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World Agricultural Supply and Demand Estimates
This is a market report on world agricultural supply and demand prepared by the United States Department of Agriculture (USDA).
WHEAT: U.S. 2008/09 wheat supplies are projected higher this month on higher production and increased carryin. Winter wheat production is forecast 40 million bushels higher with higher yields expected in most states. Beginning stocks are projected 15 million bushels higher as 2007/08 exports are lowered the same amount on slower-than-expected shipments in recent weeks. Feed and residual use for 2008/09 is raised 25 million bushels with increased supplies, particularly for soft red winter wheat, and higher expected corn prices. Exports are raised 25 million bushels on strong new-crop sales. Ending stocks are projected at 487 million bushels, up 5 million from last month. The 2008/09 marketing-year average farm price is projected at $6.75 to $8.25 per bushel, up 15 cents on both ends of the range. Wheat prices are expected to remain supported by early season demand and higher corn prices.
Global wheat production for 2008/09 is raised 6.9 million tons this month with higher output expected from FSU-12, China, and the United States. Nearly ideal weather continues to support crop prospects for Russia and Ukraine with production raised 2.0 million and 1.0 million tons, respectively. Production for China is raised 5.0 million tons for 2008/09 on good growing conditions for this year’s crop and in line with recently released estimates for 2007/08 and 2006/07 from China’s National Bureau of Statistics. Production for 2007/08 is raised 3.9 million tons, and 2006/07 production is revised 4.0 million tons higher on reported yields. Partly offsetting the 2008/09 increases are reductions for Afghanistan, Argentina, and Syria due to dry conditions. Production is also lowered 0.5 million tons for Canada as cool, dry early season conditions have slowed crop emergence and establishment.
Global wheat imports, exports, and consumption for 2008/09 are all raised this month with increased supplies. World exports are raised 1.0 million tons with increases for Ukraine and the United States more than offsetting reductions for Canada and Syria. World consumption is raised 3.9 million tons mostly reflecting higher feeding and food use in China and higher feeding in the United States. World ending stocks are projected 8.1 million tons higher this month at 132.1 million, up 16.9 million from 2007/08 and the highest since 2005/06. Ending stocks for 2007/08 and 2006/07 are raised 5.1 million tons and 2.6 million tons, respectively, mostly on increases for China following the large revisions made to production.
COARSE GRAINS: U.S. 2008/09 feed grains supplies are projected lower and prices higher with reduced prospects for corn production this month. The 2008 corn crop is projected at 11.7 billion bushels, down 390 million from last month based on lower expected yields. The national average yield is projected at 148.9 bushels per acre, 5 bushels below last month, and 6 bushels below the 1990-2007 trend. This month’s reduction reflects slow planting progress, slow crop emergence, and persistent, heavy rainfall across the Corn Belt. The latest rounds of torrential rainfall are expected to reduce plant populations and nitrogen availability, particularly for corn planted after mid-May.
Corn supplies for 2008/09 are projected 340 million bushels lower this month. Partly offsetting lower production is a 50-million-bushel increase in beginning stocks resulting from lower projected 2007/08 exports. Feed and residual use for 2008/09 is projected 150 million bushels lower on reduced feeding demand with higher prices, increased wheat and sorghum feeding, and lower expected residual losses with the smaller crop. Exports are lowered 100 million bushels reflecting tighter U.S. supplies and increased export competition with higher foreign production. Ending stocks for 2008/09 are projected at 673 million bushels, down 90 million from last month, and 760 million below the 2007/08 forecast. If realized, 2008/09 ending stocks would be the lowest since 1995/96.
The 2008/09 marketing-year average farm price for corn is projected 30 cents higher on both ends of the range at $5.30 to $6.30 per bushel. Price forecasts for sorghum, barley, and oats are all raised for 2008/09. Price forecasts for 2007/08 corn and sorghum are also raised reflecting higher expected summer prices.
Global 2008/09 coarse grain production is lowered 3.1 million tons this month. The 9.9-millionton cut in U.S. corn production is only partly offset by increased corn production in China and the Philippines, and increased corn and barley production in Russia and Ukraine. Foreign corn production is projected 7.6 million tons higher this month and 19.5 million tons above the current 2007/08 forecast. China corn production for 2008/09 is raised to 153.0 million tons, up 3.0 million from last month, reflecting a higher yield consistent with recently released 2007/08 estimates and 2006/07 revisions by China’s National Bureau of Statistics. Production for China is raised 6.8 million tons for 2007/08 on a higher reported yield and raised 6.1 million tons for 2006/07 on an upward revision to area. Corn production for Russia and Ukraine are raised 1.5 million tons and 2.0 million tons, respectively, on higher indicated area. Barley production is raised 0.5 million tons each for Russia and Ukraine on higher expected yields with continued good moisture for crop development during May. Brazil corn production for 2007/08 is raised 2 million tons reflecting above average rainfall and higher expected yields for second-crop corn.
World coarse grain consumption for 2008/09 is increased 4.3 million tons this month with increased foreign consumption more than offsetting reduced U.S. corn use. China accounts for most of the increase with corn consumption raised 7.0 million tons mostly on higher expected feeding as hog production recovers from disease problems. Corn exports for 2008/09 are raised 1.0 million tons each for Brazil and Ukraine, offsetting most of the U.S. reduction. Global coarse grain ending stocks are projected higher for 2008/09 with corn stocks up 4.3 million tons, mostly reflecting higher production for China. Global corn ending stocks for 2007/08 and 2006/07 are also raised, again mostly on changes for China.
RICE: U.S. rice supplies in 2008/09 are raised 1.0 million cwt from a month ago owing to an increase in beginning stocks and imports — each raised 0.5 million cwt. Imports in 2007/08 are raised 0.5 million cwt to 22.0 million cwt due to a strong pace. The slight increase in 2007/08 supplies are carried over to 2008/09. Total rice use in 2008/09 is raised 1 million cwt due entirely to an increase in exports. Exports are projected at 99 million cwt with each of the by-class categories raised 0.5 million cwt. Rough rice exports are raised 1.0 million cwt, while combined milled and brown exports are unchanged. The season-average farm price for 2008/09 is projected at $16.50 to $17.50 per cwt, down $2.00 per cwt on each end from a month ago, and compares to a revised $12.35-$12.65 per cwt for 2007/08. The decline in the price forecast reflects the easing of some global export restrictions. The 2008/09 price forecast is still at a record despite the reduction.
Global 2008/09 rice production, consumption, and stocks are reduced from last month while trade is nearly unchanged. Global production is lowered 0.6 million tons due primarily to a reduction for Burma. Burma’s 2008/09 rice crop is lowered 0.6 million tons to 9.4 million tons. The decline in Burma’s crop results both from a reduction in area and an expected decline in average yield due to the effects of the storm damage from Cyclone Nargis in early May. Global ending stocks are projected at 81.5 million tons, down 1.1 million tons from last month, but up 4.0 million tons from 2007/08.
OILSEEDS: This month’s U.S. oilseed supply and use projections for 2008/09 include reductions in beginning and ending stocks. Lower beginning stocks reflect a higher export projection for 2007/08. Soybean production and trade are unchanged, but crush is reduced 10 million bushels mainly reflecting reduced prospects for domestic soybean meal use. Soybean ending stocks for 2008/09 are projected at 175 million bushels, down 10 million from last month. Other changes include reduced soybean oil used for biodiesel production for both 2007/08 and 2008/09 as high soybean oil prices relative to other fats and oils have reduced the soybean oil share of total biodiesel production more quickly than expected.
Soybean, meal, and oil prices for 2008/09 are all raised this month. The U.S. season-average soybean price is projected at $11.00 to $12.50 per bushel, up 50 cents on both ends of the range. Soybean meal prices are projected at $295 to $355 per short ton, up 15 dollars on both ends of the range. Soybean oil prices are projected at 52 to 56 cents per pound, up 2 cents on both ends of the range.
Global oilseed production for 2008/09 is projected at 419.3 million tons, up 31.6 million tons from 2007/08. Foreign oilseed production is projected at 326.3 million tons, up 18.6 million tons from 2007/08. Global soybean production is projected to increase 10 percent to 240.7 million tons. Most of the increase is due to higher production in the United States as producers increased planted area sharply from 2007/08. Higher soybean production is projected for both Brazil and Argentina as producers respond to high soybean prices. The Brazil crop is projected at 64 million tons, up 3 million from 2007/08. Despite continuing financial problems and a strong currency, producers in Brazil are projected to increase plantings by around 5 percent, more than offsetting a small reduction in yields. The Argentina crop is projected at 48 million tons, up 1 million from 2007/08 based on a small increase in area and yield. Soybean production for China is projected at 16 million tons, up 2.5 million from 2007/08. Global production of high-oil content seed is up 11 percent from 2007/08 reflecting sharp increases in rapeseed and sunflowerseed production. Rapeseed production is projected higher in EU-27, China, Canada, India, Ukraine, and Australia. Higher global sunflowerseed production is projected for Argentina, Russia, Ukraine, and EU-27. Despite higher global oilseed production, 2008/09 oilseed supplies are up just 3 percent as beginning stocks are sharply lower compared with a year ago.
Global protein meal consumption is projected to increase 2.4 percent in 2008/09. Protein meal consumption is projected to increase 5 percent in China, which accounts for 40 percent of global protein consumption gains. EU-27 protein meal consumption is projected to decline as wheat production and feeding recovers from 2007/08. World soybean trade is projected to reach a record 76.3 million tons, up 2.5 million tons from 2007/08. China is projected to account for 60 percent of the increase, reaching a record 35.5 million tons of imports.
Global vegetable oil consumption is projected to increase 4.3 percent in 2008/09 led by increases for China, India, and EU-27. Industrial use is projected to grow at a reduced rate compared with recent years as high prices of vegetable oils will limit expansion. Global vegetable oil stocks are projected to decline 2 percent from 2007/08.
SUGAR: Projected 2008/09 U.S. sugar supply is decreased 63,000 short tons, raw value, from last month, due to lower beginning stocks. Ending stocks for 2007/08 are reduced due to lower processor production estimates compiled by the Farm Service Agency.
LIVESTOCK, POULTRY, AND DAIRY: Total U.S. meat production for both 2008 and 2009 is projected lower than last month as higher feed prices weigh on the sector. Beef production is forecast higher in 2008 as cow slaughter forecasts are raised, more than offsetting lower forecast steer and heifer slaughter. Beef carcass weights are unchanged despite higher feed prices as producers are expected to place cattle into feedlots at heavier weights. Beef production forecasts for 2009 are unchanged from last month. Pork production forecasts for 2008 and 2009 are lowered from last month. Imports of hogs from Canada are forecast lower as production in that country declines. Carcass weights in both years are forecast slightly lower than last month as high feed prices are expected to encourage producers to market hogs as rapidly as possible. USDA will publish its Quarterly Hogs and Pigs report on June 27, providing information on producer farrowing intentions in the coming quarters. The broiler production forecast for 2008 is unchanged from last month, but the forecast for 2009 is reduced in the last half of the year as higher forecast feed prices slow output growth. Turkey production forecasts for 2008 and 2009 are unchanged from last month. Egg production in 2008 is forecast slightly lower than last month, but 2009 forecasts are unchanged.
Red meat and poultry export forecasts for 2008 and 2009 are raised from last month, mostly reflecting higher broiler meat exports. The beef export forecast is fractionally higher, but pork exports in 2008 are reduced, reflecting lower-than-expected sales in the first quarter. Red meat forecasts are unchanged for 2009. Broiler exports were higher than expected in the first quarter of 2008 and are expected to remain robust both in 2008 and 2009 despite current short-term disease related disruptions.
Price forecasts for both 2008 and 2009 are raised as meat supplies are forecast tighter and demand remains relatively strong. Cattle price forecasts for 2008 are about unchanged as higher prices at the end of the year are mostly offset by weaker current prices. Prices in 2009 are raised from last month on tighter meat supplies. Hog prices are raised due to expectations of reduced hog supplies from Canada and generally tighter supplies of red meat and poultry. Broiler prices are forecast higher as reduced broiler meat production and tighter supplies of red meat are expected to support prices. Egg prices are forecast higher as egg production remains about unchanged.
Milk production forecasts for 2008 and 2009 are reduced primarily because high feed prices are expected to limit growth in milk per cow. For 2008, cow numbers are fractionally lower reflecting expected cow removals through the Cooperatives Working Together (CWT) program. Commercial exports are forecast higher in 2008 as sales have been stronger than expected. However, with relatively tight supplies forecast in 2009, the export forecast for 2009 is unchanged. Forecasts of domestic disappearance of fat and skim solids are reduced from last month.
Tighter supplies of dairy products and competition between export and domestic markets are expected to result in relatively strong prices. Dairy product prices are forecast higher in both 2008 and 2009. Cheese prices are forecast higher in both years, which coupled with higher whey price forecasts, lead to an increase in the forecast Class III price. The butter price forecast is raised for 2008 as demand remains robust in the face of relatively large supplies. However, as prices remain relatively strong in 2008, export demand may weaken and the price forecast for 2009 is reduced slightly from last month. Conversely, forecasts for 2009 nonfat dry milk are raised as exports are expected to support higher prices. The Class IV price forecast is little changed from last month. The all milk price is forecast higher this month, averaging $18.90 to $19.30 in 2008 and $18.15 to $19.15 in 2009.
