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World Agricultural Supply and Demand Estimates - February 2010

15 February 2010

Cattle price forecasts for 2010 are lowered as larger numbers of fed cattle are expected to pressure prices, according to the USDA World Agricultural Supply and Demand Estimates for February 2010.

LIVESTOCK, POULTRY, AND DAIRY: Total US meat production for 2010 is little changed as higher beef production is more than offset by lower forecast production of pork and turkey. The Cattle report estimated the cattle numbers on 1 January 2010, declined from the previous year, but implied the number of cattle outside feedlots remains close to last year. Thus, forecast placements and marketings are raised, resulting in higher forecast cattle slaughter. However, partly offsetting the increase in expected slaughter, cattle weights are reduced for early 2010 due to severe weather which has impacted weight gain. Pork production is reduced as slaughter has been lower than expected and weights slightly lighter. Turkey production for 2010 was reduced as the pace of growth implied by hatchery data has been less than expected. Broiler meat and egg production forecasts are unchanged from last month. Estimated meat production for 2009 is adjusted to reflect December slaughter data.

Only small changes are made to 2009 beef exports. There are no changes to red meat export forecasts for 2010 but the broiler export forecast is reduced from last month. Recently announced duties on US broilers by China and continued trade restrictions in several other countries will pressure broiler exports.

Cattle price forecasts are lowered for 2010 as larger numbers of fed cattle are expected to pressure prices. Hog prices are raised as tighter supplies may help support prices. Broiler prices are forecast higher in 2010 as domestic demand is expected to grow.

The milk production forecasts are raised for 2009 and 2010. The forecast for 2009 reflects recent USDA estimates of fourth-quarter production. Milk production is forecast higher for 2010 based on the higher-than-expected 1 January dairy replacement heifer estimate. Herds are not expected to decline as rapidly as forecast last month, boosting milk production. Dairy exports on a skim-solids basis for 2010 are raised, reflecting higher sales of cheese and nonfat dry milk. Import forecasts are lowered for 2010. Fat and skim-solids ending stocks are estimated higher for 2009 and stocks for 2010 are raised in the face of higher production. Cheese and butter price forecasts for 2010 are little changed from last month. The Class III price is raised from last month due to higher forecast whey prices, but the Class IV price forecast is lowered reflecting weaker nonfat dry milk prices. The all milk price is forecast at $16.20 to $16.90 for 2010.

WHEAT: US wheat ending stocks for 2009/10 are projected 5 million bushels higher this month reflecting an increase in expected imports. Imports are raised based on expected shipments of South American and European feed quality wheat into the southeastern US market. Exports of all wheat are unchanged, but by-class adjustments include a 10-million-bushel increase in hard red winter wheat and 5-million-bushel decreases in both hard red spring and durum wheat. The projected marketing-year average farm price is narrowed 5 cents on both ends of the range to $4.75 to $4.95 per bushel.

Global wheat supplies for 2009/10 are projected 1.4 million tons higher reflecting production increases for Argentina and Ukraine. Argentina production is raised 1.0 million tons as abundant, late-season rains raised harvested area and yields in key eastern growing areas. Ukraine production is increased 0.4 million tons as the latest revisions to state statistical committee estimates boost yields, more than offsetting a small reduction in harvested area.

Global wheat imports and exports for 2009/10 are both raised this month mostly reflecting higher expected shipments for Argentina and increased regional trade for Turkey. Exports are raised 1.0 million tons for Argentina with larger supplies and recently more favorable government policies toward exports. Exports for Turkey are raised 0.3 million tons reflecting stronger shipments to other countries in the region. Partly offsetting are reductions of 0.5 million tons and 0.2 million tons, respectively, for Pakistan and Uruguay exports. Imports are raised 0.7 million tons for Afghanistan and 0.5 million tons for Turkey. Imports are raised 0.4 million tons for Uzbekistan. Partly offsetting is a 0.5-million-ton import reduction for Pakistan. Global wheat consumption for 2009/10 is raised 1.1 million tons mostly on higher feeding in Canada and increased food use in Afghanistan. Higher consumption mostly offsets this month’s increase in world production with projected global ending stocks rising 0.3 million tons.

COARSE GRAINS: US feed grain ending stocks for 2009/10 are projected lower this month with higher expected corn use and sorghum exports. Corn used for ethanol is projected 100 million bushels higher reflecting the latest ethanol production data from the Energy Information Agency. November’s record ethanol production was up 3 per cent from the previous record in October as higher prices for ethanol and distillers grains boosted ethanol producer returns. November-December corn use for ethanol was up 16 per cent from the same period in 2008/09. Although returns have declined since November, recently lower corn prices continue to support profitability for ethanol producers. A 5-million-bushel reduction in expected corn use for sweeteners partly offsets the increase for ethanol. Corn exports for 2009/10 are projected 50 million bushels lower on increased competition from Argentina. Ending stocks are projected 45 million bushels lower. The projected marketing-year average farm price for corn is narrowed 5 cents on both ends of the range to $3.45 to $3.95 per bushel.

Global coarse grain production for 2009/10 is projected 1.6 million tons higher this month with higher Argentina corn production only partly offset by lower EU-27 corn production and lower Ukraine barley and oats production. Argentina corn production is raised 2.2 million tons with higher expected yields and harvested area as growing conditions continue to improve with additional rainfall in the main corn areas. Late planting and short-term heat stress in the western growing areas temper prospects as a substantial portion of the growing season is still ahead. EU-27 corn production is lowered 0.4 million tons on downward revisions to area for Italy. Ukraine barley and oats production are each lowered 0.2 million tons reflecting the latest revisions to state statistical committee estimates. A number of small, offsetting revisions are made for Russia coarse grains production.

Global coarse grain imports and exports for 2009/10 are both raised slightly this month. The reduction in US corn exports is more than offset by a 1.5-million-ton increase for Argentina. Sorghum imports are raised for Japan and Mexico with the increase in US sorghum exports. Other major trade changes this month include a 0.5-million-ton reduction in EU-27 barley exports and a 0.5-million-ton increase in Turkey barley exports. Global coarse grain consumption is increased 3.4 million tons this month with higher corn and sorghum use more than offsetting a reduction for barley. Higher corn use for ethanol in the United States and higher corn feeding in Argentina account for most of the increase. Sorghum feeding is raised for Australia, Japan, and Mexico. Barley feeding is lowered for Australia, Iran, Turkey, and Ukraine. Global coarse grain ending stocks are projected 1.0 million tons lower with a 2.1-million-ton reduction for corn partly offset by a 1.1-million-ton increase for barley.

RICE: No changes are made on the supply side of the US 2009/10 rice supply and use balance sheet. However, 2009/10 domestic and residual use and exports are each increased resulting in an increase in total use of 3 million cwt to 231.5 million. Domestic and residual use is raised 1 million cwt to 130.5 million, and exports are increased 2 million to 101.0 million. The 2009/10 by-class export projections are each raised 1 million cwt to 70.0 million for long-grain and 31.0 million for combined medium- and short-grain rice. The increase in exports is all in the rough rice category now projected at 37.0 million cwt. The increase in use results in a decrease in ending stocks to 39.8 million cwt, down 7 per cent from last month.

The 2009/10 long-grain, season-average price is projected at $12.90 to $13.40 per cwt, up 40 cents per cwt on the low end of the range, but down 10 cents per cwt on the high end compared to a revised $14.90 per cwt for 2008/09. The combined medium- and short-grain price is projected at $17.50 to $18.00 per cwt, up 50 cents per cwt on the low end of the range and no change on the high end compared to a revised $24.80 per cwt for 2008/09. The all rice season-average price is forecast at $14.05 to $14.55 per cwt, up 40 cents per cwt on the low end of the range, but down 10 cents per cwt on the high end compared to $16.80 for 2008/09. The price projections are based on National Agricultural Statistics Service reported prices through mid-January and expected prices the remainder of the marketing year.

Global 2009/10 rice production, consumption, trade, and ending stocks are raised from a month ago. The increase in global production is due mostly to an increase in the Indonesian rice crop, which is offset partially by small downward adjustments in the Philippines and Thailand. Indonesia’s rice crop is forecast at 38.8 million tons, up 5 per cent from last month due to an expected increase in average yield. Crop prospects have improved since a month ago, particularly in central and eastern Java as the effects of El Nino have moderated. World exports are raised slightly mostly due to increases for the United States and Egypt, which is partially offset by a reduction for Burma. Imports are raised for a number of West African countries which is partially offset by reduction for Bangladesh. Global ending stocks are raised to 92.5 million tons, up 1.8 million from a month ago with most of the increase in Indonesia -- up 1.5 million from last month. Other notable changes in ending stocks include an increase for Thailand and reductions for the United States, the Philippines, Egypt, and Senegal.

OILSEEDS: Projected US soybean ending stocks for 2009/10 are reduced to 210 million bushels, down 35 million from last month due to increased exports and crush. Soybean exports are raised 25 million bushels to 1.400 billion as export shipments continue to exceed earlier projections. Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year=s historic drought in Argentina continue to support US exports. Soybean crush is raised 10 million bushels to 1.720 billion reflecting a strong soybean meal exports and a lower soybean meal extraction rate. Soybean oil stocks are projected higher this month as the increased crush more than offsets a small reduction in the soybean oil extraction rate. Soybean oil used for methyl ester is unchanged this month despite reduced production due to the loss of the $1.00 per gallon blending credit at the end of December. The recent Environmental Protection Agency announcement of final rules for the 2009 and 2010 biodiesel mandates is expected to result in offsetting production gains through the end of the 2009/10 marketing year.

The US season-average soybean price range for 2008/09 is projected at $8.70 to $10.20 per bushel, down 20 cents on both ends of the range. The soybean meal price is projected at $270 to $320 per short ton, up 5 dollars on both ends. The soybean oil price is projected at 33.5 to 36.5 cents per pound, down 2.5 cents on both ends of the range.

Global oilseed production for 2009/10 is projected at 433.7 million tons, up 2.1 million from last month. Global soybean production is raised 1.6 million tons to 255 million tons. Improved production prospects for South America account for most of the change. Soybean production for Brazil is projected at 66 million tons, up 1 million from last month due to higher yields. Soybean production is also raised for Paraguay and Uruguay. Global sunflowerseed production is projected higher due to gains for Ukraine and Russia. Global rapeseed production is raised this month due to a larger projected crop for EU-27.

Global oilseed trade is raised 0.9 million tons to 96.3 million tons, mainly due to increased soybean imports for China and Egypt. Higher global oilseed crush mainly reflects increased rapeseed crush in Canada, China, and EU-27. Global oilseed stocks are mostly unchanged at 71.1 million tons.

SUGAR: Projected 2009/10 sugar supply is decreased 85,000 short tons, raw value, from last month due to lower imports from Mexico more than offsetting higher sugar production. Beet sugar production and Louisiana cane sugar production are increased a combined 150,000 tons to reflect anticipated higher output in September 2010. Florida cane sugar production is reduced 15,000 tons based on lower forecast production of sugarcane. Imports from Mexico are decreased 220,000 tons in line with a decrease in production based on continued reports of weather-reduced sugar yields. Sugar use is unchanged.

COTTON: The 2009/10 US cotton supply and demand estimates show sharply higher exports, lower ending stocks, and higher prices relative to last month. Production and domestic mill use are unchanged. The export forecast is raised 1.0 million bales to 12.0 million, as new export sales of more than 1.8 million bales were made in January. Led by a drop in the New York futures market, recent lower prices for US cotton combined with strong foreign mill demand have boosted export prospects. Accordingly, US ending stocks are now forecast at 3.3 million bales, 21.4 per cent of total use. If realized, this would be the lowest stocks-to-use ratio since 2003/04. The forecast range of 59 to 65 cents per pound for the marketing-year average price received by producers is raised 2 cents on the lower end and 1 cent on the upper end, based on a higher-than-expected average price received for the month of December.

This month’s world cotton 2009/10 forecasts show higher beginning stocks, largely offset by higher consumption. Beginning stocks are raised in China due to modest reductions in estimated consumption for marketing years 2007/08 and 2008/09. World production is virtually unchanged. Higher forecast 2009/10 world consumption includes increases for China and India, based on a stronger estimated recovery in demand than previously anticipated. Total world trade is about unchanged, as higher US exports are mainly offset by a reduction in exports by India. World ending stocks are raised marginally from last month.

Further Reading

- You can view the full report by clicking here.

February 2010

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