Evening Report (VIP) -- February 11, 2013

February 11, 2013 08:45 AM

USDA RELEASES LONG-TERM AG PROJECTIONS... USDA today released its long-term agricultural projections to 2022 under the following assumptions:

  • Global economic growth reflects steady gains.
  • Increases in world population continue to slow. Growth in most developing countries remains above that in the rest of the world.
  • Population gains in developing countries -- along with higher incomes, increased urbanization and expansion of the middle class -- are particularly important for growth in global food demand.
  • Continued global expansion of biofuels further adds to world demand for ag products.

For 2013-14 corn, USDA projects plantings to decline slightly from last year to 96 million acres and yields to recover to 163.5 bu. per acre. This would result in a vast improvement in production to 14.435 billion bu., which USDA projects will result in an average corn price of $5.40. This compares to production of 10.725 billion bu. for 2012-13 and an average cash price of $7.60.

For soybeans, USDA projects 2013 soybean plantings will decline by 1.2 million acres from last year to 76 million and for yields to recover to 44.4 bu. per acre. This is would boost production by 364 million bu. from 2012-13 to 3.335 billion bushels. USDA projects average farm price for soybeans will drop to $11.35 per bu. in 2013-14.

USDA expects wheat yields in 2013-14 to decline by 1.1 bu. per acre to 45.2 bu. per acre but for this to partially be offset by an increase in plantings to 57.5 million acres. Thus, USDA projects production of 2.190 billion bushels. This is expected to result in an average wheat price of $7.20 for 2013-14.

Other key ag-related projections include (click for more long-term ag projections):

  • Prices for major crops decrease in the early years of the projections as global production responds to recent high prices.
  • Total U.S. red meat and poultry production is projected to fall in 2013 in response to lower producer returns and ongoing drought conditions in the Southern Plains. Meat production then increases in response to improved returns and improved forage supplies.
  • World economic growth and demand for biofuels combine to support longer run increases in consumption, trade, and prices for agricultural products.
  • Following the near-term declines, prices for corn, wheat, oilseeds, and many other crops remain historically high.
  • After declines from record levels projected in 2013, the values of U.S. agricultural exports and farm cash receipts rise through the rest of the decade. Production expenses also rise beyond 2015, but net farm income remains historically high.
  • Retail food price increases average less than the overall rate of inflation in 2014-22, largely reflecting production increases in the livestock sector that limit meat price increases.



BEEF, PORK EXPORTS SET RECORDS IN 2012... According to USDA data compiled by the U.S. Meat Export Federation (USMEF), U.S. pork exports set new volume and value records in 2012, with beef exports a new high in terms of value.

Pork exports in 2012 of 2.26 MMT were up fractionally from the previous year's record and were valued at $6.3 billion, which was a 3.5% increase over the prior year’s record. The per-head export value of U.S. pork exports set another record in 2012, reaching $55.87, up 1% from 2011. For the year, exports accounted for 27% of total pork production and 23.4% of pork muscle cut production versus 27.5% and 23%, respectively, in 2011.

USMEF says the value of beef exports last year rose 2% to a record-high $5.51 billion despite 12% lower volume (1.13 MMT). The per-head export value for beef hit $216.73, a $10.36 increase over 2011. Contributing to that was a new monthly record value of $242.65 set in December. For the year, U.S. beef exports accounted for 12.7% of total beef production and 9.8% of muscle cut production. This compares to 14.2% and 11%, respectively, in 2011. Click here additional details, including top export destinations.



FORECAST HOPEFUL OF RAINS FOR SOUTHERN PLAINS... Meteorologist Gail Martell of MartellCropProjections.com says updated weather models are hopeful for heavy rains in the Southern Plains this week, although only light showers are expected in western Kansas. "Oklahoma would receive .75 to 1.25 inch of rainfall, and west Texas. 25 to .75 inch of moisture. Kansas would be largely bypassed, the largest U.S. wheat state, receiving only .10 to .25 inch in the far southern counties bordering Oklahoma," she says.

Martell reminds that history on wheat production following a very dry fall and early winter is not promising for a strong yield recovery. "Out of four previous instances of severe drought during October to December, only one, 1989, ultimately resulted in a favorable wheat harvest the following summer," she adds. Click here for related maps, as well as the Midwest forecast.



WHITE HOUSE WARNS OF FURLOUGH FOR MEAT, POULTRY INSPECTORS... A White House report released Friday warned that the $85 billion in across-the-board spending cuts ("sequester") slated to take effect in March could include furlough of USDA Food Safety and Inspection Service employees for 15 days. Meat cannot be shipped without USDA's inspection seal. Thus, Reuters reports this two-week furlough of meat and poultry inspectors could result in nearly $10 billion in production losses, as well as higher meat costs for consumers.


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