WorldWatch:

[mikey]

World Agricultural Supply and Demand Estimates - August 2009
According to the World Agricultural Supply and Demand Estimates report from the World Agricultural Outlook Board, weak demand for cattle, hogs and broilers is pressuring prices.


LIVESTOCK, POULTRY, AND DAIRY: Total US red meat and poultry production for 2009 is reduced as lower beef and poultry output more than offset higher pork production. The 1 July Cattle report, which was released on 24 July indicated lower cow numbers, a smaller calf crop, fewer cattle on feed, and fewer cattle outside feedlots than last year, all implying smaller feedlot placements through the balance of 2009 and into 2010. This also implies lower feedlot marketings and cattle slaughter and hence lower beef production than forecast last month. Partly offsetting the lower beef production is higher forecast pork production due to larger expected slaughter and higher carcass weights in the third quarter of 2009. Poultry production is forecast slightly lower as fractionally higher second quarter broiler production is more than offset by weaker turkey production. Egg production for 2009 is reduced slightly. Changes in the meat production forecast for 2010 reflect tighter supplies of fed cattle due to smaller cattle feedlot placements and lower cow slaughter. There are no changes to forecast pork and poultry production for 2010 as lower feed prices provide some support to producers. Egg production forecasts are unchanged from last month.

Export forecasts for 2009 and 2010 are reduced largely because of lower expected beef shipments. Weak economic growth in 2009 and tighter beef supplies for both 2009 and 2010 are expected to result in lower exports. Broiler exports are raised slightly but turkey export forecasts are reduced. Pork forecasts are unchanged.

Price forecasts for cattle, hogs, and broilers are lowered for 2009. Weak demand is pressuring prices. Egg prices are forecast slightly higher. Prices for hogs and broilers are lowered for 2010, but cattle prices are raised as tighter fed cattle supplies support prices. Egg and turkey price forecasts are unchanged for 2010.

The milk production forecast is raised for 2009 and 2010 as the reduction in cow numbers is slower than expected and growth in output per cow is higher. Fat and skim-solids basis imports are raised as cheese imports have been stronger than expected; the commercial export forecast for 2009 is adjusted as higher exports in the first half are offset by lower second half exports. Exports for 2010 are lowered as higher domestic prices and larger exportable supplies in competitor countries limit export opportunities into 2010. CCC removals are adjusted to reflect changes in support prices for cheese and nonfat dry milk (NDM). Cheese and NDM price forecasts are raised for 2009 as higher support prices and increased net removals support domestic prices. Forecast cheese and NDM prices for 2010 are lowered as higher forecast production and weaker commercial exports increase domestic supplies. Butter and whey price forecasts are unchanged from last month. Both Class III and Class IV prices are forecast higher for 2009 reflecting higher forecast prices for cheese (Class III) and NDM (Class IV). Class price forecasts for 2010 are reduced as cheese and NDM prices are lowered. The all milk price is forecast at $12.10 to $12.30 per cwt for 2009 and $14.65 to $15.65 for 2010.

WHEAT: US wheat ending stocks for 2009/10 are projected 36 million bushels higher this month as higher forecast production more than offsets an increase in projected use and lower imports. Wheat production is forecast 71 million bushels higher with increases in all classes of wheat except soft red winter. The largest increases are for hard red spring wheat and durum reflecting sharply higher expected yields in the Northern Plains. Feed and residual use is raised 5 million bushels with the larger crop. Exports are projected 25 million bushels higher with reduced production prospects in Canada and Argentina, which are major competitors in the western hemisphere wheat market. The 2009/10 marketing-year average farm price is projected at $4.70 to $5.70 per bushel, down 10 cents on both ends of the range. Small revisions are also made this month to 2007/08 and 2008/09 imports, exports, and food use based on the latest trade and mill grind data from the US Bureau of Census.

Global wheat supplies for 2009/10 are projected 5.0 million tons higher with higher beginning stocks and increased prospects for global production. World wheat production is raised 2.8 million tons for 2009/10 with major increases for India, United States, EU-27, China and Ukraine partly offset by reductions for Russia, Argentina, Canada and Kazakhstan. India production is raised 3.0 million tons to a record 80.6 million based on the latest revision to the official government estimate. EU-27 production is raised 1.6 million tons mostly on higher reported yields for Germany but also on better-than-expected yields for France and rising prospects for harvested area and yields for Poland. Partly offsetting are cuts for Spain, Romania, Bulgaria and Austria where persistent dryness reduced yields. China production is raised 1.0 million tons reflecting the first official indications for the harvested summer crops. Ukraine production is raised 1.0 million tons on higher winter wheat area and harvest reports.

Production forecasts for 2009/10 are lowered for several major wheat exporting countries. Production for Russia is lowered 4.5 million tons as dryness and extended heat during July sharply reduced yields in the Southern and Volga Districts. Kazakhstan production is lowered 0.5 million tons as western growing areas suffered under weather conditions similar to those in Russia. Argentina production is lowered 1.0 million tons as continued dryness in the central and western growing areas limited plantings. Production is also lowered 1.0 million tons for Canada as July rains came too late in some areas of Alberta and Saskatchewan and crop development remains delayed raising the potential for late season frost damage.

Global wheat imports and exports for 2009/10 are projected slightly lower. Small import reductions are projected for Afghanistan, Brazil, Egypt, Japan and Azerbaijan. Partly offsetting is an increase for Sudan. Larger country changes are forecast for exports, but they are mostly offsetting, leaving global exports down just 0.6 million tons. Exports are lowered 2.0 million tons for Russia, 1.8 million tons for India, 1.0 million tons for Argentina, and 0.5 million for Kazakhstan. Exports are raised 2.0 million tons each for EU-27 and Ukraine and combine with higher expected US exports to limit the decline in global trade. Global consumption is raised 2.7 million tons as a 4.4-million-ton increase in India food use is only partly offset by reductions in food use by Ukraine and Canada, and lower wheat feeding in EU-27 and Canada. Global ending stocks for 2009/10 are projected 2.3 million tons higher boosted in part by the rise in 2008/09 carryout.

COARSE GRAINS: US feed grain supplies for 2009/10 are projected higher this month with sharply higher forecast corn production more than offsetting a reduction in carry-in as 2008/09 corn exports are raised 50 million bushels. Corn production for 2009/10 is projected at 12.8 billion bushels, up 471 million as higher forecast yields more than offset a small reduction in harvested area as updated from the June 30 Acreage report. US corn supplies are projected at a record 14.5 billion bushels, up 134 million from the previous record in 2007/08.

Corn use for 2009/10 is projected higher with rising supplies and lower expected prices. Despite reduced prospects for livestock production, feed and residual use is raised 100 million bushels with the higher yield and production expected to add to residual loss. Food, seed and industrial use is raised 100 million bushels with higher expected use for ethanol supported by favorable ethanol producer returns and strong incentives for ethanol blending. Exports are projected 150 million bushels higher reflecting reduced foreign production prospects and stronger expected import demand from Mexico and Taiwan. Ending stocks are projected up 71 million bushels with higher expected use partly offsetting the increase in production. The 2009/10 marketing-year average farm price is projected at $3.10 to $3.90 per bushel, down 25 cents on both ends of the range. The marketing-year average reflects higher prices for corn sold for forward delivery over the past several months ahead of the sharp downturn in futures and cash market prices since early June.

Other feed grain changes include slightly higher 2009/10 production forecasts for sorghum, barley, and oats, as well as minor revisions to 2007/08 and 2008/09 imports and exports based on the latest data from the US Bureau of Census. Oats imports are projected 15 million bushels lower with reduced crop prospects in Canada. As a result, projected feed and residual use for oats is lowered 10 million bushels.

Global coarse grain supplies for 2009/10 are projected 8.3 million tons higher this month. Rising production prospects for US corn, Ukraine barley, India sorghum and EU-27 rye and mixed grains are partly offset by reductions in expected coarse grain output elsewhere. Corn production prospects are reduced for Mexico, Russia, South Africa, Ukraine and EU-27. Barley production is lowered for Turkey, Canada and EU-27.

World coarse grain imports and exports are both projected higher for 2009/10 mostly reflecting higher expected corn exports, up 2.6 million tons this month. Corn imports are raised 1.5 million tons for Mexico and 0.3 million tons for Taiwan. The 3.8-million-ton increase for US corn exports is partly offset by a 0.5-million-ton reduction each for South Africa and Ukraine, and a 0.2-million-ton reduction for Russia. Barley exports are raised 0.4 million tons with a 1.5-million-ton increase for Ukraine, partly offset by smaller reductions for Australia, Canada, EU-27 and Kazakhstan. Oats exports are cut 0.2 million tons with a reduction in Canada. Global coarse grain feeding is raised 1.7 million tons as increased US corn feed and residual use and higher barley feeding in Australia is partly offset by reduced corn feeding in Russia and reduced barley and oats feeding in Canada. Global coarse grain ending stocks are projected higher, mostly reflecting a 2.3-million-ton increase in corn stocks.

OILSEEDS: US oilseed production for 2009/10 is projected at 94.5 million tons, down 1.8 million from last month as lower soybean and cottonseed production are only partly offset by higher peanut production. Soybean yields are forecast at 41.7 bushels per acre, 0.9 bushels below last month=s trend yield projection, but 2.1 bushels above last year's yield. The first survey-based forecast of US soybean production is 3.2 billion bushels, 61 million below the July projection, but 240 million bushels above last year's crop. Soybean stocks are projected at 210 million bushels, down 40 million from July as reduced supplies are only partly offset by reduced crush and exports. Soybean crush is reduced 10 million bushels to 1.67 billion due to lower soybean meal exports. Soybean exports are reduced 10 million bushels to 1.265 billion. Lower US soybean and soybean meal exports are offset by increased shipments from Argentina.

Soybean and product prices are all increased this month. The US season-average soybean price for 2009/10 is projected at $8.40 to $10.40, up 10 cents on both ends of the range. Soybean meal prices are projected at $260 to $320 per short ton, up $5.00 on both ends of the range. Soybean oil prices are projected at 32 to 36 cents per pound, up one cent on both ends of the range.

Global oilseed production for 2009/10 is projected at 422.6 million tons, down 0.9 million tons from last month but still record high. Soybean production for China is reduced 0.2 million tons to 15.4 million due to lower yield resulting from excessive moisture in the northeast. Offsetting increases are projected for soybean production in EU-27 and Ukraine. EU-27 rapeseed production is projected at a record 19.5 million tons, up 1.2 million due to better-than-expected yields reported during harvest, especially in Germany and Poland. Other changes include higher sunflowerseed production in EU-27, lower peanut production for India, and a small reduction in cottonseed production for Brazil.

US changes for 2008/09 include increased soybean crush and exports and an offsetting reduction in residual, leaving projected ending stocks unchanged at 110 million bushels. Crush is raised 5 million bushels to 1.66 billion reflecting a small increase in domestic soybean meal disappearance. Soybean exports are increased 5 million bushels to a record 1.265 billion.

SUGAR: Projected 2009/10 US sugar supply is increased 350,000 short tons, raw value, from last month. Sugar production is increased 200,000 tons and beginning stocks are increased 150,000 tons while imports are decreased 50,000 tons. The increase in sugar production is based on higher-than-expected forecast production of US sugarbeets and Florida sugarcane, which more than offsets lower Louisiana sugarcane. The reduction in 2009/10 imports is due to prospects for sharply higher world market prices increasing shortfall in filling the tariff rate quota.

Estimated 2008/09 US sugar supply is increased 250,000 tons, based on larger early harvest of 2009-crop sugarbeets and continued strong imports from Mexico. Sugar use is increased 100,000 tons to reflect the refined portion of the increase in imports from Mexico.

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[14 August 2009] A US agribusiness trade and investment mission will visit the Philippines in October to explore the possibility of using the latter as “a staging ground for exports to the region for food and biotechnology” a statement from the Philippine Department of Agriculture (DA) said. During a meeting with USDA Secretary Thomas Vilsack, DA Secretary Arthur Yap highlighted the Philippines strategic location as a regional production and distribution hub  for biotechnology and food products for US companies that want to sell to Asian markets. Among the proposals of Mr Yap to Mr Vilsack include a USD 20-million Geographic Information System and Remote Sensing project for new technologies for crop and fisheries production.

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A UN report published this week states that Asia faces an unprecedented food crisis and huge social unrest unless hundreds of billions of dollars are invested in better irrigation systems to grow crops for its growing population. It said countries like India, China and Pakistan avoided famines in the 1970s and 1980s by building giant state-sponsored irrigation systems and introduced better seeds and fertilisers. But the extra 1.5 billion people expected to live on the continent by 2050 will double Asia’s demand for food. A combination of very little new land left for cultivation, an increasingly unpredictable climate and water supplies stretched to the limit means the only realistic option to feed people in the future will be better management of existing water supplies.

[mikey]

Pork to Keep China's Inflation on the Back-burner
CHINA - Pork, a trigger of past inflationary bouts in China, is likely to be a suppressant of price pressures in coming months and give the government leeway to keep monetary policy loose until the economic recovery is on solid ground.



A record flood of bank lending in the first half has fueled concerns that Chinese consumer price inflation, in negative territory since February, could soon accelerate - and accelerate quickly.

Monetary conditions are unquestionably crucial in determining the course of inflation, but recent history has shown that China's single most important price is that of pork.

Food makes up a third of the Chinese consumer price index and pork is the key component of that. A sweeping pig cull because of disease in 2007 sent pork prices soaring and sparked the country's worst inflation in more than a decade.

At first glance, pig market trends are unsettling, says Reuters.

Retail pork prices have risen for 11 weeks straight and are up more than 10 per cent during that time, which would seem to augur for an aggressive rebound of inflation in China.

But industry analysts and farmers said price rises would slow because an official pork stockpiling program and a general reluctance to slaughter hogs will leave the country with a bigger pig population than fundamental demand can support.

"There is no possible way that we will see pork-led inflation again because of the general over-supply of pigs," said Feng Yonghui, chief analyst for Soozhu.com, a hog industry website.

China needs about 410 million live hogs, including 41 million sows, for the market to be in equilibrium, according to the National Development and Reform Commission (NDRC), a central planning agency. Official data showed that China had 447.2 million live hogs and 48.3 million sows at the end of June.

US hog futures have plunged 34 per cent in three months and could be dragged lower by swelling supplies after a slump in export demand. China's pork prices have historically had little relationship to world prices, because it satisfies nearly all of its demand domestically and exports next to nothing.

In China, fresh pork cost 11.69 yuan ($1.70) per 500 grams in the week ending August 21, the NDRC said. That was 11 per cent higher than two months earlier, though still 20 per cent below the 2008 peak.

"Maybe the short-term price rises can last until September, but we do not expect pork prices will continue like that afterwards," said Guo Huiyong, an analyst who follows animal husbandry at Beijing Orient Agri-Business Consultant.

Low prices earlier this year meant that breeders were barely breaking even after soymeal-based feed costs rose, which might have discouraged them from raising more hogs. It takes six months to raise a hog for slaughter, so the ebb in prices could theoretically crimp the pork supply by the end of this year.

[mikey]

New Opportunity for US Feed in Viet Nam
US - Transportation is a key factor when it comes to US agricultural exports and now Vietnam has been afforded expanded access through a new shipping line.



Hanjin Shipping, South Korea’s largest shipping company, has announced the launch of a new direct service between Viet Nam and the United States this month. According to a Hanjin news release, the new service will improve transit time and provide higher quality service with easier access to its customers in Viet Nam.

As a country experiencing rapid growth and development, this new shipping route is welcomed by the Vietnamese and Americans alike. The opening of this line makes Hanjin the third major container line to offer this service to Viet Nam.

US Grains Council Regional Director in Southeast Asia Adel Yusupov said, “The launch of this line is certainly a favorable development for US exporters of distiller’s dried grains with solubles (DDGS), corn and corn gluten meal into the market.” The availability of direct service from the United States to Viet Nam will offer better risk management solutions for both US exporters and Vietnamese buyers.

The government of Viet Nam’s policies have created a favorable environment for the country’s commercial livestock sector, encouraging expansion of commercial livestock production. According to Mr Yusupov, 2009 projected feed grains demand is approximately 12 million metric tons.

“We estimate demand will reach 20 million tons by 2015, given the current rate of livestock and feed industry growth,” said Mr Yusupov. In this time of robust growth in the feedmilling industry, backed by escalating feed grains demand, the Council is optimistic this new shipping line will easily lend itself to increases in US feed grains exports to Viet Nam.


 

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[26 August 2009] Philippine food exporters are being encouraged to explore the USD 1.1 billion Indian market because it's relatively relaxed rules makes it an easier market to access. Currently, Philippine processed food manufacturers only have a negligible presence in the market, but Philippine commercial attaché in New Delhi, Vichael Angelo Roaring, said local manufacturers could partner “with big buyers and distributors in India” and that “the commercial offices of the Philippines are willing to point them to the major buyers, but they should also start the initiative.” Studies show that India's food market is projected to grow by 30% in the coming years. With the newly signed Asean-India free-trade agreement, tariffs on imported processed food will go down to 28% beginning in 2010 down to 0% in 10 years.
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Non-GM corn pushed in Negros Occidental
[25 August 2009] Even as local hog and poultry raisers call for the scrapping of the ban on the use of GM corn in Negros Occidental province, Rommel Ledesma, Executive Director of Negros Island Sustainable Agriculture and Rural Development said that with the operation of the Corn Post Harvest Processing and Trading Centre in the province, the number of  farmers planting corn is on the rise. He said a group of corn farmers have already confirmed that it has access to 500 hectares ready for production of non-GM corn, which is 10% of the 5,000-6,000 hectares needed by the province, which currently meets only 40%-50% of its corn requirement, to become self sufficient. 

[mikey]

31 August 2009] Although the Chinese government has set up a compulsory vaccination system, requiring immunization of animals against diseases harmful to human health the possibility of disease outbreaks still exist, said lawmakers in a report presented at the 10th session of the Standing Committee of the 11th National People's Congress (NPC). An official source quoted the report as saying that there should be relevant authorities to standardize use of veterinary drugs, strengthen and improve monitoring of the production and distribution of livestock products. The lawmakers proposed nationwide inspections for excessive veterinary drug residues and banned food additives to be in place, they also suggested the government subsidize treatment of animal carcasses that had died from disease or unknown causes to contain animal epidemics.

[mikey]

Asia a Valued Customer of US Feed Ingredients
GLOBAL - Asian importers can look forward to the increasing availability of a quality product this spring as US ethanol production makes advancements in output and the quality of its co-product, distiller’s dried grains with solubles (DDGS).



The US Grains Council’s Taiwanese and Japanese DDGS teams that traveled to the United States this week expressed their excitement about the quality of the product and how it has preformed in both feeding trials and real life production scenarios. "The quality of DDGS produced in the United States has improved and I am confident in using more DDGS from the United States," said Willis Wu-Yeh Cheng, chairman of Charoen Pokphand Enterprise (Taiwan) Co. Ltd., who participated in the study of US DDGS production facilities and suppliers across the Midwest.

Mr Cheng also noted his satisfaction with the current corn crop, saying, "The supply of US corn in 2009/2010 will be enough for meeting the demands from the United States and global customers." The Council arranges teams to the United States to expose key traders and buying groups to US grain and co-product quality and supply, while connecting importers with US suppliers.

Team members visited producer farms and ethanol plants and attended the Midwest Specialty Grains Conference and Trade Show in Sioux Falls, South Dakota, where discussions with US food and feed suppliers and DDGS dealers may lead to potential partnerships. USGC Associate Director in Japan Hiroko Sakashita said, "One of the team members said he found a potential supplier of specialty corn for the future. Another team member said US DDGS dealers were quick to offer additional detailed information and further individual discussions about DDGS use for aquaculture, a promising market in Japan."

During a private meeting with Council members South Dakota Corn Growers Association (SDCGA) and South Dakota Corn Utilization Council held Tuesday morning, USDA’s Foreign Agricultural Service (FAS) Administrator Michael Michener spoke to the participants about the policies and priorities of the new administration and its focus on the expansion of the US agricultural export market.

"Michener mentioned how important trade was between the United States and both Japan and Taiwan," said Gary Duffy, USGC Asia Advisory Team member and SDCGA board member. "Meeting with the FAS administrator underscored the point that trade with Japan and Taiwan is important to the United States and that US farmers are a reliable supplier of corn and DDGS. This was helpful in driving home the point that DDGS is a high-quality feed ingredient and research is showing how it can be utilized in higher percentages in feed rations."

Team participant Tony Yi-Cheun Shu, executive assistant of Formosa Oilseed Processing Company Ltd. (Taiwan), said the team members highly appreciated Michener taking the time from his busy schedule to meet with them. "We feel we are regarded as valuable customers of the United States," he said.

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[10 September 2009] McDonald’s Corporation has lost a eight-year long trademark infrigement battle against a Malaysian curry restaurant after Malaysia's Federal Court allowed the latter to use the prefix 'Mc'. McDonald’s first sued the curry restaurant in 2001 for trademark infringement and a High Court ruled in favor of the international fast food chain in 2006. But  McCurry, short for ‘Malaysian Chicken Curry’, then took the matter up to the Court of Appeal, which ruled in favor of the Malaysian restaurant, stating that McCurry's signage and Indian food menu contrasted sufficiently with McDonald's logo and Western menu.  The Federal Court said McDonald's had failed to properly frame its questions when applying to challenge the Appeals Court's earlier verdict.

[mikey]

Statistics from China Islamic Association show that, China’s halal foods trade in 2006 exceeded USD 2.1 trillion. The sector maintained a 10% growth rate and industry experts estimated that it is expected to grow at a faster pace of more than 20% this year. China’s halal foods trade volume accounts for 0.1% of the global trade, leaving greater potential for its promising growth in the international market, according to Zhang Zhigang, Vice Director General, Department of Economic Development of the State Ethnic Affairs Commission.

[mikey]

[22 September 2009] Thailand is laying more focus on the Muslim markets and aims to expand halal food exports by at least 10% annually between 2010 and 2014. The plan includes strengthening the potential of the halal industry to meet world standards and conforming to domestic demand; promoting the competitiveness of entrepreneurs and increasing Thailand's capability in certifying food to Muslim halal standards, expanding markets and upgrading research and development. The targeted products are livestock products. The strategy calls for five southern provinces - Pattani, Yala, Narathiwat, Satun and Songkhla - to become the production base for halal products.

[mikey]

25 September 2009] Asia is expected to grow more strongly than expected both this year and in 2010 and is set to lead the world out of the global financial crisis according to the latest forecasts by the Asian Development Bank (ADB). The bank said developing Asia is proving to be more resilient to the global downturn than was initially thought. 'Nevertheless, there is no room for complacency, and the region's nascent recovery faces downside risks,' the ADB report said. ADB Chief Economist Jong-wha Lee called for a series of measures like encouraging more long-term foreign investments and strengthening demand for Asia to limit the region's reliance on exports.

[mikey]

[22 September 2009] China has recently fine-tuned its subsidy for agricultural inputs in response to a price slump in chemical fertilizers and diesels in 2008. According to the new plan mooted by the Ministry of Finance, the subsidy will be more dynamic on the market price fluctuation for agricultural inputs and grains.  The price change in chemical fertilizers and diesel as well as grain planting acreage will determine the subsidy for agricultural inputs for next year, said an official from MOF. China currently has four subsidies for its agricultural sector - agricultural inputs subsidy, direct grain subsidy, farm machinery subsidy and grain seed subsidy.  Subsidies for these categories totaled CNY 102.86 billion (USD 15.1 billion) in 2008, with the agricultural inputs subsidy accounting for nearly 70%.

"15.1 billion US dollars for Chinas farm subsidies"

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China may face problems with meat exports
[1 October 2009] New market research has cast a shadow on the quality of Chinese meat and this could affect its exports in coming years. The country has emerged as the world’s largest meat producer, providing 29% of the global production, but its extremely low quality has already resulted in the restriction of its supply to most developed countries. The blame has been placed an ongoing vast disorder in the Chinese Veterinary System, excluding the possibility of exercising control over the quality of livestock products. Most of the bans were imposed because of contamination of certain dangerous diseases in Chinese meat imports, including foot-and-mouth disease, and Siberian plague.

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[8 October 2009] The Philippines and the Taiwanese governments have signed an agreement to foster technical cooperation and work together to prevent and control the spread of livestock diseases. Under the agreement, the Philippines and Taiwan agreed to cooperate in the fight against livestock diseases through the exchange of experts, sharing of diagnostic experiences and techniques, and participation in trainings and workshops. Taiwan particularly wants parallel efforts in the prevention and control of the classical swine fever which afflicts both the Philippine and Taiwanese pig industries. Philippine Agriculture Assistant Secretary Salvador Salacup said the joint effort is further proof of the deepening and expanding ties between the Philippines and Taiwan in the field of agriculture.