Text Highlights From March 2012 Supply & Demand Report

March 9, 2012 01:46 AM

WHEAT: U.S. wheat ending stocks for 2011/12 are projected 20 million bushels lower this month as lower food use is more than offset by higher exports. Projected food use is lowered 5 million bushels reflecting the latest flour production data reported by the North American Millers’ Association. Exports are projected 25 million bushels higher based on shipments and sales to date. Projected exports of Hard Red Spring and White wheat are each raised 10 million bushels. Projected Durum exports are raised 5 million bushels. Prices received by producers for the 2011/12 marketing year are projected at $7.15 to $7.45 per bushel, unchanged from last month.

Global wheat supplies for 2011/12 are nearly unchanged with lower China and Bangladesh beginning stocks offsetting higher production for Australia. Beginning stocks are lowered 1.0 million tons for China with an increase in food, seed, and industrial use for 2010/11. Australia production for 2011/12 is raised 1.2 million tons in line with the latest official estimate by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Global wheat trade is raised for 2011/12 with higher imports for a number of countries. The biggest increase is for Iran, up 0.8 million tons, reflecting recent purchases and expected deliveries before the end of the local April-March marketing year. Imports are raised 0.3 million tons each for Algeria, South Korea, and Uzbekistan. Smaller increases are made for Azerbaijan, Chile, Georgia, and Angola. Imports are lowered 0.2 million tons for Syria. The largest export increase is for the United States. Exports are also increased for Australia, Brazil, and Kazakhstan, each up 0.5 million tons. Smaller increases are made for Turkey and Serbia. At the projected 142.9 million tons, global exports are just 0.6 million tons short of the 2008/09 record.

Global wheat consumption for 2011/12 is raised 3.5 million tons mostly on higher food, seed, and industrial use in China and higher wheat feeding in Australia, Iran, and South Korea. Partly offsetting are reductions in EU-27 wheat feeding and food, seed, and industrial use. Global ending stocks for 2011/12 are projected 3.5 million tons lower, mostly reflecting a similar sized reduction for China. EU-27 ending stocks are projected 1.5 million tons higher, but changes in a number of other countries, including the United States, offset the EU-27 increase.

COARSE GRAINS: U.S. corn, sorghum, and barley balance sheets for 2011/12 are unchanged this month. Oats imports for 2011/12 are projected 5 million bushels higher with larger expected shipments from Canada. Projected U.S. oats ending stocks are increased by the same amount. The projected ranges for the season-average corn and sorghum farm prices are both narrowed 10 cents on each end to $5.90 to $6.50 per bushel and $5.80 to $6.40 per bushel, respectively. The barley farm price range is lowered 10 cents on the top end of the range to $5.20 to $5.50 per bushel. The oats farm price range is raised 10 cents on the bottom end of the range to $3.35 to $3.55 per bushel.

Global coarse grain supplies for 2011/12 are projected 1.6 million tons higher with production increases for Brazil corn and India corn and millet. Partly offsetting are reductions in sorghum output for India and Argentina and corn output for South Africa and Ecuador. Brazil corn production is raised 1 million tons on higher expected area for the second crop, which is planted following soybeans. India corn and millet production are raised 0.5 million tons and 1.5 million tons, respectively, in line with the latest government crop assessments. India sorghum production is lowered 0.7 million tons mostly reflecting lower expected area as the crop faces significant competition from cotton, soybeans, and pulses. Argentina sorghum production is lowered 0.2 million tons with lower expected yields. South Africa corn production is lowered 0.5 million tons as higher reported area is more than offset by reduced yield prospects. Below-normal rainfall and above-normal temperatures throughout South Africa’s maize triangle adversely affected pollination and early grain fill during February. Corn production for Ecuador is lowered 0.3 million tons as excess rains lower area and yields.

Global coarse grain trade for 2011/12 is raised with increases for corn and barley. Corn imports are raised for EU-27, Ecuador, and Peru, but lowered for Malaysia. Corn exports are raised for Brazil and India. Barley imports are raised for Iran and China. Barley exports are raised for Australia. Lower sorghum exports for Argentina are offset by higher expected shipments from Australia.

Global coarse grain consumption for 2011/12 is raised 2.2 million tons mostly on higher corn feeding in EU-27 and India, and higher millet use in India. EU-27 corn feeding is raised 1.0 million tons as corn is expected to replace higher priced wheat in animal rations. India corn and millet feeding are raised a combined 1.0 million tons. Millet food use is also raised 0.6 million tons for India. Partly offsetting these increases are reductions in sorghum food use in India, barley feeding in Australia, and corn feeding in Malaysia. Global coarse grain ending stocks for 2011/12 are lowered slightly, with 0.8-million-ton reduction in projected world corn stocks.

OILSEEDS: U.S. soybean supply and use projections for 2011/12 are mostly unchanged this month. U.S. soybean exports are unchanged at 1.275 billion bushels as reduced supplies in South America raise prices, reducing global imports. Although soybean meal exports and domestic use are raised this month, soybean crush remains unchanged due to a higher soybean meal extraction rate. Food use of soybean oil is reduced reflecting increased imports of canola oil and palm oil. Soybean oil stocks are projected at 2.4 billion pounds, up 100 million from last month.

The U.S. season-average soybean price range for 2011/12 is projected at $11.40 to $12.60 per bushel, up 30 cents on both ends of the range. Soybean meal prices are forecast at $310 to $340 per short ton, up 20 dollars on both ends of the range. Soybean oil prices are forecast at 50.5 to 54.5 cents per pound, unchanged from last month.

Global oilseed production for 2011/12 is projected at 445.7 million tons, down 6.7 million from last month. Foreign production, projected at 354.5 million, accounts for all of the change. Brazil soybean production is forecast at 68.5 million tons, down 3.5 million tons from last month due to lower projected yields resulting from hot, dry conditions in the southern states. Argentina soybean production is reduced 1.5 million tons to 46.5 million. Despite improved weather in recent weeks in much of the country, lower yields are projected due to continued warm, dry weather through February in northeastern growing areas. Paraguay soybean production is also reduced this month due to the effects of drought. With precipitation for November through February at the lowest level in over 25 years, soybean production is projected at 5 million tons, down 1.4 million from last month and 34 percent below earlyseason expectations. Other changes include lower rapeseed, peanut, and sunflowerseed production for India, increased cottonseed production for Brazil, and increased sunflowerseed production for Argentina.

Global oilseed trade for 2011/12 is projected at 108.4 million tons, down 2.1 million mainly reflecting reduced soybean trade. Lower soybean exports are forecast for Brazil and Paraguay. Soybean imports are reduced for China, EU-27, Indonesia, Japan, South Korea, and Taiwan. China soybean imports are reduced 0.5 million tons to 55 million. Global oilseed ending stocks are projected at 67.8 million tons, down 3.4 million from last month. Reduced soybean stocks in Brazil and Argentina account for most of the change.

LIVESTOCK, POULTRY, AND DAIRY: The 2012 forecast of total red meat and poultry production is raised from last month as higher broiler and turkey production is expected to more than offset lower forecast beef production. The pork production forecast is unchanged. The broiler production forecast is raised for the first half of the year based on January production data and stronger forecast prices. Beef production is lowered from last month. Steer and heifer slaughter is forecast lower, but is partly offset by higher expected cow slaughter. Early year carcass weights are raised due to mild weather in much of the country.

Turkey production is forecast higher as higher prices are expected to encourage a more rapid expansion. Egg production is lowered slightly for 2012 as prices are forecast lower. Poultry and egg production for 2011 is adjusted to reflect revisions in production data. The beef export forecast for 2012 is unchanged but imports are raised. Pork exports are raised from last month based on the strength of December export data. The broiler export forecast is unchanged from last month. Changes in estimates for 2011 trade reflect December data.

Cattle prices for 2012 are raised from last month, reflecting tightening supplies of fed cattle. Hog price forecasts are unchanged from last month. Broiler and turkey price forecasts are raised as current prices have strengthened. Egg price forecasts are reduced on lower-than expected early year prices.

The milk production forecast for 2012 is raised. Milk cow numbers are raised as herds are increasing more rapidly than expected. Although herds are expected to decline from 2011 in the second half of the year, the rate will be less than previously expected. Mild weather in the early part of the year is also supporting higher levels of milk production. Import and export forecasts are unchanged. Changes in 2011 estimates of supply and use reflect revised annual stocks data and December trade data. With higher forecast 2012 milk production, prices for cheese, butter, nonfat dry milk, and whey are lowered. As a result, both Class III and Class IV price forecasts are reduced from last month. The all milk price for 2012 is lowered to $17.60-$18.20 per cwt.

COTTON: The 2011/12 U.S. cotton supply and demand estimates include revisions to domestic mill use and ending stocks. Estimated mill use is reduced 100,000 bales from last month, reflecting activity to date. With beginning stocks, production, and exports unchanged, ending stocks are raised to 3.9 million bales. The forecast range for the average price received by producers of 88 to 93 cents per pound is raised one cent on the lower end.

The 2011/12 world cotton supply and demand estimates reflect higher supplies and lower consumption, resulting in an increase of nearly 1.6 million bales in forecast global ending stocks. Beginning stocks are raised mainly in Brazil and Egypt, while production is raised in Brazil and Pakistan, but lowered in Australia. Forecast consumption is reduced for China, Brazil, Egypt, and others, but is raised for South Korea. World trade is estimated nearly 4 percent above last month, as India government sources have reported sharply higher exports to date this season than were estimated previously. The revised India export forecast of 7.75 million bales assumes that the ban on further exports announced March 5, 2012, remains in place. Forecast world imports are raised 1.35 million bales, due mainly to a 1.5-million-bale increase in imports by China, where nearly 40 percent of domestic production has been placed in the government reserve. Based on these revisions, China’s ending stocks are now projected at just over 20.0 million bales.


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