Text Highlights From USDA's June 2013 S&D Report

June 12, 2013 06:36 AM



Projected U.S. wheat supplies for 2013/14 are raised this month with an increase in beginning stocks and higher forecast winter wheat production. Beginning stocks are higher with a 15-million-bushel reduction in 2012/13 exports as May shipments fell below expectations. Projected production for 2013/14 is up 23 million bushels as higher yields boost forecast production of Hard Red Winter wheat in the Southern and Central Plains and Soft Red Winter wheat across the South and Midwest. Exports are projected 50 million bushels higher for 2013/14 with strong early season sales and a reduced outlook for foreign production this month. Ending stocks for 2013/14 are projected down 11 million bushels. Projected stocks of 659 million bushels remain at a 5-year low.

The projected range for the 2013/14 season-average farm price is raised 10 cents on both ends to $6.25 to $7.55 per bushel. This is down from the record $7.80 per bushel expected for 2012/13. Global wheat supplies for 2013/14 are lowered 5.6 million tons reflecting lower foreign production. World production is projected at 695.9 million tons, down 5. 2 million from last month with reductions for Ukraine, Russia, and EU- 27. Persistent dry weather in key growing areas of southeastern Ukraine and adjoining areas of southern Russia reduces production prospects 2.5 million tons and 2.0 million tons, respectively. EU-27 production is lowered 1.3 million tons with small reductions in a number of member countries. Global wheat consumption for 2013/14 is reduced slightly with reductions in feed and residual use for EU-27, Russia, and Ukraine more than offsetting higher expected food use for India, Iran, and Egypt. Global wheat trade is raised with imports increased 1.0 million tons for Iran. Partly offsetting is a 0.5-million-ton reduction in imports for EU-27 with lower exportable supplies in Ukraine. Ukraine and Russia exports are lowered 1.5 million tons and 1.0 million tons, respectively. Export increases of 1.5 million tons for EU-27 and 0.5 million tons for Canada, combine with the U.S. increase this month to raise global exports 0.8 million tons. World ending stocks for 2013/14 are projected at 181.3 million tons, down 5. 1 million from last month, and just above the level projected for 2012/13.


The outlook for 2013/14 U.S. feed grain supplies is lowered this month as delayed plantings reduce yield prospects for corn. Projected corn production is lowered 135 million bushels to 14.0 billion with the average yield projected at 156.5 bushels per acre, down 1.5 bushels from last month. Despite rapid planting progress during mid-May across the Corn Belt, rains and cool temperatures since have delayed the completion of planting in parts of the western Corn Belt and raised the likelihood that seasonally warmer temperatures and drier conditions in late July will adversely affect pollination and kernel set in a larger share of this year’s crop. With reduced production prospects, domestic corn usage is projected 70 million bushels lower for 2013/14. Projected feed and residual disappearance is lowered 125 million bushels with the smaller crop, higher expected prices, and increased availability of distillers’ grains. Corn used in ethanol production is raised 50 million bushels in line with an increase this month for the 2012/13 marketing year. Other food and industrial uses are also projected higher, up 5 million bushels from last month. Corn ending stocks for 2013/14 are projected 55 million bushels lower. At the projected 1.9 billion bushels, ending stocks are expected to be 2.5 times their 2012/13 level.

The season-average farm price range for corn is raised 10 cents per bushel on each end to $4.40 to $5.20 per bushel. Increases are also projected for the sorghum, barley, and oats farm price ranges this month. Changes for 2012/13 include higher corn and oats imports, higher corn food, seed, and industrial use, and reduced corn exports. Corn imports are raised 25 million bushels based on the strong pace of imports to date and expectations that feeders in some locations will continue to supplement domestic supplies as old-crop corn becomes tighter during the summer months. Oats imports are raised 3 million bushels reflecting shipments to date. Corn used in ethanol production is raised 50 million bushels for 2012/13 based, in part, on higher- than-expected May ethanol production as indicated by weekly data reported by the Energy Information Administration. Favorable margins for ethanol producers and high prices for Renewable Identification Numbers (RINS) are also expected to moderate any slowdown in production through the end of the marketing year. Other food and industrial use is projected up 15 million bushels with increases projected for corn use in cereals and beverage and industrial alcohol.

Corn exports are projected 50 million bushels lower based on the continued lackluster pace of shipments and sales. Projected corn ending stocks for 2012/13 are raised 10 million bushels. Global coarse grain supplies for 2013/14 are projected 4.3 million tons lower mostly on the reduction expected in U.S. corn output. Global coarse grain beginning stocks are also lowered as a reduction in 2012/13 China corn production is only partly offset by an increase in 2012/13 Brazil corn production this month. China corn production is lowered 2.4 million tons based on the latest government revisions for the 2012/13 crop. Brazil corn production is raised 1.0 million tons for 2012/13 based on higher reported area for the safrina crop which will be harvested in the coming weeks. Global 2013/14 coarse grain trade is raised slightly this month. Corn imports are raised for Indonesia and corn exports are raised for India. Global corn consumption is down 1.7 million tons mostly based on changes to domestic use in the United States. Global corn ending stocks for 2013/14 are projected 2.8 million tons lower with reductions for China and the United States partly offset by an increase for Brazil carried through from the larger 2012/13 crop. At the projected 151.8 million tons, 2013/14 world corn stocks would be up 27.5 million tons from 2012/13 and the largest in 12 years.


U.S. soybean supply and use projections for 2013/14 are unchanged from last month. Changes for 2012/13 include increased soybean imports and crush, and reduced exports. Soybean imports are raised 5 million bushels to 25 million based on relatively strong imports through April and expected additional gains through the end of the marketing year. Soybean exports for 2012/13 are reduced 20 million bushels to 1.33 billion bushels reflecting exceptionally low shipments and sales in May and competition from Brazil. Although soybean exports are reduced, U.S. soybean meal exports are increased this month reflecting stronger- than-expected shipments this spring as importers have been slow to shift to South American supplies. As a result of increased soybean meal exports, the U.S. soybean crush is projected at 1.66 billion bushels, up 25 million. Soybean ending stocks for 2012/13 are projected at 125 million bushels, unchanged from last month.

The 2013/14 season-average price for soybeans is forecast at $9.75 to $11.75 per bushel, up 25 cents on both ends of the range. The higher forecast reflects improved forward pricing opportunities and higher corn prices. Soybean meal prices for 2013/14 are forecast at $290 to $330 per short ton, up 10 dollars on both ends. The soybean oil price forecast is unchanged at 47 to 51 cents per pound. Global oilseed production for 2013/14 is projected at 490.8 million tons, down 0.5 million from last month. EU-27 rapeseed production is reduced 0.3 million tons to 19.7 million on lower area and yield, mainly for France. Other changes include reduced soybean production for Ukraine, reduced sunflowerseed production for the EU-27, and increased sunflowerseed production for Russia. Brazil’s 2012/13 soybean production is reduced 1.5 million tons to 82 million reflecting the impact of dry conditions in the northeast.


The 2013/14 U.S. cotton supply and demand balance sheet shows lower beginning and ending stocks, lower production, and higher prices relative to last month. The 2012/13 export estimate is raised 350,000 bales to 13.6 million, reducing the current season’s ending stocks forecast. This adjustment reflects continued strong sales and shipments and expected higher imports by China. At the same time, projected U.S. production for 2013/14 is reduced to 13.5 million bales for 2013/14, as abandonment is raised to reflect continued drought conditions in the Southwest. With the total 2013/14 supply 900,000 bales below last month, U.S. exports are reduced 500,000 bales to 11.0 million and ending stocks are reduced to 2.6 million, the equivalent of 18 percent of total use. The projected range for the marketing-year average price of 73 to 93 cents per pound is raised 5 cents on each end, with a midpoint of 83 cents per pound, 15 percent above the estimated average for 2012/13.

This month’s changes to the world cotton estimates for both 2012/13 and 2013/14 result primarily from a sharp increase of 1.75 million bales in China’ s 2012/13 imports to a level of 20.0 million. Higher imports by China in the current season are drawing stocks out of exporting countries and constraining the 2013/14 s supply outside of China available for global consumption and trade. World production in 2013/14 is reduced slightly from last month, based on lower production for the United States, Turkmenistan, and others; world consumption also is reduced slightly. China’s imports are reduced 1.0 million bales from last month to 11.0 million, accounting for most of the change in the world trade, as higher China imports in 2012/13 raise beginning stocks and domestic supplies. Projected world 2013/14 ending stocks are reduced marginally, but China’s stocks are raised 750,000 bales, leaving projected stocks outside of China about 3 percent lower. These projections assume that China continues current policies regulating the national reserve acquisition and release prices.


The forecast for total meat production in 2013 is raised from last month as higher beef and broiler production more than offsets lower pork production. Beef production is raised from last month as poor forage conditions have resulted in relatively large placements of cattle in feedlots in the first part of 2013 and cow slaughter remains high. Broiler slaughter is raised slightly for the third quarter, reflecting hatchery data. Pork production in second quarter is lowered based on the pace of hog slaughter and slightly lower expected carcass weights. USDA’s Quarterly Hogs and Pigs report will be released on June 28 and provide an indication of producer farrowing intentions for the remainder of the year. Cattle price forecasts for 2013 are lowered from last month, reflecting lower-than-expected prices to date.


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