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USDA projects eased feed supply and higher cattle, broiler prices
Story Date: 2/10/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 2/9/12
While U.S. corn and soybean supplies remain tight, USDA projected slightly larger stocks than market analysts were expecting, which will slightly decrease feeding costs while cattle, broiler and turkey prices continue to increase this year.
Corn
USDA projected 2011/12 corn ending stocks at 801 million bushels, down from last month’s forecast of 846 million, but above the 797 million bushel analysts were expecting on average, according to Deutsche Bank.
USDA tightened its average corn price forecast for the year to $5.80 to $6.60 from a range of $5.70 to $6.70 last month.
Soybeans
USDA left its 2011/12 soybean ending stocks forecast unchanged at 275 million bushels. Analysts, on average, expected 269 million.
USDA forecast average soybean prices at $11.10 to $12.30 per bushel, compared to a range of $10.95 to $12.45 a month ago.
Cattle
Beef production is raised from last month. Despite expected tight fed cattle supplies, cow slaughter is expected to remain relatively strong during the first quarter and carcass weights are forecast higher. USDA reduced its U.S. beef export forecast slightly.
Cattle prices in 2012 (all grades, 5-area direct) are now expected to average $121 to $129 per hundredweight compared to a range of $120 to $128 forecast last month.
Poultry
USDA reduced its broiler production forecast to 36.1 million pounds from 36.5 million pounds last month. Lower expected broiler weights are underpinning the reduced forecast, with hatchery data continuing to point toward fewer birds for slaughter during most of 2012.
Broiler prices in 2012 are now expected to average 82 cents to 87 cents per pound, compared to a range of 80 cents to 86 cents per pound last month.
Turkey prices are forecast at $1.00 to $1.07 per pound compared to 98 cents to $1.05 last month.
Pork
Pork production is raised as first-quarter slaughter and first-half carcass weights are expected to be higher than forecast last month. The pork exports and price forecasts remain unchanged.
Analysis
Deutsche Bank analyst Christina McGlone called the report neutral to bearish for corn prices and bearish for soybean prices, which she said was good news for Tyson Foods and Sanderson Farms.
However, the corn-to-use ratio (now at 6.4 percent compared to 15 percent historically) is still tight enough to prevent poultry expansion, given weak balance sheets, she projected in a research report.
McGlone also called higher turkey prices good for Hormel and higher cattle prices negative for Tyson Foods.
To read the full report, click here.
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