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USDA drops corn, raises soybean estimates; protein trade projections little changed
Story Date: 10/12/2012
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Source: Lisa M. Keefe, MEATINGPLACE, 10/11/12
Falling feed grain stocks point to higher prices, while pork and poultry production overall are expected to offset lower beef production, the USDA reported in its October World Agricultural Supply Demand Estimates.
Corn
USDA’s corn ending stock estimate for October is 619 million bushels (below consensus of 648 million), down from 733 million last month. Corn beginning stocks for 2012 and 2013 are lowered 193 million bushels to 988 million bushels, based on the September 1 stocks estimate. With yield down slightly from the September report, at 122 bushels per acre, overall forecast corn production for 2012-13 is lowered another 21 million bushels, to 10.706 billion bushels overall.
Corn use also is projected to drop by 100 million bushels in 2012-13, but that’s due to reduced exports, not a rationing of demand in the United States, and that spells higher prices throughout the meat supply chain down the road, says BMO Capital Markets analyst Kenneth Zaslow.
In a note to investors, he writes, “The lower-than-expected corn supplies (i.e., lower yields offset expected higher acreage) indicate demand rationing has been limited and prices have not increased enough to incentivize sufficient demand restraint.”
World demand for corn is being met by strong competition from Brazil.
Soybeans
Meanwhile, soybean ending stocks of 130 million bushels fell modestly below consensus expectation of 134 million bushels, but increased from 115 million last month, Zaslow notes.
Soybean production is forecast at 2.860 billion bushels, up 226 million based on higher harvested area and yield, and so soybean supplies for 2012-13 are projected 10 percent above the forecast from last month on both increased production and beginning stocks.
U.S. soybean exports for 2012-13 are raised 210 million bushels to 1.265 billion on increased supplies, lower prices, and record export sales through early October.
Prices
Projected prices for corn are forecast to fall within a range of $7.10 to $8.50 per bushel, essentially unchanged from September’s projections, while projected prices for soybeans are expected to fall to $14.25 to $16.25 per bushel. Projected soybean meal prices were lowered to between $470 and $500 per short ton, from a range of $485 to $515 last month.
Beef
Spurred by drought-caused financial disruptions, USDA expects cattle placements in the third quarter to be lower, which will manifest itself as slightly lower supplies of fed cattle in early 2013.
Beef imports are reduced for 2012 based on a slower pace of imports from Canada, but are unchanged for 2013, and projections for beef exports are unchanged for 2012 and 2013. Projections for total beef supply in October 2012 is 28.6 billion pounds, and for October 2013, 27.9 billion pounds.
Pork
USDA noted in its report that its recent Quarterly Hogs and Pigs report estimated a small decline in the June-August pig crop and indicated that producers intend to reduce farrowings through early 2013, but it is expected that continued growth in pigs per litter will mitigate much of the decline in farrowings.
Pork exports are unchanged for 2012, but are raised slightly on expected late 2013 improvements in sales. Imports are reduced slightly for 2013.
Poultry
The forecast for 2013 poultry production is raised slightly, to 42.7 billion pounds, with increases expected in both chicken and turkey. Poultry export forecasts are unchanged for both 2012 and 2013.
Prices
Cattle and hog prices for 2013 are unchanged. Steers are projected to land in a range between $122 and $132 per hundredweight, compared with $121.72/cwt projected price for October 2012. Barrows and gilts are expected to cost between $62 and $67/cwt, up from a projected price for October 2012 of $60.98/cwt.
Broiler prices for 2013 are expected to be between $0.85 and $0.91 per pound, up slightly from a current price of $0.84 per pound. Turkey prices are expected to drop overall, to a range of $1.02 to $1.10 per pound, compared with an expected price for October 2012 of $1.07.
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