Tuesday, February 11, 2014

USDA World Ag Supply and Demand Estimates - Feb 10, 2014

U.S. wheat ending stocks for 2013/14 are projected 50 million bushels lower as higher expected food use and exports more than offset an increase in projected imports.  Imports are raised 10 million bushels as railroad backlogs and other logistical problems slow Canadian wheat shipments to Pacific Coast terminals and encourage additional shipments of Hard Red Spring (HRS) wheat into the U.S. market.  Projected food use is increased 10 million bushels based on the latest flour production data reported by the North American Millers’ Association.  Food use increases are projected for Hard Red Winter and HRS wheat.  Exports are projected 50 million bushels higher as reduced competition from Argentina and strong sales and shipments further boost prospects for U.S. wheat in world trade.  A reduction in expected exports from Australia during the July-June world trade year also raises prospects for 2013/14 U.S. shipments.  Exports are projected higher for all classes except Durum.  The season-average farm price for all wheat is narrowed 5 cents on both ends of the projected range to $6.65 to $6.95 per bushel.

Global 2013/14 wheat supplies are lowered 1.1 million tons with lower beginning stocks for Argentina and Russia and a 0.8-million-ton reduction in world production.  Small reductions in 2012/13 production for Argentina and imports for Russia reduce world carryin supplies for 2013/14.  Kazakhstan production for 2013/14 is lowered 1.6 million tons based on the latest official estimates which raised harvested area, but lowered the yield sharply from indications based on earlier harvest reports.  Production for Algeria is lowered 0.3 million tons based on the latest official data.  Partly offsetting these reductions is a 0.6-million-ton increase for Brazil where better-than-expected yields in southern wheat areas more than offset earlier freeze damage farther north.  Ukraine production is also raised, up 0.3 million tons, on final government estimates.

Foreign wheat exports for 2013/14 are lowered as reductions for Kazakhstan and Argentina more than offset an increase for the European Union.  Kazakhstan exports are lowered 1.5 million tons with the smaller crop.  Exports are lowered 1.0 million tons for Argentina based on the slow pace of shipments.  European Union exports are raised 1.5 million tons reflecting the rapid pace of shipments and licensing.  Wheat feeding is lowered for the European Union as increased corn imports and feeding free up wheat for export.  Wheat feed use is lowered 0.2 million tons for South Korea as increased corn imports and feeding also displace wheat in that market.  Global wheat ending stocks are projected 1.7 million tons lower with the largest declines for the United States and European Union.  Smaller reductions in ending stocks are expected for Algeria and Russia.  Partly offsetting are stocks increases for Argentina, Brazil, and Ukraine.  

U.S. feed grain ending stocks for 2013/14 are expected lower with a 150-million-bushel increase projected for corn exports.  Global trade data and strong export sales support this month’s outlook for increased world corn imports.  Reduced foreign export

prospects also lower competition for U.S. corn in the world market.  U.S. corn ending stocks are projected 150 million bushels lower with the export increase.  The season-average farm price for corn is raised 10 cents on both ends of the projected range to $4.20 to $4.80 per bushel.  Season-average farm prices for the other feed grains are also projected slightly higher.  

Global coarse grain supplies for 2013/14 are projected 2.1 million tons higher with higher foreign beginning stocks and production.  Corn beginning stocks are raised for Argentina and South Africa with exports lowered for 2012/13.  Coarse grain production for 2013/14 is up 0.8 million tons as small increases in sorghum, barley, oats, and millet production more than offset a reduction for corn.  Corn production is lowered 1.0 million tons for Argentina as additional dryness in January reduces expected plantings and trims yield prospects.  Production is lowered 0.3 million tons for Russia corn based on final official estimates.  Partly offsetting these reductions is a 0.9-million-ton increase for Ukraine corn output, which is also based on the latest official data.  Area harvested and production for both Russia and Ukraine are records for 2013/14.  

Global 2013/14 coarse grain consumption is raised 5.0 million tons with higher corn feeding for the European Union, Canada, South Korea, and Egypt and higher barley feeding for Canada, Kazakhstan, Libya, Kuwait, and Syria.  Corn feeding is also increased for Mexico, but offsets a reduction in sorghum feeding.  Sorghum feeding is raised for China with higher imports.  

Global corn imports for 2013/14 are raised 3.2 million tons with increases for the European Union, Egypt, South Korea, Mexico, and Vietnam.  Corn exports are raised 0.5 million tons each for Russia and Ukraine, but lowered 1.0 million tons for Argentina and 0.5 million tons each for the European Union and India.  With stronger foreign corn use, increased U.S. exports fill the gap between higher foreign corn imports and lower foreign corn exports.  Global barley imports are also raised, up 0.5 million tons, with increases for Libya, Kuwait, and Syria. Barley exports are raised with Australia, but a reduction for Kazakhstan is partly offsetting.  Global corn ending stocks are projected 2.9 million tons lower.  At the projected 157.3 million tons, world ending stocks remain at a 13-year high. 

U.S. soybean supplies are increased 5 million bushels to 3.46 billion on higher projected imports, mainly from Canada.  Soybean exports for 2013/14 are projected at 1.51 billion bushels, up 15 million from last month reflecting the record pace of shipments and sales through January.  While global imports are unchanged, increased export projections for the United States, Brazil, and Paraguay are offset by a reduction for Argentina.  Higher U.S. soybean meal exports are offset by reduced domestic use, leaving soybean crush unchanged at 1.7 billion bushels.  Residual use is reduced 10 million bushels this month on tightening supplies driven by heavy use to date and large outstanding export sales.  At 12 million bushels, projected residual use remains above the exceptionally low level of the past 2 marketing years.  Projected soybean ending stocks are unchanged at 150 million bushels.

The 2013/14 season-average soybean price range is projected at $11.95 to $13.45, up 20 cents on both ends.  The soybean meal price is projected at $425 to $465 per short ton, up 10 dollars on both ends of the range.  The soybean oil price projection is lowered 1.5 cents at the midpoint with the range narrowed to 34.5 to 37.5 cents per pound.

Global oilseed production for 2013/14 is projected at 506.0 million tons, up slightly from last month.  Global soybean production is raised 0.9 million tons to a record 287.7 million.  Soybean production for Brazil is projected at a record 90.0 million tons, up 1.0 million from last month on higher yields reflecting early harvest results in the center-west.  Prospects for the Argentina soybean crop have diminished due to an extended period of hot, dry weather through mid-January.  As a result, the crop is projected at 54.0 million tons, down 0.5 million from last month.  Global sunflowerseed production is projected at 43.3 million tons, down 0.4 million due to reduced prospects for Argentina.  Other changes include reduced cottonseed production for China, Pakistan, and Australia, and increased sunflowerseed and rapeseed production for Kazakhstan.

Global oilseed and product supply and use changes this month include reduced soybean crush, soybean meal, and soybean exports for Argentina, reduced soybean meal imports for the European Union, and increased soybean and soybean meal exports for Brazil and the United States.  Global oilseed stocks are projected higher, mostly reflecting higher soybean stocks in Argentina.

The 2014 forecast of total red meat and poultry production is lowered from last month as higher beef production is more than offset by lower pork, broiler, and turkey production.  For beef, relatively large cattle placements in the fourth quarter of 2013 are expected to carry through into the first half of 2014, which will result in higher slaughter in 2014.  Cow slaughter is also expected to remain relatively strong during the first half of 2014 with favorable cull cow prices.  Pork production is lowered as reports indicate that Porcine Epidemic Diarrhea virus (PEDv) continues to spread.  Broiler production is reduced on slower growth in slaughter.  Turkey production is reduced as recent eggs-set and poult placements remain below a year earlier.  Egg production is unchanged.  Estimates of 2013 meat and egg production are adjusted to reflect data for December. 

Beef import and export forecasts for 2014 are unchanged from last month.  Pork exports are lowered as tight supplies and high prices reduce competitiveness.  The broiler export forecast is lowered as weaker-than-expected December exports and recent weakness in leg quarter prices may reflect reduced demand.  Turkey exports are unchanged.  The egg export forecast is raised.  Meat and egg trade estimates for 2013 are updated based on data for December.  

Cattle prices for 2014 are raised from last month, reflecting tight supplies and recent price strength for fed cattle.  The hog price forecast is raised on reduced supplies of market hogs and strong demand.  Broiler, turkey, and egg prices are raised on expected demand strength and reduced supplies of competing meats in 2014. 

The milk production forecast for 2014 is raised from last month on expected higher cow numbers in the second half of the year.  USDA’s Cattle report estimated dairy replacement heifers expected to calve during 2014 were up about 2 percent from a year ago, while the number of milk cows was fractionally below a year ago.  Strong returns resulting from higher milk prices and moderate feed costs are expected to boost expansion later in the year.  Milk per cow is unchanged.  Fat-basis exports for 2014 are raised on increased sales of butter and cheese.  Skim-solids exports are lowered mostly on reduced exports of lactose.  Fat and skim-solid imports are unchanged.  For 2013, supply and use estimates for 2013 are updated based on data for December.  
Product price forecasts for cheese, butter, and whey are higher, supported by strong demand and price strength to date.  Nonfat dry milk (NDM) is lower for 2014 on expectations of competition from other exporters in second-half 2014.  The Class III price is raised on higher cheese and whey prices.  The Class IV price is down as lower NDM more than offsets greater butter.  The all milk price is forecast at $20.85-21.55 per cwt.

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