WASDE - 484 July 9, 2010
Jul 09, 2010
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WASDE - 484 July 9, 2010
Opening calls 3 to 5 lower corn, Wheat 10 to 15 lower, and Soybeans maybe 5 to 8 cents lower.
NOTE: This report adopts U.S. area, yield, and production forecasts for winter wheat, durum, other spring wheat, barley, and oats released today by the National Agricultural Statistics Service (NASS). For rice, corn, sorghum, soybeans, and cotton, area estimates reflect the June 30 NASS Acreage report, and methods used to project yield are noted on each table. The first survey-based 2010 production forecasts for those crops will be reported by NASS on August 12 and will be included in that day’s issue of this report.
WHEAT: U.S. wheat supplies for 2010/11 are raised this month on higher area, yields, and carryin. Beginning stocks are raised 43 million bushels based on the June 1 stocks estimate. Total wheat production is forecast 149 million bushels higher with higher forecast area and a forecast record yield of 45.9 bushels per acre. Winter wheat production is up 23 million bushels as higher Hard Red Winter wheat yields more than offset lower yields for Soft Red Winter wheat. Durum and other spring wheat production are forecast higher as abundant moisture and lack of heat stress in the Northern Plains support above trend yields. Feed and residual use is projected 20 million bushels lower as higher prices limit the competitiveness of wheat in livestock and poultry rations. Exports are projected 100 million bushels higher with lower expected production in several major exporting countries and strong early season export sales. Despite increased foreign demand for U.S. wheat, ending stocks for 2010/11 are projected 102 million bushels higher and remain at an expected 23-year high. The season-average farm price for all wheat is projected at $4.20 to $5.00 per bushel, up 20 cents on each end of the range as tighter world supplies and higher corn prices support wheat values.
This month’s 2009/10 changes reflect the latest export and seed use data and reported June 1 stocks. Projected exports are lowered 20 million bushels and estimated seed use is lowered 3 million bushels. Based on these changes, June 1 stocks indicate feed and residual use 21 million bushels lower. The 2009/10 wheat farm price is estimated at $4.87 per bushel, up 2 cents from last month’s projection.
Global wheat supplies for 2010/11 are reduced with world production projected 7.5 million tons lower as smaller crops in FSU-12, Canada, EU-27, India, and Turkey more than offset higher production in the United States and China. Production for Canada is lowered 4 million tons as persistent June rains limited seeding in the Western Prairies. Production is lowered 4.5 million tons and 3.0 million tons, respectively, for Russia and Kazakhstan as continued drought and high temperatures reduce yield prospects for spring wheat. EU-27 production is lowered 1.1 million tons reflecting early indications of lower-than-expected yields in northern Europe. India production is lowered 1.0 million tons on indications that heat during late grain fill reduced yields. Production is lowered 0.5 million tons for Turkey as early harvest results indicate disease has reduced expected yields. Production is raised 2.5 million tons for China where favorable June weather boosted harvested area and yields.
World wheat imports and exports are nearly unchanged for 2010/11, but substantial shifts are projected among the major exporting countries. Exports are reduced for Canada, Russia, Kazakhstan, and Turkey with lower production. Exports are raised for the United States, Australia, EU-27, and Ukraine. Global wheat consumption declines slightly with lower expected feeding in Canada, EU-27, Ukraine, and the United States mostly offset by increases for Russia and China. Global ending stocks are projected 6.9 million tons lower.
COARSE GRAINS: Projected U.S. feed grain supplies for 2010/11 are lowered with reduced carryin and lower projected production. Beginning stocks for corn are projected 125 million bushels lower reflecting higher use in 2009/10. With forecast harvested area down, corn production is lowered 125 million bushels, leaving supplies down 250 million bushels and 60 million below the 2009/10 record. Exports for 2010/11 are projected 50 million bushels lower as tighter domestic supplies, strong demand from ethanol production, and rising prices reduce the export competitiveness of U.S. corn. Ending stocks for 2010/11 are projected down 200 million bushels at 1,373 million, 105 million below the 2009/10 projection. The season-average farm price for corn is projected 15 cents higher on both ends of the range to $3.45 to $4.05 per bushel.
Other 2010/11 feed grains changes mostly reflect lower forecast area, which is partly offset by higher expected yields. Barley and oats yields, as reported in the July 9 Crop Production, are forecast above trend. Sorghum yields are raised to reflect adequate to abundant soil moisture in the southern and central Plains. Production, however, declines slightly for all three crops. Barley and oats imports are lowered with reduced supplies expected in Canada. Projected ending stocks are lowered for all three crops and farm prices are projected higher.
U.S. corn use for 2009/10 is projected 125 million bushels higher as increased feed and residual use more than offsets a reduction for ethanol. Feed and residual use is projected 175 million bushels higher as June 1 stocks indicated higher-than-expected disappearance during the March-May quarter. Corn use for ethanol is lowered 50 million bushels reflecting the latest ethanol production data from the Energy Information Administration (EIA). Although daily ethanol disappearance set another record in April, daily production slipped below March’s record pace. EIA’s new weekly ethanol production data series (first reported for the week ending June 4) suggests June production, while up from April, will not reach the March pace.
Global coarse grain supplies for 2010/11 are projected 14.9 million tons lower with nearly half of the decline driven by reductions in carryin and production in the United States. Global coarse grain production is lowered 10.8 million tons with barley, corn, and oats production lowered 6.9 million tons, 3.4 million tons, and 0.9 million tons, respectively. Partly offsetting, is a 0.4-million-ton increase in EU-27 mixed grain production. Outside the United States, the biggest reductions are for Russia, Canada, EU-27, and Kazakhstan. Russia barley production is lowered 2.5 million tons as continued drought and high temperatures reduce yield prospects. Russia corn and rye production are lowered 0.5 million tons and 0.3 million tons, respectively. Canada barley and oats production are lowered 1.1 million tons and 0.9 million tons, respectively, as persistent June rainfall limited plantings. Barley production is lowered 2.4 million tons for EU-27 mostly reflecting lower reported area. Kazakhstan barley production is lowered 0.8 million tons as extended drought and high temperatures sharply reduce expected yields.
Global coarse grain imports and exports are nearly unchanged for 2010/11. Corn imports are lowered for Mexico with exports increased for Ukraine, partly offsetting the U.S. export reduction. World barley imports and exports are raised slightly with shifts expected among exporting countries. Barley exports are reduced for Russia, Canada, and Kazakhstan, but raised for EU-27 and Australia. Global coarse grain consumption is lowered for 2010/11 mostly reflecting reduced barley and corn use in Russia and EU-27. Global coarse grain ending stocks for 2010/11 are projected sharply lower with world corn ending stocks down 6.2 million tons and barley ending stocks down 5.7 million tons. At the projected 180.2 million tons, coarse grain stocks would be the lowest since 2007/08.
OILSEEDS: U.S. oilseed production for 2010/11 is projected at 100.8 million tons, up 1.7 million tons from last month, with increased soybean production accounting for most of the change. Soybean production is projected at 3.345 billion bushels, up 35 million due to increased harvested area. Harvested area is estimated at a record 78 million acres in the June 30 Acreage report, 0.9 million above the June projection. The soybean yield is projected at 42.9 bushels per acre, unchanged from last month. Increased exports and crush offset increased supplies, leaving projected 2010/11 ending stocks at 360 million bushels, unchanged from last month. Higher soybean exports reflect increased import projections for China for 2010/11.
The U.S. season-average soybean price for 2010/11 is projected at $8.10 to $9.60 per bushel, up 10 cents on both ends of the range. Soybean meal prices are projected at $240 to $280 per short ton, up 10 dollars on both ends. Soybean oil prices are projected at 34 to 38 cents per pound, unchanged from last month.
Global oilseed production for 2010/11 is increased 0.5 million tons to a record 440.7 million tons. Foreign oilseed production is projected down 1.2 million tons to 340 million mostly due to lower rapeseed production. Global soybean production is projected at a record 251.3 million tons, up 1.4 million due mostly to higher production in the United States. Soybean production is also raised for Canada based on higher planted area reported by Statistics Canada. Rapeseed production is sharply reduced for Canada due to lower harvested area. Despite a record planted area estimate reported by Statistics Canada based on producer surveys conducted in late May and early June, significant crop area in the provinces of Saskatchewan and Manitoba did not get planted due to excessive rainfall through late June. As a result, the Canada rapeseed crop is projected at 10.2 million tons, down 1.8 million from last month. Other changes include reduced rapeseed production for China and EU-27 and increased cottonseed production for the United States, Brazil, and Uzbekistan.
U.S. soybean exports for 2009/10 are projected at a record 1.46 billion bushels, up 5 million from last month in part reflecting additional sales to China. Crush is increased 5 million bushels to 1.745 billion due to stronger than expected domestic disappearance for soybean meal. Soybean ending stocks for 2009/10 are projected at 175 million bushels, down 10 million.
SUGAR: Projected U.S. sugar supply for fiscal year 2010/11 is increased 188,000 short tons, raw value, from last month, due to higher beginning stocks and production. Beet sugar production is increased 80,000 tons while cane sugar production is decreased 10,000 tons, reflecting area for harvest in the June 30 Acreage report. Sugar use is unchanged.
For 2009/10, U.S. production is decreased 42,000 tons, mainly due to smaller-than-expected beet sugar production in May. Sugar imports under the tariff rate quota are increased 270,000 tons based on the July 6 announcement, while imports from Mexico are decreased 110,000 tons. With no change in use, ending stocks are increased 118,000 tons. For Mexico, 2009/10 production is increased to reflect output expected in the final few weeks of the harvest, imports and exports are decreased, and domestic use and ending stocks are unchanged.
LIVESTOCK, POULTRY, AND DAIRY: Total U.S. meat production forecasts for 2010 and 2011 are adjusted slightly. Cow slaughter remains relatively high boosting beef production in 2010. Higher forecast mid-year cattle placements are also expected to boost steer and heifer slaughter later in the year and into early 2011. Pork production is forecast higher for 2010 based on increased slaughter and heavier dressed weights; mainly during the second quarter. The June 1 Quarterly Hogs and Pigs report indicated that producers intend to have fewer sows farrow in the second half of 2010. Although largely offset by gains in pigs per litter, year-over growth in sows farrowing in 2011 is slower than previously forecasted for 2010 and 2011. Hatchery data point toward continued growth in bird numbers and weights have been moving up. Turkey and egg production forecasts are unchanged from last month.
A slight increase is made to beef exports for 2010. Broiler exports for 2010 and 2011 are raised due to stronger shipments to a number of small markets and resumption in exports to Russia.
Cattle and hog price forecasts for 2010 are reduced from last month as demand remains relatively weak in the face of higher production. The 2010 broiler price is adjusted to reflect second quarter prices. Prices for 2011 are unchanged. The turkey price forecasts for 2010 and 2011 are raised from last month in the face of continued tight supplies. The egg price forecasts are lowered for 2010 and 2011.
COTTON: The U.S. 2010/11 cotton projections include higher production, domestic mill use, exports, and ending stocks compared with last month. Production of 18.3 million bales is raised nearly 10 percent from the June estimate due to higher planted area, as reported in the June 30 Acreage report, combined with lower expected abandonment and a higher average yield per harvested acre. The projected abandonment rate and yield have been adjusted to reflect early July crop conditions in the Southwest, which are the most favorable since 1994/95. Domestic mill use is raised marginally on stronger recent activity. Exports are raised sharply due to the projected larger available supply and strong foreign demand. While ending stocks of 3.5 million bales are 700,000 bales above last month, the stocks-to-use ratio of 20 percent remains relatively tight. The projected range for the marketing-year average price received by producers is unchanged at 60 to 74 cents per pound.
This month’s world 2010/11 projections show higher production which is mostly offset by lower beginning stocks. Beginning stocks are reduced mainly in Pakistan, due to adjustments in production beginning in 2007/08 reflecting reduced estimates of average bale weights. Production for 2010/11 is raised in the United States, Brazil, and Uzbekistan, but lowered in Pakistan. World consumption is raised slightly based on increases for Turkey and the United States. World trade is supported by projected higher import demand by Pakistan, Turkey, and China. World stocks are marginally above the June projection and the world stocks-to-use ratio is the smallest since 1994/95.
RICE: U.S. total rice supplies for 2010/11 are projected at a record 309.4 million cwt, up 5.5 percent from last month owing to increases in beginning stocks and production. U.S. rice production is projected at a record 250.0 million cwt, 2.5 percent above last month, and 14 percent above 2009/10. Estimated harvested area at 3.49 million acres as reported in the June 30 NASS Acreage report is 3 percent above last month, 13 percent above 2009/10, and the largest since 1999/2000. Long-grain harvested area is raised 7.5 percent to a record 2.75 million acres, while combined medium- and short-grain harvested area is lowered 10.5 percent to 0.74 million. The average all rice yield for 2010/11 is projected at 7,157 pounds per acre, 45 pounds per acre below last month, but 72 pounds above 2009/10. The all rice projected yield is derived from the trend yields by rice class for the period 1990-2009. Long-grain rice production is projected at a record 190.0 million cwt, 7 percent above last month, and combined medium- and short-grain rice production is projected at 60.0 million cwt, 10 percent below last month. All rice beginning stocks for 2010/11 are raised 10 million cwt or 35 percent to 38.4 million, 26 percent above the previous year. The increase in beginning stocks is due to a reduction in 2009/10 domestic and residual use based on June 1 stocks data contained in the NASS Rice Stocks report released on June 30.
Total rice use for 2010/11 is projected at a record 242.0 million cwt, down about 2 percent from last month owing entirely to a decrease in projected domestic and residual use. Domestic and residual use for 2010/11 is projected at 129.0 million cwt, down 10 million, but up 2.0 million from the revised 2009/10 estimate. The reduction in 2010/11 domestic and residual use is based on the change for the preceding year. Exports for 2010/11 are projected at 113.0 million cwt, up 4 percent from a month ago, and an increase of 8 percent from 2009/10. Exports of combined medium- and short-grain rice are raised 10 percent to 34 million cwt, while exports of long-grain rice are up 1 percent to 79 million. Projected rough rice exports and combined milled- and brown-rice exports (on a rough-equivalent basis) are each raised 2.0 million cwt to 47.0 million—a record—and to 66.0 million, respectively. Larger supplies of long-grain rice and projected lower prices are expected to increase U.S. exports in 2010/11, particularly to markets in the Western Hemisphere and the Middle East. Despite tighter supplies of U.S. medium-grain rice, higher exports to the Middle East and Turkey are expected due to tighter supplies in Egypt, a major competitor.
USDA estimated June 1 rice stocks at 63.9 million cwt (combined rough and milled stocks on a rough-equivalent basis) in the Rice Stocks report published on June 30, 13 percent above the previous year. June 1 rough rice stocks are estimated at 57.4 million cwt, and milled stocks at 4.5 million. The higher-than-expected stocks implied lower domestic and residual use during March to May. Consequently, annual domestic and residual use in 2009/10 is lowered 7 percent to 127.0 million cwt.
The 2010/11 long-grain season-average farm price range is lowered 75 cents per cwt on each end of the range to $9.00 to $10.00 per cwt compared to a revised $12.90 per cwt for 2009/10. The combined medium- and short-grain farm price range is increased $2.50 per cwt on each end to $17.00 to $18.00 per cwt compared to a revised $17.80 per cwt in 2009/10. The all rice season-average farm price is lowered 20 cents per cwt on each end to $10.75 to $11.75 per cwt compared to a revised $14.10 per cwt for 2009/10. Record domestic supplies, particularly for long-grain rice, will pressure prices of that class. Tighter supplies for combined medium- and short-grain rice will support prices for that class. Additionally, a record global rice crop will pressure international prices, particularly for long-grain rice. Conversely, tighter global exportable supplies of medium-grain rice will help support prices of that class.
Global 2010/11 rice supply and use are little changed from last month’s projections. World production is raised fractionally as increases for the United States, Kazakhstan, and Russia more than offset decreases for Cambodia and Egypt. Global consumption is lowered nearly 0.7 million tons primarily due to decreases for the United States, Egypt, Cambodia, and Iran. Global trade for 2010/11 is nearly unchanged from a month ago. Ending stocks are raised 0.3 million tons to 96.6 million, as increases for the United States and Iran more than offset reductions for the Philippines and Egypt.
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