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World Agricultural Supply and Demand Estimates – June 2011

by 5m Editor
10 June 2011, at 12:00am

With many important crop-growing regions affected by flooding or drought, the projections are 'highly tentative', according to the latest USDA <em>World Agricultural Supply and Demand Estimates</em>.

Note: Because spring planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative. National Agricultural Statistics Service (NASS) forecasts are used for US winter wheat area, yield and production. For other US crops, methods used to project planted acreage, harvested acreage and yield are noted on each table.

Livestock, Poultry and Dairy

The forecast for 2011 total meat production is raised from last month, reflecting higher beef production. Large cattle placements and larger cow slaughter, due in part to drought in the Southern Plains, is reflected in an increase in the beef production forecast. However, forecasts for pork and poultry are reduced from last month as higher forecast grain prices are expected to trim hog weight gains and put additional pressure on broiler producers. USDA’s Quarterly Hogs and Pigs report to be released on 24 June will provide an indication of producer farrowing intentions for the remainder of the year. For 2012, meat production forecasts are reduced as higher forecast feed costs pressure hog weights and slow the expected recovery of the poultry sector. Higher feed prices are expected to slow feedlot placements as producers keep cattle on forage longer. The egg production forecast for 2011 is raised on stronger second half production but the forecast for 2012 is reduced on higher feed prices and less demand for hatching eggs.

Export forecasts for red meat and poultry are raised from last month. Beef exports for 2011 are forecast higher on strength in a number of markets and expected improvements in exports to Mexico. Pork, broiler, and turkey exports were larger than expected in the first quarter and the forecasts for the remainder of 2011 are raised. Beef and turkey exports are raised for 2012, but no changes are made to pork or broiler exports.

Cattle and broiler prices for 2011 are lowered from last month on weaker-than-expected demand but hog prices are unchanged. Broiler prices are lowered for 2012.

The milk production forecast for 2011 is raised. Producers are expected to continue to expand herds through the middle of the year and although herds may begin to decline toward the end of the year, cow numbers are expected to be above 2010. However, higher feed costs will impact profitability and the dairy cow inventory is expected to decline in 2012. Tighter feed supplies will also likely impact the rate of increase of milk per cow. As a result, the milk production forecast for 2012 is reduced from last month. Commercial exports are forecast higher for 2011 largely due to stronger expected cheese exports. However, imports of cheese and milk proteins have been stronger than expected and the import forecast for both 2011 and 2012 is raised.

Dairy product price forecasts are raised from last month. Butter supplies are tight and demand for cheese, non-fat dry milk (NDM) and whey are expected to support product prices. Class III and Class IV price forecasts are raised from last month in line with the increased product prices. The all milk price is forecast at $19.65 to $20.05 per cwt for 2011. Price forecasts for 2012 are also raised as the smaller production increase is expected to support higher product and Class prices. The all-milk price is forecast at $17.75 to $18.05 per cwt for 2012.

Wheat

US wheat supplies for 2011/12 are lowered this month as reduced carry-in more than offsets an increase in expected production. Beginning stocks are lowered 30 million bushels with a 10-million-bushel reduction in imports and a 20-million-bushel increase in exports for 2010/11, both based on the pace of shipments to date. All wheat production for 2011/12 is forecast at 2,058 million bushels, 15 million higher than last month. The winter wheat production forecast is raised 26 million bushels with higher forecast yields for Hard Red Winter, Soft Red Winter, and Soft White Winter wheat. Partly offsetting is a projected 11-million-bushel reduction for durum and other spring wheat production as seedings are projected 290,000 acres lower. Flooding and persistent wet soils have delayed planting in North Dakota and Montana well beyond the normal planting window.

US wheat usage for 2011/12 is unchanged. Ending stocks are projected 15 million bushels lower at 687 million bushels but remain above the 10-year average. The 2011/12 season-average farm price for all wheat is projected at a record $7.00 to $8.40 per bushel, up 20 cents on both ends of the range, reflecting both tighter domestic supplies and higher expected corn prices. The forecast 2010/11 wheat farm price is also raised this month, up five cents per bushel to $5.70 per bushel.

Global wheat supplies for 2011/12 are projected slightly lower this month as an increase in beginning stocks is more than offset by lower production. Global beginning stocks are projected 4.9 million tons higher mostly reflecting increased stocks in Russia as feeding is reduced 2.0 million tons and 3.0 million tons, respectively, for 2009/10 and 2010/11. Beginning stocks for 2011/12 are also raised 0.5 million tons each for Argentina and Canada with the same size reductions in 2010/11 exports for each country. Partly offsetting is a 1.5-million-ton decrease for 2011/12 beginning stocks for Australia with higher 2010/11 exports.

World wheat production is projected 5.2 million tons lower for 2011/12. At 664.3 million tons, production would be the third highest on record and up 16.1 million from 2010/11. This month’s reduction for 2011/12 mostly reflects a 7.1-million-ton decrease for EU-27 wheat output. Persistent dryness, particularly in France but also in Germany, the United Kingdom and western Poland, has reduced yield prospects for EU-27. Production is also reduced 1.0 million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding. Production is increased 1.5 million tons for Argentina and 0.5 million tons for Australia, both reflecting favourable planting conditions and strong producer price incentives to expand area. Production is also raised 0.5 million tons for Pakistan as increased use of higher quality seed and adequate water supplies resulted in higher-than-expected yields.

Global wheat trade for 2011/12 is projected slightly higher reflecting a 0.5-million-ton increase in expected imports by EU-27. Exports are lowered 3.0 million tons for EU-27. Export increases of 2.0 million tons and 1.0 million tons, respectively, for Australia and Argentina offset the EU-27 reduction. Exports are raised 0.3 million tons for Pakistan with the larger crop. Global wheat consumption is projected down 3.3 million tons, mostly reflecting a 2.5-million-ton reduction in EU-27 domestic use. Wheat feeding is lowered 0.5 million tons for Canada. Global ending stocks for 2011/12 are projected 3.0 million tons higher as decreased wheat feeding in earlier years raise projected stocks in Russia, more than offsetting declines in Australia and EU-27.

Coarse Grains

Projected US feed grain supplies for 2011/12 are sharply lower with reduced prospects for corn acreage. Corn planted area for 2011/12 is lowered 1.5 million acres from March intentions to 90.7 million acres. Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May. Harvested area is lowered 1.9 million acres, to 83.2 million with the additional 400,000-acre reduction reflecting early information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley. Production is projected at 13.2 billion bushels, down 305 million from last month, but still a record, and up 753 million from 2010/11.

US feed grain usage changes for 2011/12 include a 100-million-bushel projected decline in corn feed and residual use and a five-million-bushel increase in sorghum exports. Feed grain ending stocks are sharply lower with expected corn ending stocks down 205 million bushels to 695 million. Corn ending stocks are projected 35 million bushels lower than beginning stocks indicating a stocks-to-use ratio of 5.2 percent compared with the 2010/11 forecast ratio of 5.4 percent. The 2011/12 season-average farm price for corn is projected at a record $6.00 to $7.00 per bushel, up 50 cents on both ends of the range. Projected farm prices are also raised for the other feed grains.

Global coarse grain supplies for 2011/12 are projected down 7.8 million tons this month with lower beginning stocks and production. Reduced US corn production, lower EU-27 barley production and reduced corn beginning stocks in China, more than offset increases in China corn production. EU-27 barley production is lowered 2.2 million tons as prolonged dryness across western and northern Europe has sharply reduced yield prospects in the major producing countries. China corn area is raised for 2010/11 in line with the most recent official government area estimates with the year-to-year percentage increase for 2011/12 largely maintained.

China corn production increases 5.0 million and 6.0 million tons, respectively, for 2010/11 and 2011/12 with yields unchanged month-to-month. More than offsetting the higher production levels is higher estimated corn consumption for both feeding and industrial use. China corn consumption is raised 8.0 million tons and 13.0 million tons, respectively, for 2010/11 and 2011/12. Together these changes leave projected 2011/12 corn ending stocks down 12.0 million tons for China. At the projected 51.0 million tons, China’s stocks would be down 2.7 million tons from 2010/11 and just below the levels of the preceding two years, better reflecting the continuing rise in domestic corn prices as production struggles to keep pace with rising usage. Although China’s stocks represent 46 percent of the world total for 2011/12, China is not expected to be a significant exporter.

Global 2011/12 corn trade is raised slightly this month with higher imports for EU-27 and higher exports for Ukraine. Ukraine exports are raised 1.0 million tons with higher production and stronger expected demand from EU-27. Russia exports are lowered 0.5 million tons with lower production. Other important trade changes this month include a 0.2-million-ton increase in sorghum imports by Mexico, driving the US export increase, and a 1.5-million-ton reduction in EU-27 barley exports with lower production and tighter supplies. Barley imports are lowered for Saudi Arabia and China. Global corn ending stocks for 2011/12 are projected down sharply this month, falling 17.3 million tons mostly reflecting the usage revisions in China. The projected 5.2-million-ton drop in US ending stocks accounts for most of the rest of the decline. Global corn stocks are projected at 111.9 million tons, the lowest since 2006/07.

Oilseeds

This month’s US oilseed supply and use projections for 2011/12 include higher beginning and ending stocks and reduced exports. Although adverse weather has slowed soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season. Higher beginning stocks reflect a lower export projection for 2010/11. Soybean exports for 2010/11 are reduced 10 million bushels to 1.54 billion bushels reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China. Soybean ending stocks for 2010/11 are projected at 180 million bushels, up 10 million. US soybean exports for 2011/12 are reduced 20 million bushels to 1.52 billion, reflecting increased competition from South America resulting from an increase in the recently harvested Brazilian soybean crop. With larger supplies and reduced exports, ending stocks for 2011/12 are increased 30 million bushels to 190 million. Other changes for 2010/11 include reduced soybean oil used for biodiesel production, reduced projected food use of soybean oil, and lower soybean oil exports, all resulting in increased ending stocks for 2010/11 and 2011/12.

Soybean, meal and oil prices are all raised this month. Led by higher corn prices, the US season-average soybean price for 2011/12 is projected at $13.00 to $15.00 per bushel, up $1.00 on both ends of the range. Soybean meal prices for 2011/12 are projected at $375 to $405 per short ton, up $25 on both ends of the range. Soybean oil prices are projected at 58 to 62 cents per pound, up two cents on both ends of the range.

Global oilseed production for 2011/12 is projected at 456.9 million tons, down 2.3 million from last month, mainly due to lower rapeseed production. EU-27 rapeseed production is reduced 1.2 million tons to 18.8 million mainly due to lower yields resulting from dry conditions in April and May in major producing areas of France and Germany. Rapeseed production for Canada is lowered 0.5 million tons to 13.0 million due to reduced area planted resulting from excessive moisture this spring. China soybean production is reduced 0.5 million tons to 14.3 million reflecting lower area as producers shifted to corn. Other changes include increased sunflower seed production for Russia and reduced cottonseed production for Australia, Pakistan and the United States. Brazil’s 2010/11 soybean production is increased 1.5 million tons to a record 74.5 million, reflecting yield and production increases reported in the most recent government survey.

Further Reading

- You can view the full report by clicking here.


June 2011