Livestock, Poultry and Dairy

The estimates of 2010 red meat and poultry production are adjusted from last month to reflect December production estimates. The production forecasts for 2011 are raised for beef, broilers and turkey but lowered for pork.

Cattle placements during December were large and will result in higher-than-previously forecast slaughter in mid-2011. In addition, cow slaughter in the first half is expected to reflect currently high cull-cow prices. Cattle weights are also forecast slightly higher in the first half.

Broiler production forecasts are raised for the first quarter to reflect relatively heavy broiler weights. The turkey production forecast is raised as hatchery data points to a slower pace of contraction.

Pork production is reduced slightly for the first quarter of 2011 as lower hog slaughter more than offsets continued high carcass weights.

The forecast of egg production is raised from last month as demand for eggs remains firm.

The forecast for beef exports for 2011 is raised from last month primarily on larger expected exports to Asia. The forecast of beef imports is reduced as tight supplies in several exporting countries and a relatively weak US dollar limit shipments. The pork export forecast for 2011 is raised largely due to expected increased sales of pork to Korea as herds have been culled due to foot-and-mouth disease. The broiler export forecast is raised for 2010 but the 2011 forecast is unchanged from last month.

The cattle price forecast for 2011 is raised to reflect continued strong demand for relatively tight supplies of cattle. Hog prices for 2011 are forecast higher on stronger demand. The broiler price forecast is lowered on larger supplies of broilers and competing meats.

The milk production estimate for 2010 and forecast for 2011 are raised from last month. Supply and use estimates for 2010 are adjusted to reflect production and stock estimates for December. Milk production is forecast higher for 2011 based on higher-than-expected 1 January dairy cow and dairy replacement heifer estimates. Import and export forecasts are unchanged from last month.

Product prices are forecast higher this month. Strong international demand, coupled with improving domestic demand is expected to help support prices. Butter prices are also benefitting from tight beginning stocks. Class III and Class IV price forecasts are raised to reflect higher product prices. The all milk price is forecast to average $17.70 to $18.40 per cwt for 2011.

Wheat

US wheat supply, use, and ending stocks projections for 2010/11 are unchanged this month. While the all-wheat projections are unchanged, several offsetting by-class adjustments are made to exports and domestic use. Exports of Hard Red Winter (HRW) and White wheat are each projected 10 million bushels higher. Hard Red Spring (HRS) wheat exports are projected 20 million bushels lower. Domestic use is projected 10 million bushels lower for HRW and 10 million bushel higher for HRS. The marketing-year average price received by producers is projected at $5.60 to $5.80 per bushel, up 10 cents on the lower end of the range. Continued gains in cash and futures prices boost the farm price outlook for the remainder the marketing year.

Global 2010/11 wheat supplies are reduced slightly this month reflecting a 0.4-million-ton downward revision to Ukraine production based on the latest government estimates. Global wheat trade is reduced slightly with small reductions in imports for Syria, Iraq and Pakistan, mostly offset by an increase for Bangladesh. Exports are lowered for EU-27 and Ukraine, but raised for Canada and Pakistan. These changes largely reflect the pace of sales and shipments reported to date.

Global 2010/11 wheat consumption is nearly unchanged with higher expected food use offset by reduced wheat feeding. Food, seed and industrial use is raised 0.5 million tons each for Argentina and Bangladesh but lowered 0.2 million tons for Canada. Wheat feeding is lowered 0.4 million tons for Canada and 0.2 million tons for Iraq. Global ending stocks are projected 0.2 million tons lower with reduced stocks in Argentina, Pakistan, and Syria mostly offset by larger stocks in EU-27, Ukraine and Kazakhstan.

Coarse Grains

US corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January. Rising corn prices have reduced spot margins relative to variable costs to breakeven levels in recent weeks; however, ethanol blender incentives remain in place and export demand prospects remain strong with sugar-based ethanol uncompetitive at current sugar prices. Corn costs for many ethanol producers and other end users may also be below spot values to date as a substantial portion of this year’s crop appears to have been forward priced. The continuing wide spread between reported monthly prices received by producers and substantially higher cash market bids can be explained by farmer deliveries of corn priced last year when prices were well below current levels.

Corn food, seed, and industrial use is also projected higher for 2010/11 due to rising prospects for production of sweeteners and starch. Corn used to produce high fructose corn syrup (HFCS) is projected 15 million bushels higher, reflecting strong shipments of the corn-based sweetener to Mexico. Demand for HFCS has grown in Mexico as sugar exports to the United States have increased. Corn used for starch is also raised five million bushels based on the improving outlook for industrial output in the United States.

Ending corn stocks for 2010/11 are projected at 675 million bushels. This month’s projections lower the stocks-to-use ratio to 5.0 per cent, the same as in 1995/96—the last time ending stocks fell to multi-year lows. Corn prices rose sharply in the spring and summer of 1996 to ration usage ahead of the harvest. The 2010/11 marketing-year average farm price is projected at $5.05 to $5.75 per bushel, up from $4.90 to $5.70 per bushel last month.

Global 2010/11 coarse grain supplies are projected 4.4 million tons lower this month with smaller beginning stocks and production. Coarse grain beginning stocks are reduced 2.4 million tons mostly reflecting lower corn carry-in in Brazil and lower barley carry-in in Saudi Arabia. Higher 2009/10 corn exports for Brazil and lower 2009/10 barley imports for Saudi Arabia drive these changes in 2010/11 supplies. Global 2010/11 corn production is lowered 1.8 million tons with reductions for Argentina and Mexico. Argentina production is lowered 1.5 million tons as continued dryness through mid-January further reduced yield prospects in the country’s central growing areas. Mexico production is lowered 0.5 million tons on lower reported area. Partly offsetting are small increases for the Philippines and Zimbabwe. Corn, barley, and rye production are all lowered slightly for Ukraine based on the latest government estimates.

Changes in global 2010/11 coarse grain trade are mostly offsetting. Corn exports are reduced 1.5 million tons for Argentina with the smaller crop. Corn exports are raised 0.3 million tons for Canada and 0.1 million tons for Paraguay. Corn imports are reduced for South Korea and Mexico, but raised for EU-27. South Korea corn imports are reduced an additional 0.5 million tons this month as efforts to contain the recent outbreak of foot-and-mouth disease further reduce feed demand. Barley exports are raised 0.3 million tons for Canada with a similar increase in imports projected for Saudi Arabia. Global corn consumption is raised slightly, mostly reflecting the increase in food, seed and industrial use in the United States. Corn feeding is raised for EU-27, but lowered for Canada and South Korea. Global corn ending stocks for 2010/11 are projected 4.5 million tons lower with most of the decrease in Brazil and the United States.

Oilseeds

US soybean supply and use projections for 2010/11 are unchanged this month, leaving ending stocks at 140 million bushels. Although soybean export shipments are only modestly ahead of last year's pace, record sales through the first five months of the marketing year are expected to result in stronger gains in the second half of the marketing year. Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave US soybean crush well-below 2009/10 levels. Soybean oil exports are increased to 2.8 billion pounds reflecting continued strong export sales. Although soybean oil used for biodiesel during the first quarter of the marketing year was the lowest in six years, projected use for 2010/11 is unchanged from last month as biodiesel production is expected to accelerate due to the 2011 mandate and the return of the $1.00 per gallon blending credit.

The US season-average soybean price range for 2010/11 is projected at $11.20 to $12.20 per bushel, unchanged from last month. Soybean oil prices are forecast at 51 to 55 cents per pound, up three cents on both ends of the range. Soybean meal prices are forecast at $340 to $380 per short ton, up $20 on both ends of the range. Soybean product prices are raised this month based on strong year-to-date prices.

Global oilseed production for 2010/11 is projected at 441.8 million tons, up 1.4 million tons from last month. Foreign production, projected at 341.3 million tons, accounts for all of the change. Brazil soybean production is forecast at a record 68.5 million tons, up 1.0 million tons from last month as timely rains in the southern producing area have raised yield prospects. Paraguay soybean production is also projected higher this month. Argentina soybean production is projected at 49.5 million tons, down one million tons. Despite widespread rains since mid-January, the extended dry period during planting and early crop development reduced yield prospects. Other changes include higher soybean and sunflower seed production for Ukraine, and increased peanut production for China. Palm production is raised for Indonesia and lowered for Malaysia.

Further Reading

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February 2011