World Agricultural Supply and Demand Estimates

Total U.S. meat production forecasts for 2008 and 2009 are reduced from last month, says the World Agricultural Outlook Board.

10 January 2009

7 minute read

Livestock, Dairy and Poultry

Estimates for 2008 reflect lower reported production during the last part of fourth-quarter 2008. The production forecasts for 2009 reflect lower pork and broiler production. Sows farrowing and broiler hatchery data point toward lower numbers of hogs and broilers available for slaughter. Current slaughter data indicates that animal weights are lagging last year, and these lower weights are expected to continue through the early part of 2009 as producers adjust to earlier poor returns. Beef production forecasts for 2009 are unchanged. USDA’s Cattle report, to be released January 30, will provide an indication of cattle supplies outside feedlots and breeding herd retention plans. Turkey production forecasts are unchanged. Egg production forecasts are reduced on lower hatching egg output; table eggs are unchanged.

Beef exports are raised slightly for 2008, but are unchanged for 2009. Export forecasts for other meats are unchanged from last month. Beef import forecasts are raised for 2008 and 2009, based on stronger imports from Oceania and South America.

Livestock and poultry price estimates for 2008 are adjusted based on year-end data. Price forecasts for 2009 cattle and hogs are lowered. Weak demand is expected to offset smaller expected red meat supplies. Broiler price forecasts are raised on lower production forecasts. Turkey and egg prices are reduced reflecting expected weaker demand.

Milk production forecasts for 2008 are lowered from last month. Based on monthly milk production data through November, higher expected cow numbers are more than offset by lower expected milk per cow. Production forecasts for 2009 are reduced from last month as poor returns are expected to manifest themselves in a more rapid decline in cow numbers and slower growth in milk per cow. Commercial export forecasts for 2008 and 2009 are unchanged from last month. Exports for 2009 remain below last year as global demand reflects economic weakness. Ending stocks for both 2008 and 2009 are expected to be above levels forecast last month as weak demand is expected to slow domestic use. Sales of nonfat dry milk (NDM) to CCC during 2009 are forecast higher and small sales of cheese and butter to CCC are now forecast for the year.

Milk and dairy product prices for 2008 are adjusted from last month reflecting December data. Class III and Class IV prices for 2009 are reduced from last month as product price forecasts are lowered. Economic uncertainties have reduced demand for dairy products and prices have declined sharply for cheese, with lesser declines in butter, NDM, and whey. Price forecasts for cheese and butter in 2009 are reduced, with the sharpest declines in the first half of the year as supplies of these products are large. However, the reduction is less later in the year as lower forecast milk production results in declines in stocks of fat-based products. Although forecast weaker than last month, tightening supplies of NDM later in the year are expected to help support NDM prices. The all milk price is also forecast lower, $11.80 to $12.60 per cwt in 2009.

Coarse Grains

U.S. corn ending stocks for 2008/09 are projected 316 million bushels higher this month on higher estimated production and lower expected use. Corn production for 2008/09 is estimated 81 million bushels higher. Feed and residual use is reduced 50 million bushels reflecting lower animal numbers and September-November disappearance as indicated by December 1 stocks. Ethanol corn use is lowered 100 million bushels as sustained negative ethanol production margins since early December have reduced incentives for ethanol output. Recent increases in trading values for Renewable Identification Numbers (RINs) that can be used in lieu of ethanol to meet mandated levels also indicate reduced demand for ethanol. Projected food, seed, and industrial use is lowered an additional 35 million bushels on lower-than-expected use for sweeteners and starch during September-November. Exports are projected 50 million bushels lower based on the slow pace of sales and shipments to date. The projected season-average farm price for corn is lowered 10 cents on each end of the range to $3.55 to $4.25 per bushel.

Sorghum ending stocks for 2008/09 are increased 27 million bushels on higher estimated production and lower expected feed and residual use. Projected sorghum feed and residual use is reduced 20 million bushels on lower-than-expected September-November disappearance as indicated by December 1 stocks. The sorghum season-average farm price range is lowered 10 cents on both ends of the range to $2.90 to $3.50 per bushel. The barley farm price is narrowed 10 cents on each end of the range to $4.95 to $5.35 per bushel. The oats price is raised 10 cents on each end of the range to $2.90 to $3.10 per bushel based on producer prices to date.

Small supply and use changes for feed grains in 2007/08 and earlier years are made based on revisions in Field Crops Final Estimates 2002-2007. A 36-million-bushel reduction in 2007/08 corn production and an offsetting reduction in feed and residual use are the most significant changes.

Global coarse grain supplies for 2008/09 are projected 5.5 million tons higher with global corn production raised 5.1 million tons. Increased corn production in China, the United States, Mexico, Russia, and EU-27 more than offset reductions for Brazil and Argentina. Corn production for China is raised 5.5 million tons on higher area and yields as indicated by available national and provincial government data. Mexico production is raised 1.0 million tons as favorable weather is reflected in the latest indications of yields. Production for Russia is raised 0.3 million tons on higher harvested area and higher yields consistent with late-season harvest results. EU-27 production is raised 0.3 million tons reflecting official government statistics by France. Brazil corn production is lowered 2 million tons as extended dryness and heat during December sharply reduced yield prospects for southern Brazil. Argentina production is lowered 1.5 million tons as continued drought and extended heat during December reduced prospects for harvested area and yields in eastern Argentina.

World coarse grain imports and exports for 2008/09 are both lowered this month mostly on lower expected corn trade. Corn imports are lowered 1.0 million tons for Mexico with part of this reduction offset by a 0.3-million-ton increase in sorghum imports. Smaller reductions in imports are projected for a number of other countries where feeding is projected lower. Corn exports are lowered 1.5 million tons for Argentina and 0.8 million tons for India. Global corn consumption is lowered with lower expected feeding and food, seed, and industrial use, much of this reduction coming from changes to the U.S. balance sheet. Global corn ending stocks for 2008/09 are projected 12.2 million tons higher with the United States and China accounting for most of the increase.

Oilseeds

U.S. oilseed production for 2008/09 is estimated at 89.1 million tons, up 0.9 million tons from last month. Increases for soybeans and peanuts are only partly offset by decreases for cottonseed, canola, and sunflowerseed. Soybean production is estimated at 2.959 billion bushels, up 39 million bushels from last month based on both higher yields and harvested area. The soybean yield is estimated at 39.6 bushels per acre. Soybean exports are raised 50 million bushels to 1.1 billion due to strong sales and shipments to China. Projected soybean crush is reduced 30 million bushels to 1.685 billion bushels reflecting sharply reduced domestic soybean meal consumption. Soybean ending stocks are projected at 225 million bushels, up 20 million. Lower soybean oil production is more than offset by reduced domestic consumption and exports, leaving projected soybean oil stocks at 2.1 billion pounds, up 110 million from last month.

The U.S. season-average soybean price range for 2008/09 is projected at $8.50 to $9.50 per bushel compared with $8.25 to $9.75 per bushel last month. Soybean oil prices are forecast at 32 to 35 cents per pound, up 1 cent on the bottom of the range. Soybean meal prices are projected at $250 to $310 per short ton, up $10 on both ends of the range.

Global oilseed production for 2008/09 is projected at 416.3 million tons, down 2 million from last month. Foreign production is projected at 327.2 million tons, down 2.9 million. Global soybean production accounts for most of the change, projected at 233.2 million tons, down 1.5 million. Argentina’s soybean crop is projected at 49.5 million tons, down 1 million. The reduction is mainly due to lower projected area reflecting the impact of dry weather on soybean planting. Soybean production for Paraguay is reduced 0.9 million tons to 5.6 million tons as unusually dry, hot weather has reduced yield potential throughout much of the country. Dry conditions also have resulted in reduced soybean production for Bolivia and Uruguay, and reduced sunflowerseed production for Argentina. Other changes include lower cottonseed production estimates for India and increased sunflowerseed production for EU-27 and Russia. The Russia crop is projected record high at 7.4 million tons, up 0.4 million from last month.

Sugar

Projected 2008/09 U.S. sugar supply is increased 111,000 short tons, raw value, from last month, due to higher production more than offsetting revised lower beginning stocks. Cane sugar production is raised 119,000 tons based on increased production of sugarcane. Beet sugar production is unchanged and consistent with processors’ projections. Sugar use is unchanged.