Corn and soybean meal use has fallen for feed use within the United States for 2008/09 as a result of poor economics for major meat/milk corporations/producers. It comes as little surprise corn for US feed use has fallen 11% while soybean meal use for feed has dropped 5% year on year. While the US may be experiencing adverse economic conditions and limiting meat/milk protein intake, the same can not be written for China’s 1.3 billion population. With China’s unemployment rate at 1.53% vs the US’s 7.6%, meat and milk consumption within China may not warrant as drastic cut to its corn and soybean meal use.

 

Whether milk, poultry, beef or pork, China demand remains in a notable upward trend. The year on year increase from 2008 to projected 2009 for fluid milk consumption is up 5.3%, poultry up 8.6%, beef and veal up 1.6% and swine meat up 2.9%. More impressive is since 2004 each sector has been on a very positive growth trend with pork up 7.3%, beef up 13.3%, poultry up 40% and milk consumption up a staggering 67.5%!

            Now consider the fact each of these sectors require corn and soybean meal fed to produce the meat/milk product. Conversion rates are as follows; to produce one pound of poultry meat, it requires 1.8 pounds of grain, for pork the rate is 2.75 pounds of feed fed to produce one pound, for beef the rate is 6 pounds of grain for one pound of production and to produce one gallon of milk, 2.8 pounds of grain is required. Granted the feed conversion rates for China may not be as efficient as the US but none the less, corn and soybean meal is required for strong production.

            Of equal interest are growth trends of major world meat/milk consumption finds since 2004, India’s milk consumption up 22.7%, USA up 12.7% and Brazil up 30%. With respect to poultry, USA consumption up 5.4%, EU-27 up 11.8%, Mexico up 22% and Brazil up 28%.

            In conclusion, is the optimistic outlook for long term sustained growth for meat and milk protein needs within and outside of the US and the corn and soybean meal required.

Without question, the US may be temporarily reflecting less feed use but major consuming countries may not be following the same pause.

Feel free to call us 800 551 4626 with your ideas

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Allendale’s 20^th annual Acreage Survey begins Feb 23^rd. Allendale, Inc.

 

 

 

 

When USDA released it initial 2008/09 World Agriculture Supply and Demand Estimates in June of 2008, projected United States soybean meal use was estimated at 31.8 million tonnes and most recently within the February 2009 WASDE suggests a level of 27.9 million tonnes.

            The number one annual US soybean meal user is poultry. Of the total annual soybean meal use, 50% is for US poultry, 25% for hogs, 13% for cattle, 6% dairy, 3% pet food and balance for others. It may come of little surprise with the chicks placement down 7% from June 2008 to present, USDA had little choice but to reduce soybean meal consumption.

Please contact an Allendale representative with old crop and new crop recommendations. 800 551 4626

 

Ask about how the Allendale Evaluator may assist in your new crop marketing plans.

 

Allendale’s 20^th annual Acreage Survey begins Feb 23^rd. Allendale, Inc.

 

 

 

As the Texas winter wheat conditions continue to spiral downward, news wire reports are beginning to surface of the possibility of fewer winter wheat acres and increasing cotton acres. It is important to note Texas is the US’s fourth largest winter wheat producer annually and the nation’s largest cotton producer. From Jan 4^th, 2009 through Feb 1, 2009 winter wheat crop conditions for the Fair category have fallen from 35% to 24%, the Poor category have remained relatively stable at 29% but just as quickly as the fair conditions have fallen, the Very Poor category has risen from 17% to 35%.

Thus as of Feb 1, the poor to very poor wheat conditions are a combined 64% vs just 46% a month earlier. Viewing vegetative health index maps support the facts of declining crop conditions.

As farmers in the South Plains (heavy cotton region) begin for spring plantings, the perception by the trade is the possibility of wheat acres to be removed and cotton acres to increase. However crop insurance economics suggest any wheat acres which are removed and spring planted insured cotton acres, the wheat insured value will be reduced by 65%!

South Plain farmers are becoming increasingly interested in planting uninsured sorghum (feed grain) for the following reasons. Present new crop budgets on a per acre basis suggest a profit of $23.70 for wheat, $48.94 loss for cotton and with new crop sorghum forward prices of $6.29 per hundred weight, a per acre loss of $5.66.

Farmers within the region are also considering the drought tolerance of sorghum vs that of cotton as well as the potential for end user demand for cotton vs sorghum, presently favoring the sorghum.

Sources suggest the present dry conditions are comparable to the most recent 2006 year. In checking 2006 planting intentions vs planted acreage reports for Texas, winter wheat acres declined 100,000 while sorghum acres increased by 100,000.

In conclusion, present economics during weather related deterioration, may imply, Texas farmers may be more inclined to replace non functioning winter wheat acres with sorghum and increase US feed grain supplies. Weather, futures, basis and cash levels of new crop warrant monitoring for Texas as well as states of Oklahoma and Kansas.

            Consider the impact the decisions farmers in the southern Plains are coping with. With the potential added feed grain acres, could the value of corn be influenced?

 

Allendale would appreciate your comments 800 551 4626 or research@allendale-inc.com

 

 

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