WASDE Report February 9, 2011
OILSEEDS: U.S. soybean supply and use projections for 2010/11 are unchanged this month, leaving ending stocks at 140 million bushels. Although soybean export shipments are only modestly ahead of last year=s pace, record sales through the first 5 months of the marketing year are expected to result in stronger gains in the second half of the marketing year. Continued strong soybean meal export competition this spring, especially from Argentina, is expected to leave U.S. soybean crush well-below 2009/10 levels. Soybean oil exports are increased to 2.8 billion pounds reflecting continued strong export sales. Although soybean oil used for biodiesel during the first quarter of the marketing year was the lowest in 6 years, projected use for 2010/11 is unchanged from last month as biodiesel production is expected to accelerate due to the 2011 mandate and the return of the $1.00 per gallon blending credit. The U.S. season-average soybean price range for 2010/11 is projected at $11.20 to $12.20 per bushel, unchanged from last month. Soybean oil prices are forecast at 51 to 55 cents per pound, up 3 cents on both ends of the range. Soybean meal prices are forecast at $340 to $380 per short ton, up 20 dollars on both ends of the range. Soybean product prices are raised this month based on strong year-to-date prices.
Global oilseed production for 2010/11 is projected at 441.8 million tons, up 1.4 million tons from last month. Foreign production, projected at 341.3 million tons, accounts for all of the change. Brazil soybean production is forecast at a record 68.5 million tons, up 1.0 million tons from last month as timely rains in the southern producing area have raised yield prospects. Paraguay soybean production is also projected higher this month. Argentina soybean production is projected at 49.5 million tons, down 1 million. Despite widespread rains since mid-January, the extended dry period during planting and early crop development reduced yield prospects. Other changes include higher soybean and sunflower seed production for Ukraine, and increased peanut production for China. Palm production is raised for Indonesia and lowered for Malaysia.
COARSE GRAINS: U.S. corn ending stocks for 2010/11 are projected 70 million bushels lower this month with higher expected food, seed, and industrial use. Corn used for ethanol is projected 50 million bushels higher on a higher-than-expected November final ethanol production estimate and weekly ethanol data that indicate record output for December and January. Rising corn prices have reduced spot margins relative to variable costs to breakeven levels in recent weeks; however, ethanol blender incentives remain in place and export demand prospects remain strong with sugar-based ethanol uncompetitive at current sugar prices. Corn costs for many ethanol producers and other end users may also be below spot values to date as a substantial portion of this year's crop appears to have been forward priced. The continuing wide spread between reported monthly prices received by producers and substantially higher cash market bids can be explained by farmer deliveries of corn priced last year when prices were well below current levels. Corn food, seed, and industrial use is also projected higher for 2010/11 due to rising prospects for production of sweeteners and starch. Corn used to produce high fructose corn syrup (HFCS) is projected 15-million-bushels higher reflecting strong shipments of the corn-based sweetener to Mexico. Demand for HFCS has grown in Mexico as sugar exports to the United States have increased. Corn used for starch is also raised 5 million bushels based on the improving outlook for industrial output in the United States. Ending corn stocks for 2010/11 are projected at 675 million bushels. This month's projections lower the stocks-to-use ratio to 5.0 percent, the same as in 1995/96-the last time ending stocks fell to multi-year lows. Corn prices rose sharply in the spring and summer of 2006 to ration usage ahead of the 2006 harvest. The 2010/11 marketing-year average farm price is projected at $5.05 to $5.75 per bushel, up from $4.90 to $5.70 per bushel last month.
Global 2010/11 coarse grain supplies are projected 4.4 million tons lower this month with smaller beginning stocks and production. Coarse grain beginning stocks are reduced 2.4 million tons mostly reflecting lower corn carry in Brazil and lower barley carryin in Saudi Arabia. Higher 2009/10 corn exports for Brazil and lower 2009/10 barley imports for Saudi Arabia drive these changes in 2010/11 supplies. Global 2010/11 corn production is lowered 1.8 million tons with reductions for Argentina and Mexico. Argentina production is lowered 1.5 million tons as continued dryness through mid-January further reduced yield prospects in the country's central growing areas. Mexico production is lowered 0.5 million tons on lower reported area. Partly offsetting are small increases for the Philippines and Zimbabwe. Corn, barley, and rye production are all lowered slightly for Ukraine based on the latest government estimates. Changes in global 2010/11 coarse grain trade are mostly offsetting. Corn exports are reduced 1.5 million tons for Argentina with the smaller crop. Corn exports are raised 0.3 million tons for Canada and 0.1 million tons for Paraguay. Corn imports are reduced for South Korea and Mexico, but raised for EU-27. South Korea corn imports are reduced an additional 0.5 million tons this month as efforts to contain the recent outbreak of foot-and-mouth disease further reduce feed demand. Barley exports are raised 0.3 million tons for Canada with a similar increase in imports projected for Saudi Arabia. Global corn consumption is raised slightly, mostly reflecting the increase in food, seed, and industrial use in the United States. Corn feeding is raised for EU-27, but lowered for Canada and South Korea. Global corn ending stocks for 2010/11 are projected 4.5 million tons lower with most of the decrease in Brazil and the United States.
WHEAT: U.S. wheat supply, use, and ending stocks projections for 2010/11 are unchanged this month. While the all-wheat projections are unchanged, several offsetting by-class adjustments are made to exports and domestic use. Exports of Hard Red Winter (HRW) and White wheat are each projected 10 million bushels higher. Hard Red Spring (HRS) wheat exports are projected 20 million bushels lower. Domestic use is projected 10 million bushels lower for HRW and 10 million bushel higher for HRS. The marketing-year average price received by producers is projected at $5.60 to $5.80 per bushel, up 10 cents on the lower end of the range. Continued gains in cash and futures prices boost the farm price outlook for the remainder the marketing year. Global 2010/11 wheat supplies are reduced slightly this month reflecting a 0.4-million-ton downward revision to Ukraine production based on the latest government estimates. Global wheat trade is reduced slightly with small reductions in imports for Syria, Iraq, and Pakistan, mostly offset by an increase for Bangladesh. Exports are lowered for EU-27 and Ukraine, but raised for Canada and Pakistan. These changes largely reflect the pace of sales and shipments reported to date. Global 2010/11 wheat consumption is nearly unchanged with higher expected food use offset by reduced wheat feeding. Food, seed, and industrial use is raised 0.5 million tons each for Argentina and Bangladesh, but lowered 0.2 million tons for Canada. Wheat feeding is lowered 0.4 million tons for Canada and 0.2 million tons for Iraq. Global ending stocks are projected 0.2 million tons lower with reduced stocks in Argentina, Pakistan, and Syria mostly offset by larger stocks in EU-27, Ukraine, and Kazakhstan.
RICE: No changes are made on the supply side of the U.S. 2010/11 rice supply and use balance sheet. On the use side, the export forecast is lowered 1.0 million cwt from a month ago to 116.0 million. The long-grain rice export projection is lowered 1.0 million cwt to 78.0 million, and combined medium- and short-grain export forecast is unchanged at a record 38.0 million. Rough rice exports and combined milled- and brown-rice exports are each lowered 0.5 million cwt from last month to 43.0 million and 73.0 million, respectively. The reduction in the export projection is due primarily to the slower-than-expected pace of sales and shipments to date to Central America, Venezuela, and Sub-Saharan Africa. The decrease in the export forecast resulted in an increase in ending stocks of 1.0 million to 52.8 million, the largest stocks since 1985/86.
The 2010/11 long-grain, season-average price is projected at $10.75 to $11.25 per cwt as the range is narrowed 25 cents per cwt on each end with the midpoint unchanged at $11.00 per cwt. The combined medium- and short-grain price is projected at $16.75 to $17.25 per cwt, down 25 cents per cwt on the low end of the range and a decrease of 75 cents per cwt on the high end with the midpoint lowered 50 cents per cwt to $17.00 per cwt. The all rice seasonaverage price is forecast at $12.15 to $12.65 per cwt, up 15 cents per cwt on the low end of the range, but down 35 cents per cwt on the high end with the midpoint lowered 10 cents per cwt to $12.40 per cwt. The price projections are based on National Agricultural Statistics Service reported prices through mid-January and expected prices the remainder of the marketing year. Global 2010/11 projections of rice production, consumption, and ending stocks are lowered from a month ago, and trade is increased. The decrease in the global production forecast is due mostly to reductions in Indonesia, the Philippines, Japan, and Sri Lanka partially offset by increases for Cambodia and Uruguay. Indonesia's rice crop is forecast at 37.5 million tons, down 500,000 tons from last month due to an expected decrease in average field and milling yields. According to the U.S. Agricultural Counselor in Jakarta, the lower field and milling yields were caused by excessive rains during the growing season. Severe flooding in Sri Lanka has damaged the 2010/11 rice crop. The reduction in the Philippine and Japanese rice crops are due to a decrease in average field yields based on official government estimates. Global consumption is lowered primarily due to reductions for Cambodia, the Philippines, and Sri Lanka. World exports are raised by 0.5 million tons primarily due to increases for Australia, Brazil, Cambodia, and Uruguay, partially offset by a reduction for the United States. Higher import forecasts for Bangladesh, Indonesia, and Vietnam are partially offset by a reduction for the Philippines. Global ending stocks are lowered by 0.5 million tons to 93.9 million based primarily on reductions for Japan, Pakistan, the Philippines, Sri Lanka, and Thailand.
SUGAR: Projected U.S. sugar supply for fiscal year 2010/11 is increased 139,000 short tons, raw value, from last month. Cane sugar production in Florida is reduced 100,000 tons, based on processor forecasts. Imports are increased 239,000 tons, mainly due to the pace to date. Higher imports both from Mexico and under the re-export program more than offset reduced imports under the tariff rate quota (increased shortfall). The pace of exports and domestic use reported in the Farm Service Agency=s Sweetener Market Data through December are higher than expected, leading to an increase of 200,000 tons in total use. For Mexico, 2010/11 imports are increased 65,000 metric tons, raw value, matching the increase in U.S. exports. Domestic use is reduced 106,000 tons to reflect increased substitution by corn sweeteners. Higher imports and lower domestic demand and ending stocks are the basis for raising Mexico=s exports by 194,000 tons.
LIVESTOCK, POULTRY, AND DAIRY: The estimates of 2010 red meat and poultry production are adjusted from last month to reflect December production estimates. The production forecasts for 2011 are raised for beef, broilers, and turkey, but lowered for pork. Cattle placements during December were large and will result in higher-than-previously forecast slaughter in mid-2011. In addition, cow slaughter in the first half is expected to reflect currently high cull-cow prices. Cattle weights are also forecast slightly higher in the first half. Broiler production forecasts are raised for the first quarter to reflect relatively heavy broiler weights. The turkey production forecast is raised as hatchery data points to a slower pace of contraction. Pork production is reduced slightly for the first quarter of 2011 as lower hog slaughter more than offsets continued high carcass weights. The forecast of egg production is raised from last month as demand for eggs remains firm. The forecast for beef exports for 2011 is raised from last month primarily on larger expected exports to Asia. The forecast of beef imports is reduced as tight supplies in several exporting countries and a relatively weak U.S. dollar limit shipments. The pork export forecast for 2011 is raised largely due to expected increased sales of pork to Korea as herds have been culled due to foot-and-mouth disease. The broiler export forecast is raised for 2010 but the 2011 forecast is unchanged from last month. The cattle price forecast for 2011 is raised to reflect continued strong demand for relatively tight supplies of cattle. Hog prices for 2011 are forecast higher on stronger demand. The broiler price forecast is lowered on larger supplies of broilers and competing meats. The milk production estimate for 2010 and forecast for 2011 are raised from last month. Supply and use estimates for 2010 are adjusted to reflect production and stock estimates for December. Milk production is forecast higher for 2011 based on higher-than-expected January 1 dairy cow and dairy replacement heifer estimates. Import and export forecasts are unchanged from last month. Product prices are forecast higher this month. Strong international demand, coupled with improving domestic demand is expected to help support prices. Butter prices are also benefitting from tight beginning stocks. Class III and Class IV price forecasts are raised to reflect higher product prices. The all milk price is forecast to average $17.70 to $18.40 per cwt for 2011.
COTTON: The 2010/11 U.S. cotton supply and demand estimates are unchanged from last month. The forecast for the average price received by producers of 79 to 84 cents per pound is raised 1 cent on the lower end and lowered 2 cents on the upper end of the range. The 2010/11 world cotton supply and demand estimates show marginal revisions from last month. Production is reduced for Uzbekistan, while consumption is lowered for Bangladesh and Taiwan but raised for Uzbekistan. The world ending stocks forecast is unchanged at 42.8 million bales.
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