down 1.9 million. EU-27 barley ending stocks are down 4.0 million tons accounting for most of the rest. Coarse grain and corn ending stocks are both expected to remain well above their recent lows in 2006/07.

Oilseeds

US oilseed production for 2010/11 is projected at 103.3 million tons, up 2.6 million from last month as higher soybean and cottonseed production are only partly offset by lower peanut production. Soybean yields are forecast at 44.0 bushels per acre, 1.1 bushels above last month=s trend yield projection, and equal to last year's record yield. The first survey-based forecast of US soybean production is a record 3.4 billion bushels, 88 million above the July projection, and 74 million above last year=s crop. Projected soybean exports are raised 65 million bushels to 1.435 billion. The sharp increase in exports reflects strong export sales, especially to China, stronger projected import demand for China, and reduced soybean stocks in South America at the beginning of the 2010/11 marketing year. China soybean imports are raised to 49.5 and 52 million tons, respectively for 2009/10 and 2010/11. Soybean crush is raised five million bushels to 1.65 billion reflecting a small increase in domestic soybean meal demand. Soybean ending stocks are projected at 360 million bushels, unchanged from July.

Soybean and product prices all increased this month. The US season-average soybean price for 2010/11 is projected at $8.50 to $10.00, up 40 cents on both ends of the range. Soybean meal prices are projected at $250 to $290 per short ton, up $10.00 on both ends of the range. Soybean oil prices are projected at 36.5 to 40.5 cents per pound, up 2.5 cents on both ends of the range.

Global oilseed production for 2010/11 is projected at 439.7 million tons, down one million from last month. Reductions for sunflower seed and rapeseed are mostly offset by higher soybean production. Sunflower seed production is reduced by one million tons each for Russia and Ukraine. Persistent drought and excessive heat in July and early August sharply reduced yield potential for both countries. Rapeseed production is reduced for EU-27, Russia, Ukraine and Belarus. Higher global soybean production reflects the larger US crop. Other changes include higher rapeseed production for Australia, lower sunflower seed production in EU-27, lower cottonseed production for Pakistan and increased cottonseed production for India.

US changes for 2009/10 include increased soybean crush and exports and lower ending stocks. Crush is raised five million bushels to 1.75 billion reflecting increased domestic soybean meal disappearance. Soybean exports are increased 10 million to a record 1.47 billion bushels. Soybean ending stocks are projected at 160 million bushels, down 15 million from last month. Soybean oil ending stocks are raised to 3.18 billion pounds reflecting sharply lower projected use for methyl ester production.

Further Reading

- You can view the full report by clicking here.

August 2010