Source: Lisa M. Keefe, MEATINGPLACE, 5/10/16


Another bumper corn crop looks on the way for the 2016-17 marketing year, projected at 14.4 billion bushels, up 829 million from last year and 214 million higher than the previous record set in 2014-15, USDA said in its monthly World Agricultural Supply and Demand Estimates report.

Corn
U.S. feed grain supplies for 2016-17 are projected up 4 percent from the 2015-16 record with increases in both beginning stocks and production. The U.S. corn yield is projected at 168.0 bushels per acre, down 0.4 bushels from 2015-16, and corn supplies for 2016-17 are projected at a record 16.3 billion bushels, up 886 million from 2015-16, which more than offsets projected declines for sorghum, barley and oats.

U.S. corn use for 2016-17 is projected at a record 14.1 billion bushels, 4 percent higher than for the previous year. Feed and residual use for 2016-17 is projected 300 million bushels higher with higher production, lower expected prices, and further expansion in animal numbers. Corn used to produce ethanol is projected 50 million bushels higher than in 2015-16 with a reduction in sorghum use for ethanol and higher expected ethanol blending.

U.S. corn ending stocks for 2016-17 are projected at 2.2 billion bushels, up 350 million from the 2015-16 projection. If realized, stocks would be the highest since the mid-1980s; however, the stocks-to-use ratio remains far lower than in those years. The season-average 2016-17 farm price is projected at $3.05 to $3.65 per bushel, down 25 cents at the midpoint from this month’s slightly higher outlook for 2015/16.

“The key as always is that yield number, which is highly dependent on late June and July weather,” noted Steve Meyer and Len Steiner Inc., in their Daily Livestock Report. “The reason why corn markets remain bearish for now is due to the combination of a large carryover (1.8 billion bushels) and projections for a +14 billion bushel crop. Livestock producers can absorb more ... at the right price. But even with higher use, ending stocks for 2016-17 are projected at almost 2.3 billion bushels. If correct, this would imply a stocks-to-use ratio of over 16 percent. And that kind of ratio, if it ends up being true, could quickly lead you toward $3 corn.”

Beef
Total U.S. red meat and poultry production in 2017 is projected to be above 2016. Beef production is forecast higher as larger 2015 and 2016 calf crops are expected to support year-over-year increases in cattle placements in late 2016 and early 2017.
Marketings of fed cattle are forecast higher during 2017 while carcass weights are expected to increase with good forage conditions and lower feed costs.

The total red meat and poultry production forecast for 2016 is lowered from last month as production forecasts for beef, and poultry are reduced. Pork is raised on the pace of slaughter, but beef production is reduced on lowered first-half carcass weights.

Red meat and poultry exports are expected to increase in 2017 with expanding production and moderating prices; conversely, imports of beef are expected to decline. For 2016, the beef trade forecast is adjusted to reflect March trade data; no change is made to the forecast.

Pork
Pork production is expected to increase with larger hog supplies and heavier carcass weights. A modest expansion of farrowings is expected during the latter part of 2016 and early 2017, and continued growth in pigs per litter will support larger pig crops.

For 2016, the pork export forecast is adjusted to reflect March data; imports are reduced on the slow pace of trade to date

Poultry
Broiler production is forecast higher as the industry continues its current expansion path. Turkey production will continue to increase during 2017, but not at the rate of growth expected for 2016 when the sector is rebuilding following the outbreak of Highly Pathogenic Avian Influenza (HPAI) in 2015.

Broiler production in 2016 is adjusted to reflect first quarter data. Turkey production is reduced on a slower expected pace of recovery from HPAI. Broiler exports are forecast weaker on a slower expected pace of recovery in the first half of the year. Turkey exports are adjusted for March data.

For 2017, prices of fed cattle, hogs, broilers, and turkeys are all forecast below 2016 as supplies of meat are forecast higher.

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