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World Agricultural Supply and Demand Estimates – October 2011

by 5m Editor
14 October 2011, at 12:00a.m.

The forecast of total red meat and poultry production is raised, reflecting higher beef, pork and turkey production but lower broiler production, according to the latest USDA <em>World Agricultural Supply and Demand Estimates</em>.

Livestock, Poultry and Dairy

The increase in beef production is largely due to higher expected cow slaughter as drought conditions in much of the Southern Plains and high hay prices will likely keep slaughter high. Higher than expected third quarter commercial hog slaughter supports the higher pork production forecast. Broiler production is reduced as lower egg sets point to a sharp reduction in later-year bird slaughter. However, continued relatively heavy bird weights result in an increase in expected third-quarter production.

Table egg production is increased but is partly offset by lower expected broiler hatching egg production. For 2012, beef and broiler production is reduced from last month, but pork production is increased. First-quarter beef production is raised slightly but is more than offset by reduced production later in the year as feedlot supplies decline. Broiler production is reduced as broiler price forecasts are weakened. Pork production is raised from last month. In the Quarterly Hogs and Pigs report, released on 28 September, producers indicated they farrowed about one per cent fewer sows in June–August and intended to keep farrowings near year-ago levels into early 2012. However, the number of pigs per litter continues to grow and is expected to support increased pig crops and supplies of slaughter hogs in 2012.

Beef import forecasts are lowered in 2011 and 2012 as strong demand for beef by competing importers limits shipments to the United States. The beef export forecast is raised as the strong demand in a number of countries is expected to support continued growth in US exports. Pork imports are unchanged from last month but the export forecast for 2012 is reduced slightly as expected increased production in several Asian markets may limit export opportunities later in the year. Broiler exports are raised for 2011 but are unchanged for 2012.

Cattle prices are forecast higher for the remainder of 2011 and through 2012. Demand remains stronger-than-expected and the strength is expected to carry into 2012. Hog prices are lowered for the last quarter of 2011 and into 2012 as hog supplies and slaughter are forecast higher. Broiler prices are lowered for 2011 as supplies remain relatively large and demand relatively weak. The pace of price recovery in 2012 is expected to be slower than forecast last month.

The milk production forecast for 2011 is raised as the dairy herd has been expanding at a more rapid rate and milk per cow during the summer increased more rapidly than expected. However, the forecast for 2012 is reduced as forecast lower milk prices and weakening milk-feed ratios increase the pace of later year declines in cow numbers. Fat basis exports are lowered for 2011 on slightly weaker butter and cheese exports, but are unchanged for 2012. Skim solids exports are unchanged for 2011 but are lowered for 2012. Import forecasts are unchanged.

Butter and cheese prices for 2011 are forecast lower, but the non-fat dry milk (NDM) price forecast is unchanged and whey prices are forecast higher. International prices have been weaker which has put some pressure on butter and cheese prices. Butter and cheese price forecasts are also reduced for 2012. NDM prices have also been under pressure from weakening international prices and although the forecast for 2011 is unchanged from last month, the price forecast for 2012 is reduced.

Whey prices are raised for both 2011 and 2012 as demand is strong. The Class III price is lowered for 2011 but for 2012 the higher whey price more than offsets a decline in the cheese price, and the Class III price forecast is raised. The Class IV price is lowered for both years due to lower forecast butter and NDM prices. The all milk price forecast is lowered to $20.00 to $20.10 per cwt for 2011, and $17.75 to $18.65 per cwt for 2012.

Wheat

Projected US wheat ending stocks for 2011/12 are raised 76 million bushels as lower expected domestic use and exports more than offset reduced production. Production is lowered 69 million bushels, mostly reflecting lower spring wheat output as estimated in the September 30 Small Grains report. With tighter domestic supplies and an increase in production in Canada, US imports are raised 10 million bushels, five million bushels each for Durum and Hard Red Spring (HRS) wheat.

v Domestic use is lowered 84 million bushels with seed use reduced four million bushels on lower planted area and feed and residual use projected 80 million bushels lower on indications from the 1 September stocks. Despite competitive wheat prices relative to corn for feeders in many areas, wheat feed and residual use during June-August is indicated 53 million bushels lower than the same quarter last year. All wheat food use for 2011/12 is unchanged; however, food use is lowered 15 million bushels for HRS wheat and raised an offsetting amount for Hard Red Winter (HRW) wheat.

US exports for 2011/12 are projected 50 million bushels lower with HRS reduced 40 million and HRW reduced 10 million. Tighter spring wheat supplies in the United States boost export prospects for Canada and larger exportable supplies in Australia and strong shipments by Russia increase competition in the world market. The season-average price received by producers is projected at $7.10 to $7.90 per bushel compared with $7.35 to $8.35 last month. The higher 2011/12 wheat carryout projection and lower corn prices are both expected to limit seasonal price increases.

Global wheat supplies for 2011/12 are projected 5.4 million tons higher with larger beginning stocks in Australia and higher production in Kazakhstan, Australia, EU-27, Canada, and South Africa. World beginning stocks are raised 2.3 million tons as a 3.2-million-ton increase for Australia (reflecting the latest government stocks estimate) more than offsets numerous, small, downward revisions elsewhere. Kazakhstan production is raised 3.0 million tons based on harvest results that confirm the impact of abundant moisture and near-perfect summer weather on this year's crop. Australia production is raised 1.0 million tons as September rainfall across most of the country's wheat-producing areas boosts yield prospects. Production is raised 0.5 million tons for the EU-27 with further upward revisions to official statistics for France and higher reported output in the Czech Republic and Hungary. Production is raised 0.2 million tons each for Canada and South Africa, in line with the latest government estimates.

World wheat trade is raised for 2011/12 as higher expected imports for a number of countries and larger exportable supplies in major exporting countries support increased trade. Imports are raised 0.5 million tons each for Egypt, Morocco and Turkey. Smaller increases also are projected for Libya, Thailand, Taiwan and Tunisia. Exports are raised 2.0 million tons each for Australia and Russia.

Exports are raised 1.0 million tons each for Canada and Kazakhstan. Reduced competition from US spring wheat boosts prospects for Canada, while the record crop adds to available supplies in Kazakhstan. World wheat feeding is lowered 4.6 million tons led by the 2.2-million-ton reduction for the United States. Wheat feeding is lowered 2.0 million tons for Russia as exports draw wheat away from domestic use. Wheat feeding is also lowered 1.4 million tons for Australia in part reflecting lower usage indications from the latest official stocks estimate. Global ending stocks are raised 7.8 million tons this month to 202.4 million. As projected, 2011/12 stocks would be a 10-year high.

Course Grains

US feed grain supplies for 2011/12 are projected higher this month as higher beginning stocks more than offset lower forecast production. Corn production is forecast 64 million bushels lower with planted and harvested area lowered 385,000 acres and 452,000 acres, respectively. The national average corn yield forecast is unchanged this month at 148.1 bushels per acre. Beginning stocks for 2011/12 are raised 208 million bushels from the previous projection based on the 1 September stocks estimate. Corn supplies for 2011/12 are forecast 144 million bushels higher. Total US corn use for 2011/12 is projected 50 million bushels lower with reduced exports.

Higher expected Black Sea production and exports increase competition for US corn. US ending stocks are projected 194 million bushels higher at 866 million. The season-average farm price is projected 30 cents per bushel lower on both ends of the range to $6.20 to $7.20 per bushel. Other 2011/12 feed grain changes this month include a 10-million-bushel reduction in projected sorghum exports and a 10-million-bushel increase in feed and residual use. Barley feed and residual use is projected 10 million bushels lower based on June-August disappearance as indicated by the 1 September stocks and updates to June-August trade. For 2010/11, corn feed and residual use is lowered 197 million bushels based on the 1 September stocks estimate and other changes to 2010/11 use and supplies. Sweetener and starch use is lowered 15 million bushels based on reported use for the June-August quarter.

Corn imports are lowered three million bushels for 2010/11. Global coarse grain supplies for 2011/12 are projected 10.4 million tons higher with more than half of the increase reflecting the 5.3-million-ton increase in US corn beginning stocks. Global corn production is raised 5.4 million tons with foreign production increases more than offsetting the US reduction. Production is raised 4.0 million tons for China to a record 182.0 million tons supported by 2011 weather data, information from crop tours, and early forecasts by officials in China. Ukraine corn production is raised 3.0 million tons as summer precipitation and temperature patterns support a sharp year-to-year increase in yield prospects and early harvest results indicate record yields. Production is also raised 0.5 million tons for Russia but lowered 0.3 million tons for Serbia.

Estimates of China’s 2009/10 and 2010/11 corn production are raised 6.0 million tons and 4.2 million tons, respectively, in line with data from the China National Bureau of Statistics (NBS). Based on analysis of summer weather data from China’s northeast corn growing region during the past decade, NBS provincial yield estimates for 2000 through 2008, and the recently released provincial yield estimates for 2010, NBS yields for 2009 are consistent with the historical relationship between yields and reported summer rainfall and temperatures. Summer weather data and the same statistical relationship support this month’s upward revisions to 2010 production. Increases in China corn feed and residual use for 2009/10, 2010/11, and 2011/12 offset this month’s production increases leaving China ending stocks nearly unchanged.

Global coarse grain trade for 2011/12 is raised slightly driven by increased corn imports by South Korea and higher corn exports from Ukraine and Russia. Exports are raised 2.0 million tons for Ukraine and 0.3 million tons for Russia with larger crops expected in both countries. These changes more than offset the reduction projected for US shipments. Global corn ending stocks are projected 5.8 million tons higher for 2011/12 mostly reflecting the larger US beginning stocks. Despite the increase, 2011/12 world corn ending stocks would be the smallest since 2006/07.

Rice

US rice production in 2011/12 is forecast at 186.9 million cwt, down 4.0 million from last month and the smallest crop since 1998/99. The decline is entirely due to a decrease in yield. Average yield is estimated at 7,123 pounds per acre, down 150 pounds from last month. Harvested area is unchanged at 2.62 million acres. Long-grain production is forecast at 116.8 million cwt, 2.5 million below last month and the smallest crop since 1996/97. Combined medium- and short-grain production is still a record forecast at 70.1 million cwt, down 1.5 million from last month. The import forecast is unchanged at 19.0 million cwt. Domestic and residual use for 2011/12 at 127.0 million cwt is unchanged from a month ago. Total rice exports are projected at 91.0 million cwt, down 2.0 million from last month. The decrease is entirely in the milled and brown rice category, as the rough rice export forecast is unchanged. Long-grain and combined medium- and short-grain export projections are each lowered 1.0 million cwt to 60 million and 31.0 million, respectively. Total rice ending stocks are projected at 36.4 million cwt, down 1.9 million from last month.

The 2011/12 long-grain season-average farm price range is projected at $13.50 to $14.50 per cwt, unchanged from last month. The combined medium- and short-grain farm price range is projected at $15.50 to $16.50 per cwt, up 50 cents per cwt on each end of the range from last month. The all rice season-average farm price is forecast at $14.00 to $15.00 per cwt, unchanged from a month ago.

Projected global 2011/12 rice supply, consumption, trade and ending stocks are increased from a month ago. World rice production is forecast at a record 461.4 million tons, up 3.0 million from last month due primarily to an increase in India. Thailand’s 2011/12 rice crop is raised 0.5 million in anticipation of a bumper main-season crop in the Northeast and large off-season crop in the North and the Central Plateau that will likely offset the production losses from the recent flooding. India’s 2011/12 rice crop is forecast at a record 100.0 million tons, up three per cent from last month and up five per cent from the previous year. India benefitted from a near-record monsoon in 2011. Partially offsetting the production increases are reductions for Pakistan, the Philippines and the United States. Global consumption is raised 1.8 million mostly due to an increase in India. Global exports are raised with increases for India and Viet Nam, partially offset by decreases in the United States and Pakistan. Imports are raised for Bangladesh and Nigeria. Global 2011/12 ending stocks are projected at 101.4 million tons, up 2.8 million from last month, 3.6 million above 2010/11 and the largest stocks since 2002/03. Forecast ending stocks are raised for Bangladesh, India and the Philippines but lowered for Viet Nam and the United States.

Oilseeds

US oilseed production for 2011/12 is projected at 91.6 million tons, down 0.8 million from last month. Soybean production is forecast at 3.06 billion bushels, down 25 million based on lower harvested area and yield. Harvested area is lowered 147,000 acres to 73.7 million. The soybean yield is projected at 41.5 bushels per acre, down 0.3 bushels. Sunflowerseed and canola production are projected lower this month while peanuts and cottonseed production are projected higher.

US soybean exports for 2011/12 are reduced 40 million bushels to 1.375 billion reflecting the slow pace of export sales and strong early season export competition from South America. The 1 September stock estimate of 215 million bushels indicated higher-than-expected residual use for 2010/11. As a result, the 2011/12 residual use is projected at 32 million bushels, up nine million from the previous estimate. Soybean ending stocks are projected at 160 million bushels, down five million from last month.

Prices for soybeans and products are all reduced this month. The US season-average soybean price range for 2011/12 is projected at $12.15 to $14.15 per bushel, down 50 cents on both ends of the range. The soybean meal price is projected at $335 to $365 per short ton, down $25 on both ends of the range. The soybean oil price range is projected at 53 to 57 cents per pound, down two cents on both ends. Global oilseed production for 2011/12 is projected at 453.5 million tons, up 0.5 million from last month. Global soybean production is projected at 258.6 million tons, down 0.4 million mainly due to the lower US crop. Soybean production is raised for India and Ukraine. Offsetting is a small reduction for Canada based on the latest survey information from Statistics Canada. Global sunflower seed production is raised this month based on increased yields for Russia, EU-27 and Turkey, and increased area in Argentina. Rapeseed production is reduced for Canada based on lower yields reported in the most recent survey from Statistics Canada. Rapeseed production is also reduced for Russia and Belarus. Other changes include increased peanut production for Argentina, and increased cottonseed production for Brazil. Global oilseed stocks for 2011/12 are increased 0.5 million tons to 73.0 million with soybeans accounting for most of the change.

Further Reading

- You can view the full report by clicking here.


October 2011