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World Agricultural Supply and Demand Estimates - November 2010

by 5m Editor
9 November 2010, at 12:00am

Continued gains in broiler production are predicted, while the rate of decline in 2010 turkey production is slower than previously forecast, according to the latest USDA <em>World Agricultural Supply and Demand Estimates</em>.

Livestock, Poultry and Dairy

The forecast of total US meat production is raised for 2010 and 2011. Production forecasts for all major meats are raised for 2010. Beef production is raised on higher steer and heifer slaughter and the pork production increase reflects exceptional gains in carcass weights. Broiler hatchery data points toward continued gains in broiler production as the number of eggs set and chicks placed are large. The rate of decline in 2010 turkey production is slower than previously forecast. For 2011, production forecasts for beef, pork and broilers are increased. The beef production increase largely reflects slaughter of the higher-than-expected number of cattle placed on feed during the third quarter of 2010. Pork production is forecast higher in early 2011 as some of the weight gains seen in late 2010 carry into 2011. However, the increase in weights is expected to be moderated by higher costs of feed during 2011. Broiler production is also forecast higher in early 2011 as the sector carries its current expansion into 2011. However, higher expected feed costs are expected to slow the rate of increase later in the year. The turkey production forecast for 2011 is unchanged from last month as is the egg production forecast.

The beef import forecast is lowered for 2010 as the pace of imports to date is relatively slow but the forecast for 2011 is unchanged. Beef exports in both 2010 and 2011 are raised on stronger growth to Asian markets. The forecast for pork imports is raised for both 2010 and 2011 on strong shipments from several markets. The pork export forecast is lowered for 2010 based on the pace of exports but the forecast for 2011 is unchanged. The poultry export forecast is reduced on weaker third-quarter data but the forecast for 2011 is unchanged from last month.

The cattle price forecasts for 2010 and 2011 are raised to reflect continued strong demand for cattle. Hog prices are forecast lower on larger forecast pork supplies. The broiler price forecast is unchanged. Egg prices for 2010 are forecast higher as prices recovered from their late summer decline but the 2011 forecast is unchanged.

Forecast milk production for 2010 is unchanged from last month. However, for 2011, production is lowered from last month as forecast cow numbers are reduced from last month. Milk per cow is adjusted slightly higher in early 2011 but higher feed prices and lower forecast milk prices limit the rate of growth in 2011. Exports in 2010 are forecast higher due to strong growth in butter, cheese and fluid milk/cream. For 2011, continued global economic recovery and a favorable exchange rate should support exports. Revisions have been made to historical export aggregations, resulting in higher estimated exports. Import forecasts are raised on the strong pace of imports.

Cheese and butter prices for both 2010 and 2011 are forecast lower. The 2010 forecast for nonfat dry milk is unchanged from last month but stronger expected exports support a higher forecast for 2011. The whey price forecast is unchanged. Both Class III and Class IV price forecasts for 2010 are lowered due to the lower cheese and butter price forecasts. The Class III price forecast is lowered for 2011 but the Class IV price forecast is raised as the higher nonfat price more than offsets the lower butter price forecast. The all milk price is forecast to average $16.30 to $16.40 per cwt for 2010 and $15.95 to $16.85 per cwt for 2011.

Wheat

US wheat ending stocks for 2010/11 are projected five million bushels lower this month as downward production revisions of 11 million bushels for Hard Red Spring (HRS) wheat and four million bushels for durum more than offset higher projected imports. Imports are raised 10 million bushels with increases for Soft Red Winter (SRW) wheat and durum. Exports are unchanged, but shifts among classes result in higher projected exports of Hard Red Winter and HRS wheat and reductions for SRW and durum. The projected season-average price received by producers is narrowed five cents on each end of the range to $5.25 to $5.75 per bushel. Heavy early season marketings and forward sales limit upside potential for the season-average farm price.

Global wheat supplies are projected slightly higher for 2010/11 as higher world production offsets lower carry-in, mostly reflecting higher 2009/10 wheat feeding in China. World production is raised 1.5 million tons for 2010/11 as increases for Argentina, Australia, EU-27 and Paraguay more than offset reductions for FSU-12 and the United States. Argentina production is raised 1.5 million tons as favourable returns and timely rains boost area and yield prospects. Australia production is raised 1.0 million tons as rising yield prospects in eastern growing areas more than offset reductions from extended dryness in Western Australia. Production is raised 0.6 million tons for EU-27 mostly based on higher reported area for Poland. Production for Russia is lowered 0.5 million tons as harvest results indicate lower-than-expected yields in Siberia. Production is also lowered 0.5 million tons each for Azerbaijan and Kazakhstan as the latest reports confirm higher-than-expected yield losses from the extended drought across the region.

World wheat trade for 2010/11 is raised this month with imports up 0.5 million tons each for China, Egypt and South Korea, mostly reflecting higher reported shipments so far for the marketing year. Imports are also raised for Azerbaijan and the United States. Turkey’s imports and exports both are reduced one million tons as short supplies of FSU-12 wheat limit Turkey’s wheat imports and flour exports. Kazakhstan exports are lowered 0.5 million tons with the smaller crop. Exports are raised 1.0 million tons each for Argentina and EU-27 with larger available supplies in Argentina and the strong pace of EU-27 export licensing. Russia exports are raised 0.5 million tons as flour exports will now be allowed after 31 December 2010.

Global wheat consumption for 2010/11 is raised 2.5 million tons with much of the increase reflecting a 2.0-million-ton increase in China wheat feeding. Wheat feeding is also raised 0.5 million tons for Korea based on the pace of feed quality wheat imports. Feeding is lowered 1.0 million tons for Russia but is offset by a 1.0-million-ton increase in food use. Global ending stocks for 2010/11 are projected 2.2 million tons lower with the largest reduction for China where stocks are lowered 3.4 million tons. Ending stocks are also lowered 1.0 million tons for Russia. Partly offsetting are higher projected ending stocks for Australia, Egypt, Argentina and Paraguay.

Coarse Grains

US feed grain supplies for 2010/11 are reduced this month with lower expected corn production. Corn production is forecast 124 million bushels lower as the national average yield is lowered to 154.3 bushels per acre, down 1.5 bushels from the previous forecast. Feed and residual use is projected 100 million bushels lower with the smaller forecast crop and higher prices expected to reduce feeding. Exports are lowered 50 million bushels as higher prices trim export demand. Corn use for ethanol is raised 100 million bushels with record October ethanol production indicated by weekly Energy Information Administration data and favourable ethanol producer margins. Ethanol prices continue to track higher with corn prices, supporting returns for ethanol producers. Although small relative to domestic usage, higher ethanol exports and lower imports are also expected to add to corn use for ethanol with high sugar prices limiting the availability of ethanol from Brazil.

Corn ending stocks for 2010/11 are projected 75 million bushels lower. At 827 million bushels, ending stocks would be the lowest since 1995/96 and represent a carry-out of 6.2 per cent of projected usage. In 1995/96, carry-out dropped to five per cent of estimated usage. The season-average farm price is projected at $4.80 to $5.60 per bushel, up 20 cents on both ends of the range and well above the previous record of $4.20 per bushel in 2007/08.

Global coarse grain supplies for 2010/11 are projected 3.3 million tons lower reflecting reduced corn production in the United States, reduced barley production in China, and reduced oats and rye production in Russia. Global corn production is reduced 1.1 million tons as the US decline is partly offset by a 2.0-million-ton increase for China on higher 2010/11 area. Corn production for China is also raised 2.0 million tons for 2009/10 based on an area increase of 800,000 hectares as indicated by official government statistics. Global 2010/11 barley production is lowered 0.8 million tons mostly on a 0.7-million-ton reduction for China on lower area and yields. Other barley changes include small reductions for Belarus and EU-27, and a 0.3-million-ton increase for Australia as abundant rainfall in eastern growing areas support higher yields. Global oats production is lowered 1.3 million tons mostly on a 1.0-million-ton reduction for Russia. Global rye production is lowered with a 0.4-million-ton reduction for Russia.

Global 2010/11 coarse grain trade is lowered slightly this month with lower corn imports for the Philippines and South Korea partly offset by small increases in corn imports for Saudi Arabia and sorghum imports by EU-27. Corn exports are raised 0.5 million tons each for EU-27 and Serbia mostly offsetting the 1.3-million-ton reduction for the United States. Global coarse grain consumption for 2010/11 is lowered slightly as higher corn feeding in China and Argentina are mostly offset by reduced corn feeding in EU-27, South Korea and the Philippines. Oats and barley consumption are also lowered with reduced oat feeding in Russia and China and reduced barley feeding in EU-27 and China. Global corn ending stocks are lowered 3.2 million tons. At 129.2 million tons, world corn stocks would be the lowest since 2006/07, the first year of the rapid expansion in US ethanol production and use.

Oilseeds

Total US oilseed production is projected at 101.8 million tons, down one million from last month as lower soybean and cottonseed production are only partly offset by higher peanut production. Soybean production is forecast at 3.375 billion bushels, down 33 million from last month. The soybean yield is projected at 43.9 bushels per acre, down 0.5 bushels from the previous estimate. Soybean exports are raised 50 million bushels to a record 1.57 billion due to increased global import demand and to a record sales pace, especially to China which accounts for over 70 per cent of known US soybean export sales through October. Soybean ending stocks are projected at 185 million bushels, down 80 million from last month.

Soybean oil ending stocks for 2010/11 are raised this month due to higher beginning stocks reported by the US Census Bureau and to reduced domestic disappearance reflecting lower projected food use of soybean oil.

Prices for soybeans and products are projected higher for 2010/11. The US season-average soybean price range is projected at $10.70 to $12.20 per bushel, up 70 cents on both ends. The soybean meal price is projected at $310 to $350 per short ton, up 20 dollars on both ends of the range. The soybean oil price range is projected at 42.5 to 46.5 cents per pound, up three cents on both ends of the range.

Global oilseed production for 2010/11 is projected at 440.7 million tons, up 0.1 million from last month. Increased soybean production is mostly offset by lower sunflower seed, rapeseed, peanut and cottonseed production. Global soybean production is projected higher with increases for Brazil, Argentina, India and South Africa only partly offset by a reduction for the United States. Argentina soybean production is raised two million tons to 52 million due to increased area as producers respond to relatively high soybean prices. Brazil soybean production is projected at 67.5 million tons, up 0.5 million from last month due to increased area. Global sunflower seed production is projected lower due to reduced estimates for Russia, Argentina, India and EU-27. Other changes include lower rapeseed production for Australia, lower peanut production for India and lower cottonseed production for China.

Oilseed trade is projected at 111.4 million tons, up 1.8 million. China soybean imports for 2010/11 are raised to 57 million tons, up two million from last month. EU-27 imports of soybeans and soybean meal are raised this month to offset lower sunflower seed and rapeseed availability.

Further Reading

- You can view the full report by clicking here.

November 2010