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World Agricultural Supply and Demand Estimates - May 2010

11 May 2010

Tighter cattle supplies, as a result of a declining cattle inventory over recent years, and pressure on imports will likely lead to a fall in beef production in 2011. This may however push prices up, says the USDA World Agricultural Supply and Demand Estimates for May 2010.

LIVESTOCK, POULTRY, AND DAIRY

Total US meat production for 2011 is projected to be slightly higher than 2010 as increased pork and poultry production more than offset declines in beef production. Beef production for 2011 declines on tighter supplies of cattle. Declining cow inventories and calf crops over the past several years, coupled with expected lower imports of cattle during 2011 will result in a smaller pool of cattle available for slaughter. Pork production for 2011 is expected to increase as improved returns encourage increased sows farrowing and carcass weights are heavier. Both broiler and turkey production for 2011 are forecast higher as producers respond to improved returns. Egg production is forecast higher as production gradually builds upon the measured expansion currently underway.

The total meat production forecast for 2010 is reduced from last month as lower red meat production more than offsets higher broiler and turkey production. Forecast beef production is reduced as slightly higher cattle slaughter is offset by expected lighter cattle weights. The pork production forecast is reduced as supplies of hogs for slaughter are tighter than expected. Broiler production is raised as improved returns are expected to encourage increased hatchery activity. The turkey production forecast for the first half of the year is raised based on the most recent slaughter data.

Despite an improved world economy, US beef exports for 2011 are expected to be lower as US production declines and more competitor beef becomes available. Pork and broiler exports are expected to benefit from an improved global economic climate and increased US production. Beef imports are expected to be higher for 2011 as US cow slaughter declines in response to lower cow inventories. Pork imports are forecast higher with relatively strong US pork demand.

The 2010 red meat export forecast is little changed from last month with fractionally higher beef exports reflecting the pace of trade to date. Pork exports are unchanged. Beef imports are forecast lower as competitor supplies of beef are tight and global beef demand is improving with the economic recovery. Broiler exports are forecast lower than last month on weaker shipments to several markets.

For 2011, cattle prices are forecast to rise as demand improves and production declines. Hog prices are forecast lower due to increased production. Broiler and egg prices are also forecast higher on demand strength carried over from 2010. Turkey prices will be slightly lower in 2011.

Cattle, hog, and broiler price forecasts for 2010 are raised from last month as demand improves and supplies are tight. However, turkey and egg price forecasts are reduced.

Milk production for 2011 is forecast to increase as producers respond to improving returns. Cow numbers are projected lower than 2010, but the rate of decline is expected to slow, especially in the latter part of the year. Milk per cow is forecast to increase at a rate similar to 2010. Commercial exports are forecast to increase as the global economy improves. Imports will also increase slightly. An improving economy will support increased domestic use, reducing stocks below 2010 levels. Cheese, nonfat dry milk (NDM), and whey prices are forecast higher in the face of improved demand and tighter supplies. However, butter prices are expected to be below 2010 levels. Nonetheless, both Class III and Class IV prices are forecast to be higher than 2010 as higher cheese and whey prices support the Class III price and stronger NDM prices more than offset weaker butter prices and support the Class IV price. The all milk price is forecast at $15.70 to $16.70 per cwt for 2011.

Forecast milk supply in 2010 is raised slightly from last month reflecting a slower decline in cow numbers and stronger expected growth in milk per cow. Cheese and whey price forecasts are lowered, resulting in a lower Class III price. Butter and NDM price forecasts are raised and the Class IV price increased. The all milk price is forecast to average $15.65 to $16.15 per cwt.

WHEAT

The 2010/11 outlook for US wheat is for larger supplies as higher beginning stocks more than offset lower production. Beginning stocks are up 45 per cent from 2009/10 and the highest in a decade more than offsetting a forecast 8 per cent reduction in this year’s crop. Total production is projected at 2,043 million bushels, down 173 million from last year. The survey-based forecast of winter wheat production is down 4 per cent, but higher yields in Oklahoma, Texas, and a number of the soft red winter wheat states partly offset an 8 per cent decline in expected winter wheat harvested area. Spring wheat production is also expected lower as a return to trend yields from last year’s record levels lowers production prospects. Durum and other spring wheat production is projected at 585 million bushels, down 16 per cent from 2009/10, based on 10-year harvested-to-planted ratios and state yield trends for 1985-2008. US wheat supplies for 2010/11 are projected at 3,103 million bushels, up 4 per cent from the current year and the largest since 2000/01.

Total US wheat use for 2010/11 is projected up 3 per cent with higher expected domestic use and exports. Food use is projected at 940 million bushels, up 20 million bushels from 2009/10 as flour extraction rates are expected to return to historical averages from their high levels during the past 2 years. Feed and residual use is projected at 190 million bushels, up 10 million bushels from the 2009/10 projection as the larger carryin, particularly for soft red winter wheat, raises feed use prospects. Exports are projected at 900 million bushels, up 35 million bushels from the current year as large, early season supplies and lower prices improve US competitiveness. Despite higher expected use, US ending stocks are projected at nearly 1 billion bushels and the highest since 1987/88. The season-average farm price for all wheat is projected at $4.10 to $5.10 per bushel, compared with the 2009/10 projection of $4.90 per bushel.

Global wheat supplies for 2010/11 are projected 2 per cent higher with larger year-to-year beginning stocks more than offsetting lower expected production. Global 2010/11 wheat production is projected at 672.2 million tons, down 1 per cent from 2009/10 and the third largest production on record if realized. Larger projected production in EU-27, South America, and the Middle East is more than offset by expected declines in FSU-12, North Africa, South Asia, China, Canada, and Australia.

Global wheat trade is expected to rise slightly for 2010/11 with world exports up 2 per cent from 2009/10 at 129.2 million tons. Higher year-to-year exports for Argentina and EU-27 more than offset lower exports for Ukraine, Australia, and Canada. Export prospects for Russia are unchanged for 2010/11 as larger Middle East crops and rising domestic wheat feeding limit export expansion for Russian wheat. Global wheat consumption is projected up 2 per cent for 2010/11 with larger global supplies supporting growth in demand. World wheat feeding is projected 3 per cent higher with much of the year-to-year increase from rising feeding in FSU-12. Global stocks are projected at 198.1 million tons, up 4.7 million from 2009/10; however, China stocks are projected up 8.3 million tons leaving stocks in the rest of the world down from the current year projection.

COARSE GRAINS

The 2010/11 outlook for US feed grains is for larger supplies with higher beginning stocks and production; however, rising use is expected to limit the growth in ending stocks. Corn production for 2010/11 is projected at 13.4 billion bushels, up 260 million from 2009/10 as a 2.3-million-acre increase in intended plantings more than offsets a projected decline in yield from last year’s record. Based on the rapid pace of 2010 planting as reported in Crop Progress, the 2010/11 yield is projected at 163.5 bushels per acre, 2.7 bushels above the 1990-09 trend. Corn supplies are projected at a record 15.1 billion bushels, 325 million higher than in 2009/10.

Total US corn use for 2010/11 is projected up 2 per cent from the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use. FSI use is projected 4 per cent higher with a 200-million-bushel increase in corn used for ethanol accounting for most of the increase. Corn ethanol use, projected at 4.6 billion bushels, is supported by rising Federal biofuels mandates and strong blending incentives that continue to boost ethanol usage. Exports are projected up 3 per cent with larger supplies and lower prices, but rising foreign feed grain supplies, mostly corn, limit export growth in 2010/11. Domestic corn feed and residual use is projected down slightly with a slow recovery in animal numbers and increased use of distiller’s grains. US corn ending stocks for 2010/11 are projected up 5 per cent to 1.8 billion bushels. The season-average farm price is projected at $3.20 to $3.80 per bushel compared with the 2009/10 forecast of $3.50 to $3.70 per bushel.

Changes to the 2009/10 corn balance sheet include higher FSI use and exports, which are partly offset by lower expected feed and residual use and lower production with downward revisions to harvested area and yields for North Dakota and South Dakota. FSI is revised back to 1997/98 to better reflect net exports of sweeteners and starch as indicated by US Bureau of Census data. These changes raise FSI slightly and lower feed and residual use offsetting amounts. The largest changes are in the most recent years when foreign demand for US corn sweeteners has been strongest. Feed and residual use for 2009/10 is lowered 75 million bushels, in part, reflecting increased availability of distillers grains with a 100-million-bushel increase in projected corn use for ethanol. Exports are raised 50 million bushels based on recent strength in sales and shipments. These changes combine with the 21-million-bushel reduction in 2009/10 production to lower ending stocks 161 million bushels.

Global coarse grain production for 2010/11 is projected at a record 1,129.8 million tons, up 2 per cent from 2009/10. Most of the 27.4-million-ton increase in coarse grains production results from higher projected foreign corn production, up 19.9 million tons from 2009/10. Higher expected foreign corn area and rising yields combine with higher US area to boost global corn production to a record 835.0 million tons, up 26.5 million from 2009/10. Corn production is projected higher year-to-year for China, Mexico, India, Russia, EU-27, Ukraine, and Canada. Corn production is expected to be lower in Brazil and South Africa. World coarse grain trade is higher for 2010/11 mostly reflecting rising projected corn imports and exports. Global corn consumption is projected to be record high at 827.9 million tons, up 19.0 million from 2009/10, with nearly three-quarters of the increase in foreign markets. World corn ending stocks are projected at 154.2 million tons, up 7.2 million from 2009/10 and the highest since 2000/01. With stocks for China projected up 6.9 million tons, other country changes year-to-year are mostly offsetting.

RICE

Note: The source of the average milling yield used in the conversion of milled to rough rice in the WASDE has changed for the 2000/01 through 2010/11 marketing years. The average milling yield used, expressed as a per cent, from the Farm Service Agency (FSA), is calculated from warehouse stored loan data for the different rice classes. Previously, data supplied from the USA Rice Federation were used to calculate the average milling yield (these data are no longer available). The 2010/11 average milling yield at 68.86 per cent is based on the average of the previous 5 years.

Larger US 2010/11 rice supplies, combined with a modest increase in use, will boost projected ending stocks and lower farm prices. Total rice supplies in 2010/11 are projected at a record 296.4 million cwt, 9 per cent above the previous year, and 7 per cent above the previous record in 2005/06. US rice production is projected at a record 244.0 million cwt, 11 per cent above 2009/10, and 5 per cent above the previous record in 2004/05. Planted area in 2009 is estimated at 3.41 million acres, up 9 per cent from 2009 and the largest area since 1999. Harvested area is estimated at 3.39 million acres and is an average of the previous five-year harvested-to-planted ratios. Average rice yield is projected at a near-record 7,202 pounds per acre, up 2 per cent from the previous year, but down less than 1 per cent from the 2007/08 record. Imports for 2009/10 are projected at 22.0 million cwt, up 5 per cent from the previous year.

US 2010/11 rice use is projected at a record 245.0 million cwt, 2 per cent above the year earlier. US domestic and residual use is projected at a record 138.0 million cwt, 2 per cent above 2009/10. Exports are projected at 107.0 million cwt, 2 per cent above revised 2009/10. Despite an expected increase in global import demand, competition for those markets will be greater as US and competitor supplies are expected to be large. US ending stocks in 2010/11 are projected at 51.4 million cwt, 69 per cent above the previous year, and the largest stocks since 1985/86.

The 2010/11 long-grain season-average farm price is projected at $10.00 to $11.00 per cwt compared to a revised $12.90 to $13.10 for the previous year. The combined medium- and short-grain price is projected at $14.50 to $15.50 per cwt, compared to a revised $17.65 to $17.85 for the year earlier. The 2010/11 all rice price is projected at $11.15 to $12.15 per cwt, compared to a revised $14.05 to $14.25 per cwt for 2009/10. Large domestic and global supplies and lower Asian prices will pressure US prices.

Global 2010/11 rice production is projected at a record 459.7 million tons, up 17.6 million or 4 per cent from 2009/10. World disappearance (consumption and residual) is projected at a record 453.4 million tons, up 10.9 million or 2 per cent. Large crops are projected for most of Asia including record or near-record crops in Bangladesh, Burma, Cambodia, India, Indonesia, the Philippines, Thailand, and Viet Nam. Additionally, large crops are forecast for the US, EU-27, and Nigeria.

Global exports in 2010/11 are projected at 31.4 million tons, up 1.75 million tons or 6 per cent from the previous year, and the largest exports since 2007/08. Exports are expected to increase from the previous year in the US, Argentina, China, India, Pakistan, Thailand, Uruguay, and Viet Nam. Larger imports are projected for the Middle East and Sub-Saharan Africa. Global ending stocks are expected to increase 6.3 million tons or 7 per cent from 2009/10 to 96.6 million tons—the largest stocks since 2002/03. The stocks-to-use ratio for 2010/11 at 21.3 per cent is up from last year's 20.4 per cent, and the highest since 2003/04.

OILSEEDS

US oilseed production for 2010/11 is projected at 99.1 million tons, up less than 1 per cent from 2009/10. Soybean production is projected at 3.3 billion bushels, down 49 million from the record crop produced in 2009 as increased planted and harvested area are more than offset by lower yields. Harvested area is projected at a record 77.1 million acres based on an average harvested-to-planted ratio. Soybean yields are projected at a trend level of 42.9 bushels per acre, down 1.1 bushels from the 2009 record. Soybean supplies are projected at 3.5 billion bushels, unchanged from 2009/10 as larger beginning stocks offset lower production. Soybean ending stocks for 2009/10 are unchanged at 190 million bushels as increased exports and crush projections are offset by reduced residual.

Soybean crush for 2010/11 is projected to decline 5 per cent. Sharply lower US soybean meal exports are only partly offset by a small increase in domestic soybean meal use. US export prospects are reduced due to increased export competition from Argentina and India. Domestic soybean oil consumption is projected to increase 3 per cent as biodiesel production gains more than offset reduced food use. Soybean oil used for biodiesel production is projected at 2.9 billion pounds, up 700 million from 2009/10. A rebound in South American supplies from last year=s drought-reduced levels is projected to limit US soybean exports to 1.35 billion bushels in 2010/11, down from a record 1.455 billion in 2009/10. Ending stocks for 2010/11 are projected at 365 million bushels, up 175 million from the projection for 2009/10.

The US season-average soybean price for 2010/11 is projected at $8.00 to $9.50 per bushel compared with $9.50 per bushel in 2009/10. Soybean meal prices are forecast at $230 to $270 per short ton compared with $295 per ton for 2009/10. Soybean oil prices are projected at 34 to 38 cents per pound compared with 36 cents for 2009/10.

Global oilseed production for 2010/11 is projected at a record 440 million tons, up 2.2 million from 2009/10. Foreign oilseed production is projected at 340.9 million tons, up 2 million. Global soybean production is projected to decrease 3 per cent to 250.1 million tons. The Argentina crop is projected at 50 million tons, down 4 million from 2009/10 crop based on reduced harvested area and trend yields. Soybean area is projected lower as producers are expected to increase grain and sunflowerseed plantings. The Brazil soybean crop is projected at 65 million tons, down 3 million from 2009/10. A small increase in harvested area is more than offset by lower yields following record yields set for the 2009/10 crop. China soybean production is projected at 15.2 million tons, up 0.7 million from 2009/10 due to higher area and yields. Global production of high-oil content seeds (sunflowerseed and rapeseed) is projected to increase 5 per cent from 2009/10, mostly due to increased harvested area. Despite only small gains in global oilseed production, 2010/11 oilseed supplies are up 4 per cent as beginning stocks are 19 million tons higher than a year ago. Most of the increase is for soybeans in South America.

Global protein meal consumption is projected to increase 4.6 per cent in 2010/11. Protein meal consumption is projected to increase 8.4 per cent in China, accounting for 44 per cent of global protein consumption gains. Global soybean exports are projected at 87.9 million tons, up 2.5 million from 2009/10. China soybean imports are projected at 49 million tons, accounting for more than half of world soybean trade. Global vegetable oil consumption is projected to increase 4.5 per cent in 2010/11, led by increases for China and India.

Further Reading

- You can view the full report by clicking here.

May 2010

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