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World Agricultural Supply and Demand Estimates - May 2009

by 5m Editor
11 May 2009, at 12:00a.m.

Broiler production is raised as higher-than-expected first quarter production more than offsets a slightly weaker second quarter, and turkey production is decreased due to lower-than-expected first quarter production, according to the World Agricultural Supply and Demand Estimates, produced by the USDA's World Agricultural Outlook Board.

Livestock, Poultry and Dairy

Smaller calf crops through 2009 are expected to result in a smaller pool of cattle outside feedlots during 2010. Marketable cattle supplies may be further reduced if producers begin rebuilding herds by retaining calves for addition to the breeding herd. Pork production in 2010 is forecast slightly lower than 2009. Pork production is below 2009 levels in first half 2010 as producers are expected to farrow fewer sows in late 2009. However, improved returns during late 2009 are likely to stimulate farrowings in 2010 which coupled with higher carcass weights will push second half 2010 production higher. Both broiler and turkey production for 2010 are forecast higher as producers respond to improved returns. Egg production is forecast higher as production builds upon the expansion expected to begin during the second half of 2009.

The total meat production forecast for 2009 is raised from last month as higher expected beef and broiler production more than offset lower pork and turkey. Beef production is raised to reflect higher expected fed and non-fed cattle slaughter. Pork production is reduced on lower slaughter partly due to fewer hog imports. Broiler production is raised as higher-than-expected first quarter production more than offsets a slightly weaker second quarter. Turkey production is decreased due to lower-than-expected first quarter production.

Beef and pork exports for 2010 are forecast higher as the global economic situation improves. Broiler exports are forecast lower due to tight early year supplies.

The 2009 beef export forecast is reduced from last month as economic weakness limits export growth. The pork export forecast is raised from last month reflecting stronger-than-expected estimated export growth in the first quarter that carries into early second quarter. However, stronger export growth in the second quarter is dampened due to A/H1N1 influenza concerns as a combination of foreign bans on pork imports as well as pork consumption reductions in some countries is expected to limit export growth. However, trade disruptions and consumption declines are expected to be relatively short-lived.

Cattle and hog prices are forecast higher for 2010 due to tighter supplies and improved domestic and export demand. Broiler, turkey, and egg prices for 2010 are forecast higher as increases in production are modest and demand improves.

Most livestock and poultry prices for 2009 are lower than last month as demand lags because of economic weakness. Hog prices in the second quarter have also been pressured by concerns about A/H1N1 influenza.

Milk production is forecast to decline in 2010 as the sector responds to weak 2009 returns. Cow numbers are forecast to decline from 2009 although the pace of decline will slacken during the year as returns improve. Growth in milk per cow is expected to improve slightly in 2010. Commercial exports are forecast to increase as the global economy improves. Domestic disappearance of fat and skim solids reflect tightening supplies and improved exports. Product prices are forecast higher as demand improves and supplies tighten. With firmer cheese and whey prices, the Class III price is forecast to rise above 2009. Likewise, stronger butter and non-fat dry milk (NDM) prices will push Class IV prices above 2009. The 2010 all milk price is forecast at $14.70 to $15.70 per hundredweight.

Forecast milk supply for 2009 is lowered slightly from last month primarily reflecting weaker expected growth in milk per cow. Cheese prices are lowered but butter and whey price forecasts are raised. The NDM price forecast is unchanged. The Class III price forecast is lowered slightly as the weaker cheese prices more than offsets the higher whey price. The Class IV price forecast is unchanged. The milk price is forecast to average $11.85 to $12.35 per hundredweight.

Wheat

The 2009/10 outlook for US wheat is for reduced supplies and use as lower production more than offsets higher beginning stocks and reduced export prospects outweigh expected gains in domestic use. Total production is projected at 2,026 million bushels, down 19 per cent from last year on reduced area and lower expected yields. The survey-based forecast of winter wheat production is down 20 per cent with sharply lower yields expected in the Southern Plains on extended dryness and early April freeze damage. Spring wheat production is also expected lower with less intended acreage as reported in the Prospective Plantings and significant planting delays, especially in North Dakota and Minnesota where yields are expected below trend levels. Durum and other spring wheat production is projected at 524 million bushels, down 17 per cent from 2008/09, based on 10-year harvested-to-planted ratios and trend yields adjusted for late seeding in the Northern Plains. US wheat supplies are projected down 4 per cent despite the highest carry-in since 2002/03.

Total US wheat use for 2009/10 is projected down 4 per cent as lower exports and feed and residual use more than offset higher expected food use. Food use is projected at 955 million bushels, up 33 million bushels from the revised projection for 2008/09 as flour extraction rates fall to more normal levels in 2009/10. Feed and residual is projected at 240 million bushels, down 10 million bushels from the 2008/09 projection. Exports are projected at 900 million bushels, down 11 per cent from this month’s higher projection for 2008/09 as large global supplies limit export opportunities. Despite lower expected use and higher beginning stocks, ending stocks are projected down 5 per cent at 637 million bushels. The season-average farm price for all wheat is projected at $4.70 to $5.70 per bushel, well below the record $6.85 for 2008/09.

Global wheat production for 2009/10 is projected at 657.6 million tons, down 4 per cent from last year’s record, but still the second largest if realized. Reduced output in major exporting countries such as EU-27, Ukraine, Russia, and Canada are only partly offset by increases in Argentina and Australia. Despite reduced area projected for Argentina, trend yields for 2009/10 allow for a significant recovery from last year’s drought-reduced crop. A recovery from last year’s drought in North Africa and much of the Middle East boosts production prospects in this region supporting world production. Production is projected slightly lower for Brazil and India, while China’s production is unchanged.

Global wheat imports and exports for 2009/10 are both projected lower reflecting reduced demand in North Africa, the Middle East, and South Asia. World wheat consumption is projected to increase 1 per cent, but world wheat feeding is projected 3 per cent lower with reduced overall output and less low quality wheat expected from the Black Sea region. Global stocks are projected at 181.9 million tons, up 9 per cent from 2008/09 and the highest in 8 years.

Coarse Grains

The 2009/10 outlook for US feed grains is for slightly lower production, rising use, and tighter ending stocks. Corn production for 2009/10 is projected at 12.1 billion bushels, down 11 million bushels from 2008/09 as lower plantings more than offset higher expected yields. Harvested area is projected at 77.8 million acres based on historical abandonment and derived demand for silage. The yield is projected at 155.4 bushels per acre, 1.5 bushels below the 1990-2008 trend based on the slow pace of planting in the eastern Corn Belt as reported in Crop Progress. The projected yield assumes a mid-May planting progress well below the 10-year average and just below last year’s delayed progress. Corn supplies, projected at 13.7 billion bushels, are down 35 million from 2008/09. Lower 2009/10 beginning stocks reflect this month’s 50-million-bushel increases in both ethanol corn use and exports for 2008/09.

Total US corn use for 2009/10 is projected up 3 per cent from the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use. FSI use is projected 7 per cent higher with a 350-million-bushel rise in ethanol corn use accounting for most of the increase. Ethanol use, at 4.1 billion bushels, reflects the rising Federal biofuels mandate and improved blending incentives as higher gasoline prices increase demand for ethanol. Ethanol producer returns, however, will remain under pressure as excess production capacity weighs on producer margins. Exports are projected up 9 per cent as world corn trade and feeding are expected to recover modestly in 2009/10, partly reflecting a reduction in global supplies of low-cost feed quality wheat. Domestic corn feed and residual use is projected down 2 per cent with reduced animal numbers and increased availability of distiller’s grains. US corn ending stocks for 2009/10 are projected down 28 per cent to 1.1 billion bushels as use is expected to exceed production by 470 million bushels. The season-average farm price is projected at $3.70 to $4.50 per bushel compared with the record $4.20 reported for 2007/08 and the $4.10 to $4.30 projected for 2008/09.

Global coarse grain production for 2009/10 is projected down 16.7 million tons, but world supplies are projected up at 1,265.1 million with a 23.8-million-ton increase in beginning stocks. Global corn supplies are projected at 924.7 million tons, 6.5 million higher despite a 2.7-million-ton reduction in output as beginning stocks are up sharply. Global corn production at 785.1 million tons would be the third highest on record. Corn production for 2009/10 is projected higher for Argentina and Brazil, but lower for China, EU-27, and Ukraine. Global production of barley, oats, rye, and sorghum are all projected lower in 2009/10. World coarse grain imports and exports are projected higher with rising trade in corn only partly offset by lower trade in barley. Global coarse grain consumption is projected higher mostly on higher corn consumption. Global corn feeding and food, seed, and industrial use are both expected higher in 2009/10 with growth in foreign feeding and US ethanol production. World corn ending stocks are projected at 128.2 million tons, down 8 per cent from 2008/09.

Oilseeds

US oilseed production for 2009/10 is projected at 94.5 million tons, up 6 per cent from 2008/09 with soybean production accounting for most of the increase. Cottonseed production is also projected higher, while peanuts, sunflower seed, and canola production are projected down. Soybean production is projected at 3.2 billion bushels, up 236 million from 2008/09 reflecting a small increase in harvested area and a trend yield of 42.6 bushels per acre. Soybean supplies are projected at 3.3 billion bushels, up 5 per cent from 2008/09 as smaller beginning stocks partly offset increased production.

Soybean crush for 2009/10 is projected to increase 2 per cent to 1.675 billion bushels reflecting a small increase in domestic meal use and higher exports. Domestic soybean oil consumption is projected to increase 1 per cent as biodiesel expansion is partly offset by a small decline in food use. Soybean oil used for biodiesel production is projected at 2.2 billion pounds, up 300 million from the revised 2008/09 estimate of 1.9 billion. Reduced South American supplies, due to drought in Argentina, Paraguay, and southern Brazil, are projected to push US soybean exports to a record 1.26 billion bushels. Ending stocks are projected at 230 million bushels, resulting in a relatively low stocks-to-use ratio at 7 per cent.

The US season-average soybean price for 2009/10 is projected at $8.45 to $10.45 per bushel compared with $9.85 in 2008/09. Soybean meal prices are forecast at $260 to $320, compared with $305 per ton for 2008/09. Soybean oil prices are projected at 32.5 to 36.5 cents per pound compared with 32.5 cents for 2008/09.

Global oilseed production for 2009/10 is projected at a record 422.1 million tons, up 25.9 million from 2008/09. Foreign oilseed production is projected at 327.6 million tons, up 20.4 million. Global soybean production is projected to increase 14 per cent to 241.7 million tons. The Argentina crop is projected at 51 million tons, up 17 million from the revised estimate for the 2008/09 crop based on increased harvested area and a return to trend yields. The Brazil crop is projected at 60 million tons, up 3 million from 2008/09 based on a 3-per cent increase in harvested area. China soybean production is projected at 15.6 million tons, down 0.4 million from 2008/09 due to reduced area. Global production of high-oil content seeds is projected to decline 2 per cent from 2008/09 as lower projected yields more than offset higher area for sunflower seed and rapeseed. Lower rapeseed production for Canada and Ukraine more than offsets increases for China, EU-27, India, and Australia. Lower sunflower seed production for Russia, Ukraine, and EU-27 more than offsets an increase for Argentina. Despite higher global oilseed production, 2009/10 supplies are up just 4 per cent reflecting lower beginning stocks.

Global protein meal consumption is projected to increase 3 per cent in 2009/10. Protein meal consumption is projected to increase 4 per cent in China, accounting for 32 per cent of global protein consumption gains. Global soybean trade is projected at 75.3 million tons, up 2.1 million from 2008/09. China imports are projected to account for just over half of world trade at 38.1 million tons.

Global vegetable oil consumption is projected to increase 3.8 per cent in 2009/10 led by increases for China, India, and EU-27. Global vegetable oil stocks are projected to decline 6 per cent from 2008/09.

Further Reading

- You can view the full report by clicking here.


May 2009