S&D Report Text Highlights

July 11, 2012 02:51 AM

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 29 NASS Acreage report, and methods used to project production are noted on each table. Non-survey based yields for some crops have been adjusted to reflect weather conditions to date. The first survey-based 2012 production forecasts for those crops will be reported by NASS on August 10.

WHEAT: Projected U.S. wheat supplies for 2012/13 are raised 5 million bushels with higher estimated beginning stocks more than offsetting lower forecast production. Beginning stocks were reported in the June 29 Grain Stocks report 15 million bushels above last month’s projection. Feed and residual disappearance, seed use, and exports are all lowered slightly for 2011/12. Production for 2012/13 is reduced 10 million bushels as a 14-million-bushel reduction in winter wheat is only partly offset by higher forecast spring wheat. Among the Hard Red Winter wheat states, lower production for Texas, Colorado, Oklahoma, and Montana is only partly offset by increases for Kansas and Nebraska. For the Soft Red Winter (SRW) wheat states, increases for Ohio, Illinois, and Indiana are mostly offset by reductions in the southern SRW-producing states. Total U.S. wheat use for 2012/13 is projected 35 million bushels higher. Domestic U.S. food use for 2012/13 is raised 5 million bushels on expectations of lower flour extraction rates for this year’s crop. Projected feed and residual use is lowered 20 million bushels, with higher prices and stronger export demand. Exports are projected 50 million bushels higher with reduced competition from Black Sea exporters. Ending stocks for 2012/13 are projected 30 million bushels lower. The projected range for the 2012/13 season average farm price is raised 60 cents on both ends to $6.20 to $7.40 per bushel, supported by sharply higher corn and soybean prices. This compares with the record $7.24 per bushel reported for 2011/12.

Global wheat supplies for 2012/13 are reduced 5.1 million tons with lower world production more than offsetting a 1.6-million-ton increase in beginning stocks. World production is lowered 6.7 million tons with reductions for Russia, Kazakhstan, and China accounting for most of the reduction. Russia production is lowered 4.0 million tons with lower expected yields for winter wheat and lower area and yield prospects for spring wheat. Kazakhstan production is lowered 2.0 million tons as persistent June heat and dryness have also reduced production prospects. China production is reduced 2.0 million tons reflecting government indications of lower yields. Canada production is also lowered slightly, down 0.4 million tons, based on lower reported plantings in the latest official survey by Statistics Canada. EU-27 production is raised 2.1 million tons with increases for France, Germany, and Hungary more than offsetting a reduction for Poland. Global wheat consumption for 2012/13 is lowered 1.8 million tons mostly reflecting lower expected wheat feeding in Kazakhstan, Australia, and the United States. Partly offsetting are small increases in wheat feed and residual use for EU-27 and South Korea. Global wheat trade is lowered slightly with imports lowered for China, Indonesia, and Uzbekistan. Partly offsetting is an increase in imports for Iran. Exports are reduced 4.0 million tons for Russia and 1.5 million tons for Kazakhstan. Exports, however, are raised 2.0 million tons for India, 1.5 million tons for EU-27, and 1.4 million tons for the United States. World ending stocks for 2012/13 are projected 3.3 million tons lower at 182.4 million.

COARSE GRAINS: U.S. feed grain supplies for 2012/13 are projected sharply lower with corn production prospects reduced 1.8 billion bushels from last month. The projected U.S. corn yield is lowered 20 bushels per acre to 146 bushels reflecting the rapid decline in crop conditions since early June and the latest weather data. Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions. Harvested area is also reduced slightly based on the June 29 Acreage report. Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol. Exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments. A 52-million-bushel increase in beginning stocks and a 15- million-bushel increase in imports offset only a small portion of the expected reduction in this year’s crop. Ending stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection. The season average 2012/13 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel in June.

Trade changes to the 2011/12 corn balance sheet boost projected 2011/12 ending stocks. Imports are raised 2 million bushels based on the latest trade data. Exports are projected 50 million bushels lower reflecting the slowing pace of old-crop sales and shipments. The season average 2011/12 farm price for corn is projected at $6.10 to $6.30 per bushel, up from $5.95 to $6.25 per bushel last month, as cash and futures prices have soared since early June on intensifying drought and heat across the Midwest. Global coarse grain supplies for 2012/13 are lowered 47.6 million tons mostly reflecting the 46.2- million-ton projected reduction in the U.S. corn crop. Partly offsetting is a 1.3-million-ton increase in EU-27 corn production, mostly reflecting higher reported area, and a 0.4-million-ton increase in Canada corn, also on higher reported area. Other important 2012/13 coarse grain production changes include a 1.5-million-ton reduction for Ukraine barley, a 1.0-million-ton reduction for Russia barley, a 0.5-million-ton reduction for Canada barley, and a 0.3-million-ton reduction for Canada oats. Brazil 2011/12 corn production is raised again this month, up 1.0 million tons, based on the latest reports from national and state statistical agencies.

Global 2012/13 coarse grain trade is projected lower this month mostly reflecting lower corn exports from the United States. Corn imports are lowered 2.0 million tons each for China and EU-27, 0.5 million tons each for Japan and South Korea, and 0.3 million tons for Mexico. Global barley trade is also lowered with Ukraine exports down 0.5 million tons and Russia and Canada exports each down 0.2 million tons. Barley exports for Australia and Argentina are raised 0.3 million tons and 0.2 million tons, respectively. Global corn consumption drops 22.9 million tons with most of the decline in the United States. Corn consumption is also lowered 0.8 million tons for India and 0.5 million tons each for Japan and South Korea. Global corn ending stocks are projected 21.7 million tons lower with the United States accounting for 17.7 million tons of the decline. Stocks are also lowered for China, Brazil, EU-27, and Mexico.

OILSEEDS: U.S. oilseed production for 2012/13 is projected at 92.7 million tons, down 4.2 million from last month, with lower soybean production accounting for most of the change. Soybean production is projected at 3.050 billion bushels, down 155 million as increased harvested area is more than offset by reduced yields. Harvested area, estimated at 75.3 million acres in the June 29 Acreage report, is 2.3 million above the June projection. The soybean yield is projected at 40.5 bushels per acre, down 3.4 bushels from last month. The drop reflects sharply declining crop conditions resulting from limited rainfall since early April coupled with excessive heat across much of the producing area in late June and early July. Soybean supplies are 160 million bushels below last month’s forecast due to lower beginning stocks and reduced production. Soybean crush is projected at 1.61 billion bushels, down 35 million reflecting the impact of higher soybean meal prices on meal exports and domestic disappearance. Soybean exports for 2012/13 are reduced 115 million bushels to 1.37 billion reflecting lower U.S. supplies. Increased exports from South America and Canada partly offset reduced U.S. exports. Soybean ending stocks are projected at 130 million bushels, down 10 million. U.S. soybean crush for 2011/12 is raised 15 million bushels to 1.675 billion reflecting strongerthan- expected domestic soybean meal use. Soybean exports for 2011/12 are projected at 1.34 billion bushels, up 5 million, reflecting strong late-season sales and increased imports for China. Seed use is raised and residual is reduced based on indications from the June 29 Acreage and Grain Stocks reports, respectively. Soybean ending stocks for 2011/12 are projected at 170 million bushels, down 5 million. Prices for soybeans and soybean meal for 2012/13 are raised this month. The U.S. season average soybean price is projected at $13.00 to $15.00 per bushel, up $1.00 on both ends of the range. Soybean meal prices are projected at $365 to $395 per short ton, up $30 on both ends of the range. The soybean oil price projection is unchanged at 52.5 to 56.5 cents per pound.

Global oilseed production for 2012/13 is projected at 465.7 million tons, down 5.1 million from last month. Lower soybean, cottonseed, and sunflowerseed production estimates are only partly offset by increases for peanuts and rapeseed. Global soybean production is projected at 267.2 million tons, down 3.9 million mostly due to lower production in the United States. Higher soybean production for Canada resulting from increased area partly offsets the U.S. reduction. Rapeseed production is raised for Canada due to increased harvested area reflecting record plantings reported by Statistics Canada. Sunflowerseed production is reduced for Russia based on indications from planting progress data reported by Russia’s Ministry of Agriculture. Other changes include reduced rapeseed production for Russia and increased peanut, canola, and sunflowerseed production for the United States. Global oilseed ending stocks for 2012/13 are projected at 63.1 million tons, down 2.7 million as reduced supplies are only partly offset by lower crush. Lower soybean stocks in the United States and South America account for most of the change.

LIVESTOCK, POULTRY, AND DAIRY: The forecasts for 2012 and 2013 red meat and poultry production are reduced from last month as higher feed prices are expected to slow the pace of pork and poultry expansion and temper growth in weights. Beef production is forecast higher for 2012 as deteriorating pasture conditions are expected to increase placements in feedlots. USDA’s Cattle report, to be released on July 20 will provide an indication of the 2012 calf crop and producers’ intentions regarding heifer retention. Beef production is reduced slightly for 2013 as the earlier placement of calves in 2012 results in a small adjustment to early 2013 marketings. Cattle carcass weights are raised for the first part of 2012, but placement of lighter-weight cattle in feedlots and the higher forecast cost of feed are expected to dampen weight growth in 2012 and 2013. Egg production is raised slightly for 2012 as higher prices support slightly faster growth, but the forecast for 2013 is reduced as higher feed prices pressure producer returns.

Beef imports are raised for 2012 as demand for processing beef remains strong and a strengthening of the U.S. dollar has helped support imports from Oceania. Beef exports are reduced from last month as exports have slowed. Strong pork exports in April support an increase in the 2012 forecast. Pork imports are unchanged. Broiler and turkey exports for 2012 are raised based on current export demand. Beef, pork, and turkey trade forecasts for 2013 are unchanged from last month but the forecast of broiler exports is raised on expectations of continued strong demand.

Cattle, broiler, and turkey price forecasts 2012 are lowered from last month, but hog prices are raised. Egg prices are raised as current prices have been stronger than expected and supplies are expected to be tighter in the later part of the year. For 2013, the cattle price is unchanged, but hog, broiler, and turkey prices are raised from last month on tighter supplies. The egg price forecast is raised as the production forecast is reduced.

The milk production forecasts for 2012 and 2013 are reduced from last month as higher forecast feed prices are expected to pressure producer returns and encourage a more rapid decline in the cow herd. Milk per cow is also reduced due to higher forecast feed prices this year and next. In addition, milk yields in the short term may be affected by recent high temperatures. Imports are raised on a fat basis, reflecting stronger imports of cheese. Exports are raised on stronger sales of cheese, whey, and nonfat dry milk (NDM).

Cheese prices are forecast higher for 2012 and into early 2013 as stronger exports support prices. Butter prices are forecast higher in 2012 but weaker domestic demand is expected to offset lower production in 2013 and the price forecast is unchanged. Weaker expected domestic demand will also limit price movements for NDM and whey. The NDM price is reduced slightly from last month, but the forecast for 2013 is unchanged. The whey price forecasts for both 2012 and 2013 are unchanged from last month. The Class III price forecasts for 2012 and 2013 are raised from last month due to the higher forecast cheese price and the Class IV price for 2012 is raised on the higher butter price. The 2012 all milk price is forecast at $17.05 to $17.35 per cwt and the all milk price for 2013 is raised to $17.35 to $18.35 per cwt.

COTTON: This month’s 2012/13 U.S. cotton estimates show slight revisions in supply and offtake, resulting in marginally lower ending stocks. Beginning stocks are raised 100,000 bales to 3.3 million, reflecting a decrease for domestic mill use in 2011/12. Production for 2012/13 is unchanged at 17.0 million bales, despite a 4-percent reduction in planted area in the June Acreage report, as abandonment and yield have been adjusted based on current conditions. Forecast domestic mill use is reduced 100,000 bales based on recent activity levels. Exports are raised due to higher projected global imports and slightly reduced foreign competition. Ending stocks are now projected at 4.8 million bales. The projected range for the season average farm price is unchanged at 60 to 80 cents per pound.

Lower beginning stocks and production trim this month’s 2012/13 world stocks projection by 3 percent. World production is reduced 1.5 million bales due to decreases for India, Pakistan, and others. A reduction in India’s crop of 1.0 million bales reflects lower-than-expected planted area and slightly lower yield prospects due to the monsoon delay. Total world consumption is virtually unchanged as reductions for China and the United States are offset by increases for India, Pakistan, and Vietnam.

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