10 October 2008

9 minute read

Production Forecasts

For 2008, beef production is slightly lower in the third quarter due to reduced steer and heifer slaughter that more than offsets increased cow slaughter. Increased cow slaughter in the fourth quarter results in slightly more beef production that quarter, resulting in unchanged output for 2008.

The beef production forecast for 2009 is unchanged from last month. Pork production for 2008 is reduced because of a slower-than-expected pace of hog slaughter and lighter carcass weights in the third quarter. Forecast pork production for 2009 is reduced as producers are expected to market hogs at lighter carcass weights. The Quarterly Hogs and Pigs report, which will be released September 26, will provide information on producer farrowing intentions into 2009.

Broiler and turkey production forecasts for 2008 and 2009 are raised as gains in bird weights are expected to be heavier than previously forecast. Egg production forecasts are unchanged.

Export Forecasts

Beef exports are forecast higher for 2008 and 2009 as exports to Asia are strengthening. Broiler exports for 2008 are increased due to strong shipments through July. Export changes for 2008 pork and turkey reflect complete second quarter trade data.

hjk Cattle price forecasts for both 2008 and 2009 are raised reflecting current strength in demand and relatively tight supplies of cattle. Hog prices are raised for the third quarter 2008, reflecting strong demand, but forecasts are unchanged for subsequent quarters.

Broiler price forecasts are reduced slightly as demand for domestically consumed products remains soft and production is forecast higher. Turkey price forecasts for 2008 are raised slightly from last month but 2009 forecasts are unchanged from last month. Egg price forecasts are lowered for 2008 and early 2009 as prices continue to recede from their recent records.

The milk production forecast for 2008 is fractionally higher than last month, and forecast 2009 production is raised. For both years, cow numbers are expected to decline less rapidly than previously expected, and milk per cow in 2009 is expected to increase at a slightly higher rate. Dairy trade forecasts are adjusted to reflect complete second quarter data but forecasts are unchanged from last month.

Stocks are adjusted to reflect tighter expected stocks of fat-basis products but potentially larger stocks of nonfat dry milk (NDM).

Prices for butter, cheese, NDM, and whey are forecast lower as milk production is forecast higher. As a result of lower product prices, Class III and IV prices forecasts are reduced. The all milk price is forecast lower this month, averaging $18.65 to $18.85 in 2008 and $17.85 to $18.85 in 2009.

Wheat

The 2008/09 U.S. wheat and wheat by-class balance sheets are unchanged this month. The projected range for the all wheat season-average farm price is narrowed 20 cents on each end of the range to $6.70 to $7.80 per bushel. Tight world supplies of higher quality milling wheat are expected to support domestic farm prices.

Global 2008/09 wheat production is projected at a record 676.3 million tons, up 5.5 million from last month. Increases for EU-27, Russia, and Ukraine more than offset reductions for Argentina, Australia, and Kazakhstan.

EU-27 production is increased 4.0 million tons as harvest results indicate higher-than-expected yields especially for Germany, which accounts for half of this month’s increase. Production is raised 3.0 million tons for Russia and 2.5 million tons for Ukraine on higher reported area and higher yields as indicated by harvest results.

Argentina production is lowered 1.0 million tons as excessive dryness reduces planted area and continues to hamper crop development, particularly in the north central growing regions.

Production is lowered 3.0 million tons for Australia on August dryness that reduced yield prospects, particularly in Western Australia and in pockets of southeastern Australia where dryness persisted. Kazakhstan production is lowered 0.8 million tons on early harvest results that suggest summer dryness has trimmed spring wheat yields in some growing regions. Changes for other FSU-12 states are nearly offsetting. Production for Brazil and Canada are each raised 0.4 million tons based on the most recent government indications.

World imports and exports for 2008/09 are raised mostly reflecting increased supplies of feed quality wheat and increased prospects for wheat feeding. Imports are increased 0.5 million tons each for South Korea and Philippines and 0.4 million tons for Israel. Wheat feeding is increased by similar amounts for these countries as more competitively priced feed quality wheat reduces corn feeding. Increased supplies of lower quality wheat in EU-27, Russia, and Ukraine also boost wheat feeding and exports.

Exports are raised 2.5 million tons for EU-27 and 0.5 million tons each for Russia and Ukraine. Exports are also raised 0.5 million tons for Canada. Partly offsetting are reductions of 1.0 million tons each for Argentina and Australia, and 0.6 million tons for Kazakhstan. Global ending stocks for 2008/09 are projected 3.7 million tons higher this month. At 139.9 million tons, stocks are expected to increase 21.4 million tons on the year.

Coarse Grains

U.S. feed grain supplies for 2008/09 are reduced this month with lower forecast corn production. At 12.1 billion bushels, USDA’s September Crop Production report reduces production 216 million bushels on lower expected yields. The forecast yield of 152.3 bushels per acre is down 2.7 bushels from last month, reflecting August dryness throughout much of the Corn Belt. Feed and residual use is lowered 100 million bushels on increased sorghum feeding, lower expected residual loss with the smaller crop, and higher expected prices. Ending stocks are lowered 115 million bushels. The season-average farm price is projected at $5.00 to $6.00 per bushel, up 10 cents on each end of the range.

U.S. sorghum production for 2008/09 is raised 16 million bushels this month reflecting a 2.4-bushelper- acre increase in the forecast yield. Feed and residual use is raised 10 million bushels with the increase in supplies. Sorghum ending stocks are also raised 6 million bushels. The sorghum season-average farm price is projected at $4.45 to $5.45 per bushel, up 5 cents on each end of the range. Price projections for barley and oats are both lowered based on early indications from actual reported prices.

Global coarse grain production for 2008/09 is lowered 2.4 million tons. Higher FSU-12 barley and oats production, higher China and Mexico corn production, and higher Canada corn, barley, and oats production are more than offset by reduced U.S. and Argentina corn output and lower Australia barley output. Barley production is raised 3.0 million tons for Russia and 0.5 million tons for Ukraine on harvest results. China corn production is raised 3.0 million tons as adequate to abundant summer rainfall throughout most of the growing areas supports a projected record corn crop. Coarse grain production is raised 1.2 million tons for Canada in line with the latest official government estimate. Corn production for Argentina is lowered 3.0 million tons as more favorable returns for soybeans and continued uncertainty about government export policies reduce producer incentives for growing corn. Australia barley production is lowered 1.0 million tons on August dryness in key growing areas. Mexico corn production is raised 1.0 million tons as good summer rainfall improves crop prospects in most of the key growing areas. Other notable changes this month include an 0.8-million-ton reduction in Philippines corn production and a 0.4-million-ton reduction in EU-27 corn production.

World coarse grain imports, exports, and feeding for 2008/09 are all lowered this month reflecting tighter supplies of corn and increased wheat feeding. Corn imports are lowered 1.0 million tons each for EU-27 and Mexico with smaller reductions for South Korea, Israel, Canada, and Colombia. Corn exports are reduced 2.0 million tons for Argentina and 0.5 million tons for Ukraine. Global corn feeding is lowered 3.6 million tons with reductions for Argentina, Israel, South Korea, Philippines, Ukraine, and the United States more than offsetting increases for China and South Africa. Partly offsetting the reduction in corn feeding is a 0.6-million-ton increase in barley feeding. Total grain feeding, however, increases month-to-month as world wheat feeding is raised 4.7 million tons.

Global coarse grain ending stocks for 2008/09 are projected up 3.2 million tons mostly on higher world barley stocks, up 4.4 million tons this month. World barley stocks are expected to be the highest in 3 years. Small increases in projected sorghum and oats stocks also boost coarse grain ending stocks and more than offset a 2.4-million-ton reduction in global corn stocks.

Oilseeds

U.S. oilseed production for 2008/09 is projected at 88.2 million tons, down 0.9 million from last month as a lower soybean crop is only partly offset by higher peanut and cottonseed output. Soybean production is forecast at 2.934 billion bushels, down 39 million based on lower yields, especially in the eastern Corn Belt. Soybean crush is reduced 30 million bushels due to sharply lower projected domestic soybean meal use and meal exports. The lower projection for domestic soybean meal consumption is in line with revised 2007/08 consumption. Soybean exports and ending stocks are unchanged.

Changes for 2007/08 include reduced soybean crush and increased exports and ending stocks. Soybean exports are projected at a record 1.155 billion bushels. Ending stocks are up 5 million bushels at 140 million. Soybean oil stocks for 2007/08 are reduced, reflecting lower production. The U.S. season-average soybean price range for 2008/09 is projected at $11.60 to $13.10 per bushel, up 10 cents on both ends of the range. The projected soybean meal price is unchanged at $330 to $390 per short ton. The soybean oil price range is reduced 2 cents on both ends to 52 to 56 cents per pound.

Global oilseed production for 2008/09 is projected at 417.8 million tons, up 1.7 million from last month. Foreign production is up 2.6 million tons to 329.6 million. Global soybean production is projected at a record 238 million tons, up 9 percent from 2007/08. Argentina soybean production is raised to a record 50.5 million tons based on higher expected area.

China soybean production is raised 0.5 million tons to 16.5 million based on increased yields. Global rapeseed production is raised 1.2 million tons to 53.4 million, an 11 percent increase over 2007/08. Rapeseed crops are projected higher for Canada, EU-27, and Belarus. Other changes include increased peanut production for China and reduced cottonseed production for Pakistan.

Global oilseed stocks for 2008/09 are raised 3 million tons to 60.4 million primarily due to increased rapeseed stocks in Canada and increased soybean stocks in South America and China. China soybean imports for 2007/08 are raised to a record 36.5 million tons.

Sugar

Projected 2008/09 U.S. sugar supply is decreased 262,000 short tons, raw value, from last month. Carry-in stocks are down 75,000 tons. Production for 2008/09 is lowered 267,000 tons. Based on forecast harvest area and yield for U.S. sugarbeets and Louisiana sugarcane (adjusted for sugarcane assumed to be used for seed), production is lowered 256,000 tons.

Louisiana sugarcane production estimates reflect survey data as of September 1, and therefore, do not fully reflect the damage caused by Hurricane Gustav which hit the Gulf Coast on September 1. For Florida, Texas, and Hawaii, production is from processor projections compiled by the Farm Service Agency. Imports are raised 80,000 tons as a result of the tariff rate quota announcement on September 6. Total use is unchanged. Ending stocks are projected down sharply from the beginning level at 505,000 tons.

Further Reading

-

You can view the full WASDE report by clicking here.

October 2008