WorldWatch:

[Mustang Sally Farm]

Barley Crop Lowered
US barley production for 2011/12 is forecast at 155 million bushels, down 13 million from August and down 25 million from 2010/11. Average yield per acre, at 69.2 bushels, is down 1.2 from last month and 3.9 bushels from last year. Area harvested for grain is estimated at 2.2 million acres, 151,000 below last month and 226,000 below 2010/11. Total supply of barley is projected at 254 million bushels, down 13 million from last month and down 51 million from 2010/11. Imports were unchanged from last month’s projection of 10 million bushels.

Projected barley use is lowered 10 million bushels from last month due to reduced feed and residual. Ending stocks for 2011/12 are lowered by three million bushels to 54 million and are down 35 million from last year. Barley prices were reduced by 15 cents on the low end or the range and 25 cents on the high end of the range to $5.30-$6.30 per bushel, compared with $3.86 in 2010/11. Higher expected prices year-to-year reflect stronger feed grain prices generally and steady malting barley demand.

 


Oats Production Continues to Set Record Lows
US production of oats for 2011/12 is estimated at a record low 54 million bushels, down three million bushels from last month and down 27 million from 2010/11. The estimated yield was lowered 4.1 bushels per acre from last month to 57.5 bushels. Compared with last year, yields were down 6.8 bushels per acre. Area planted to oats is estimated at 2.5 million acres, down slightly from last month and 642,000 acres lower than for 2010/11. The largest declines occurred in North Dakota, Wisconsin, Minnesota, South Dakota and Iowa, where planted areas decreased 110,000, 100,000, 80,000, 70,000 and 60,000 acres, respectively. Harvested area, estimated at 940,000 acres, is up slightly from last month but down 323,000 acres from last year, making it the smallest acreage harvested for grain on record.

Total oats supply is forecast at 212 million bushels, down three million bushels from last month and 35 million below 2010/11. Projected ending stocks were lowered by three million bushels this month to 43 million bushels, down 25 million from the slightly revised 2010/11 carry-out of 68 million. Prices for 2011/12 are lowered 30 cents on both ends of the range to $3.10 to $3.70 per bushel compared with $2.52 last year.

 


Hay Production Falls in 2011/12
US all-hay production in 2011/12 is forecast at 131.7 million tons, down from 145.6 million tons in 2010/11. Both area harvested and yields are reduced. Total hay harvested area for 2011/12 decreased to 57.6 million acres from 59.9 million last year. Roughage-consuming animal units (RCAU) in 2011/12 are projected to be 68.0 million units, down from 69.2 million in 2010/11. With hay production and RCAUs down, hay supply per RCAU is 1.94 tons in 2011/12, compared with 2.10 tons in 2010/11.

Production of alfalfa hay and alfalfa mixtures is forecast at 64.7 million tons, down slightly from the August forecast and down 3.2 million tons from last year. Based on 1 October conditions, yields are expected to average 3.35 tons per acre, down 0.01 tons from August and down 0.05 tons from 2010. Harvested area is forecast at 19.3 million acres, unchanged from August but down 3 per cent from the previous year's acreage.

Other hay production is forecast at 67.0 million tons, down slightly from the August forecast but 14 per cent below 2010/11. Based on 1 October conditions, yields are expected to average 1.75 tons per acre, unchanged from the August forecast and down 0.20 tons from last year. Harvested area, at 38.3 million acres, is unchanged from August but down 4 per cent from the previous year.


INTERNATIONAL OUTLOOK

Global Coarse Grain Production Increased This Month
World coarse grain production in 2011/12 is projected to reach 1,136.3 million tons, up 5.1 million this month as foreign increases swamped the US decline. Foreign coarse grain production is forecast up 7.1 million tons to 810.0 million, with almost all the change in corn. Foreign barley production is up 0.3 million tons but sorghum and oats together are down by a like amount.

Corn production for China in 2011/12 is increased 4.0 million tons to 182 million as yields are increased. Rains and temperatures throughout the growing season were exceptionally favourable in the main surplus producing region, the North-East. In the North China Plain, another major growing area, rains were irregular but the wide availability of irrigation helped limit loses. With most of the harvest finished, yields are reported better than the previous year, and almost as good as the banner year of 2008/09. After a detailed review of provincial yield data, USDA has decided that the official Chinese Government statistics for yields for 2009/10 and 2010/11 are the best available and has adopted those numbers. This increases 2009/10 corn production from 158.0 million tons to 164.0 million, and 2010/11 production from 173.0 million tons, to 177.2 million.

 


Ukraine’s corn production for 2011/12 is increased 3.0 million tons this month to a record 21.0 million. With harvest more than one-third complete, record yields appear to be a foregone conclusion as the early-harvested areas tend to be lower yielding than the late-harvested areas. The growing season was quite favourable, with some dryness at planting, followed by good rains during the growth cycle, a break in the heat during tasseling (reproduction), and mostly dry conditions for harvest. Corn planted area in Ukraine is the highest since 1963.

Russia’s corn crop is increased 0.5 million tons to 6.0 million based on improved yields. In the key Southern District, rainfall and temperatures were mostly favourable throughout the growing season. Preliminary harvest reports confirm the higher yield prospects.

Partly offsetting are declines in corn production for Serbia, down 0.3 million tons to 6.7 million tons as dryness during the filling stage reduced yield prospects; for the Philippines, down 0.1 million to 7.0 million, on early indications of crop damage from recent storms; and the EU, down slightly with a reduction for Hungary mostly offset by an increase for Germany.

While world barley production only increased a small amount, several offsetting changes were significant. Russia’s barley production increased 1.0 million tons to 16.5 million as harvest reports indicate better-than-expected yields. Good yields are also reported in Kazakhstan, boosting production 0.2 million tons to 2.3 million. In Argentina, increased area is reported planted to barley as producers seek an alternative to wheat, where government policies interfere with exports. Argentine production is increased 0.2 million tons to 3.3 million. However, in Australia, prospects for barley yields are reduced, cutting projected production 0.8 million tons to 8.2 million. Also, government surveys in Canada revealed slightly lower area and yield for barley, cutting production 0.4 million tons to 7.9 million.

Global coarse grain beginning stocks for 2011/12 are up 5.3 million tons this month, with almost the entire change in the United States. Foreign changes were small and mostly offsetting. Increased US beginning stocks and increased foreign production combine to boost world coarse grain supplies 10.4 million tons this month.

Increased Use Forecast Mostly in China
Global coarse grain use is up 4.3 million tons this month to 1,148.5 million. Most of the increase, 4.0 million tons, is for corn used as feed in China. The increases in China’s corn production for 2009/10, 2010/11 and 2011/12 were balanced by increases in feed and residual use, leaving ending stocks nearly unchanged. South Korea’s corn feed use is up 0.5 million tons this month as pork production is recovering from disease related problems. Ukraine, with a record crop, has corn use up 0.35 million tons, with 0.30 million of the increase in feed and residual use. Peru had a small increase in corn use but Taiwan and Serbia had declines. For Egypt, total corn use is unchanged, but 0.2 million tons are shifted from feed and residual to food and industrial use as more corn is being mixed into wheat flour to make bread.

World barley use forecast for 2011/12 is down 0.9 million tons this month to 136.2 million. All the reductions are in feed and residual use. EU use is down as favourable prices for exports are expected to move barley away from the domestic feed market. With reduced production, feed use in the United States and Canada is cut 0.2 million tons each. Reduced EU barley feed use supports a partly offsetting 0.3-million-ton increase in oats feed use, the only significant change in global oats use this month. Tighter supplies of sorghum are expected to reduce feed use 0.2 million tons each for Mexico and Argentina, partly offset by a similar sized increase in US consumption.

World Coarse Grain Ending Stocks Boosted
Global coarse grain ending stocks for 2011/12 are increased 6.0 million tons this month to 156.0 million. While most of the increase is in US corn stocks, foreign coarse grain stocks are up 1.2 million tons to 131.5 million. Most of the increase in foreign stocks is for corn, up 0.9 million tons to 101.2 million.

Corn stocks prospects for Ukraine are up 0.7 million tons to 2.3 million due to record production. Increased production boosts Russia’s corn ending stocks 0.3 million tons. Adjustments to Canada’s corn trade for 2010/11 boost 2011/12 beginning and ending stocks 0.1 million tons. These increases are partly offset by reductions in ending stocks prospects for Serbia, down 0.1 million tons due to reduced production, with smaller reductions for China, the EU, and Peru.

World barley ending stocks are up 0.9 million tons this month to 22.5 million. Russia and Kazakhstan, with increased production, are raised 0.8 million tons and 0.2 million tons, respectively. However, Australia, with reduced production, has barley ending stocks prospects trimmed 0.1 million tons. Australia, with reduced sorghum production, has ending stocks prospects reduced 0.2 million tons, accounting for most of the change in projected global sorghum stocks. EU oats stocks are reduced 0.3 million tons this month, accounting for most of the change in global oats stocks. EU rye stocks are projected down 0.1 million tons.

World Corn Trade Increased, US Export Prospects Reduced
Global corn trade for 2011/12 (October-September) is projected up 1.2 million tons this month to 93.3 million. Increased exportable supplies and some moderation in prices are encouraging trade prospects. South Korea’s corn imports are increased 0.5 million tons to 7.7 million based on strong recent purchases and the recovery of the pork sector from disease problems. Corn import for Peru and the Philippines for 2011/12 are each boosted 0.1 million tons this month. Slightly reduced production prospects (2010/11 for Peru and 2011/12 for Philippines) support import prospects. However, Taiwan’s corn imports have lagged, and prospects for 2011/12 are reduced 0.2 million this month.

Ukraine, with a record corn crop, is projected to export 12.0 million tons of corn in 2011/12, up 2.0 million this month and more than double the 5.0 million estimated for 2010/11. Of all export competitors, Ukraine has responded to increased corn prices with the largest increase in corn production and exports. Russia, with increased production, is expected to export 0.6 million tons, double last month’s forecast, but still less than half the corn exported in 2008/09. Serbia’s corn export prospects are trimmed 0.1 million tons to 2.1 million due to reduced production prospects.

US export prospects for 2011/12 are reduced 1.0 million tons to 41.0 million – down 50 million bushels to 1.6 billion for the September-August local marketing year. Reduced production, high prices, and increased competition are putting a damper on US corn export prospects. However, as of 29 September 2011, outstanding sales of corn reached 14.3 million tons, up from 13.8 million a year earlier.


The slow pace of US corn exports in September 2011 – inspections of 2.9 million tons, compared to 4.3 million a year earlier – caused a reduction of 0.5 million tons to 45.5 million for the 2010/11 trade year export estimate.

US sorghum export prospects for 2011/12 are reduced 0.2 million tons to 2.7 million (down 10 million bushels for the local marketing year to 100 million). Tight sorghum supplies and competition from domestic demand are expected to limit exports. Mexico’s sorghum imports are reduced 0.2 million tons to 2.1 million due to tight US supplies.

World barley trade in 2011/12 is projected at 15.4 million tons, unchanged this month. While projections for importers did not change, a number of offsetting changes were made in export prospects. With reduced production, Australia’s exports are reduced 0.7 million tons to 4.0 million and Canada’s export prospects are trimmed 0.2 million tons to 0.7 million. However, EU exports are raised 0.5 million tons to 2.0 million and exports by Argentina and Russia are each boosted 0.2 million.


October 2011

[Mustang Sally Farm]

World Agricultural Supply and Demand Estimates – November 2011
While beef and broiler production forecasts for 2011 are lowered, pork and turkey production are increased, according to the latest World Agricultural Supply and Demand Estimates (WASDE) report for November.

Livestock, Poultry and Dairy
The 2012 forecast of total red meat and poultry production is reduced from last month. Beef production is reduced due to slightly lower cattle slaughter during the year and slower growth in carcass weights. Broiler production is forecast lower as sharper declines are expected in bird numbers during late 2011 and into 2012. Turkey production is raised as prices are expected to favour expansion during 2012. Pork production is unchanged. For 2011, beef and broiler production forecasts are reduced, but pork and turkey production is increased. Egg production is forecast higher in the last quarter of 2011 and for 2012.

The beef import forecast is raised slightly for 2011. Beef export forecasts for 2011 and 2012 are raised slightly as strong global beef demand supports continued gains in US exports to a number of Asian markets. Small changes are made to US pork imports for 2011 and 2012 and pork exports for 2011. Broiler exports are raised for 2011 and 2012 on strong demand in a number of countries and a relatively weak dollar.

Cattle prices are forecast higher for the remainder of 2011 and through 2012. Strong demand is expected to carry into next year along with tight cattle supplies. Hog prices are raised for 2011 and 2012 on demand strength and support from lower beef and broiler production. Broiler prices are lowered for the last quarter of 2011 and the first quarter of 2012 as weakness in domestic demand and current overhanging supplies pressure prices.

Milk production forecasts for 2011 and 2012 are unchanged from last month. Commercial exports are forecast higher for 2011. Fat and skim-solids ending stocks for 2011 are lowered.

Cheese, butter and whey prices are forecast higher for both 2011 and 2012, but the non-fat dry milk (NDM) price forecast is reduced for 2011 and unchanged for 2012. Class III prices are raised for 2011 and 2012 on the increased price forecast for cheese and whey. The Class IV price is unchanged for 2011 as the higher butter price is mostly offset by a lower NDM price forecast. However, for 2012 with an unchanged NDM price forecast, the Class IV price forecast is raised due to higher butter prices. The all milk price is forecast at $20.10 to $20.20 per cwt for 2011, and $18.05 to $18.95 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered nine million bushels based on updated production estimates for the states resurveyed following the 30 September Small Grains report. Adjustments to production in these states, where significant acreage remained unharvested in early September, lowers production estimates for Hard Red Spring (HRS) wheat and durum. An increase in white wheat production is partly offsetting. Projected use for 2011/12 is unchanged for all wheat; however, domestic food use is projected higher for Hard Red Winter (HRW) wheat and lower for HRS wheat. Projected exports are raised for HRS and lowered for HRW. All wheat ending stocks are lowered nine million bushels in line with the production change. The season average farm price is projected lower at $7.05 to $7.75 per bushel compared with $7.10 to $7.90 last month, reflecting the latest reported prices.

Global wheat supplies for 2011/12 are projected 2.6 million tons higher mostly reflecting higher production in Kazakhstan and EU-27. Kazakhstan production is raised 2.0 million tons as an extended harvest period capped off a nearly ideal growing season, confirmed by the latest government reports. EU-27 production is raised 1.2 million tons with further upward revisions for France and Spain and higher reported production in the United Kingdom and Czech Republic. Partly offsetting these increases is a 0.5-million-ton reduction for Argentina and 0.3-million-ton reductions for both Algeria and Ethiopia.

World wheat trade is raised for 2011/12 with higher expected imports for China, a number of African countries, including Morocco and Algeria, as well as for Brazil and several FSU-12 countries neighboring Kazakhstan. Partly offsetting is a reduction in projected imports for South Korea where more corn feeding is expected. Exports are raised 1.0 million tons each for EU-27 and Russia reflecting larger supplies in EU-27 and the continued heavy pace of shipments from Russia.

Global wheat consumption for 2011/12 is raised 2.4 million tons with increased feeding expected for Kazakhstan, Brazil and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas, raising the potential for more feeding. Higher consumption is also expected for EU-27, Ethiopia, Kenya and several smaller FSU-12 countries. Global ending stocks are projected 0.2 million tons higher. Rising stocks in Kazakhstan, China, and Morocco are partly offset by reductions in major exporting countries including Russia, Argentina and EU-27.

Coarse Grains
US feed grain supplies for 2011/12 are projected lower with reduced corn and oats production more than offsetting small increases for sorghum and barley. Corn production for 2011/12 is forecast 123 million bushels lower with the national average yield forecast 1.4 bushels per acre below last month. At 146.7 bushels per acre, this year’s yield would be the lowest since 2003/04. Feed and residual use is lowered 100 million bushels with the smaller crop and further reductions in the outlook for broiler production. Projected US ending stocks are lowered 23 million bushels. The season-average farm price is unchanged at $6.20 to $7.20 per bushel.

Other 2011/12 changes include small adjustments to projected ending stocks for sorghum, barley and oats, reflecting this month’s production changes. Projected sorghum exports are reduced 10 million bushels as sales and shipments continue to lag earlier expectations. A 10-million-bushel increase in expected sorghum food, seed and industrial use is offsetting. Projected farm prices for sorghum are unchanged, but projected ranges are narrowed for barley and oats, and the barley farm price is projected lower based on reported malting barley prices.

Changes for 2010/11 corn mostly reflect a 13-million-bushel increase in food, seed, and industrial use with usage raised for sweeteners, starch and ethanol, all based on the latest available data. In addition, there are small adjustments to imports and exports based on August trade data from the US Census Bureau. These changes reduce 2010/11 feed and residual use 11 million bushels.

Global coarse grain supplies for 2011/12 are projected slightly lower with reduced US corn production and lower EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 corn, barley, oats production and higher Kazakhstan barley production. Corn production is lowered for a number of countries with the biggest reduction for Mexico where production is lowered 3.5 million tons. A late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico’s summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011/12 corn production prospects. Reservoir levels are well below those necessary to sustain a normal seasonal draw down in the northwestern corn areas which normally account for 70 to 80 per cent of Mexico’s winter corn crop.

Increases in 2011/12 corn production for a number of countries partly offset reductions in Mexico, the United States and Serbia. Corn production is raised 2.5 million tons for China with increases in both area and yields in line with the latest indications from the China National Grain and Oils Information Center. EU-27 corn production is raised 1.9 million tons mostly reflecting higher reported output in France, Romania and Austria. Argentina production is raised 1.5 million tons with higher expected area. FSU-12 production is raised 0.7 million tons with higher reported yields in Belarus and Russia. There are also a number of production changes this month to corn and sorghum production in Sub-Saharan Africa which reduce coarse grain production for the region.

World coarse grain trade for 2011/12 is raised with increased global imports and exports of barley and corn. Barley imports are raised for Algeria, Saudi Arabia and Jordan with exports increased for EU-27 and Russia. Corn imports are increased for China, Mexico and South Korea. Higher expected corn exports from Argentina and EU-27 support these increases. Higher sorghum exports from Argentina offset the reduction in expected US sorghum shipments. Global corn consumption is mostly unchanged with higher industrial use and feeding in China and higher corn feeding in EU-27 and South Korea offsetting reductions in Mexico and the United States. Global corn ending stocks are projected 1.6 million tons lower with reductions in EU-27, Mexico, Brazil and the United States outweighing increases for China and Argentina.

Rice
US all rice production in 2011/12 is forecast at 188.1 million cwt, 1.2 million above last month due to an increase in yield. Average all rice yield is estimated at 7,167 pounds per acre, up 44 pounds from last month, and the second highest yield on record. Harvested area is unchanged at 2.62 million acres. Long-grain rice production is raised 0.7 million cwt to 117.5 million, while combined medium- and short-grain production is increased 0.4 million to 70.6 million. No changes are made to rice use for either all rice or the rice by-class forecasts. All rice domestic and residual use is forecast at 127.0 million cwt, and all rice exports are forecast at 91.0 million, both down from a year ago. All rice ending stocks are forecast at 37.5 million cwt, up 1.2 million from a month ago, and a decrease of 10.9 million from the previous year.

The long-grain, combined medium- and short-grain, and all rice 2011/12 season-average farm price forecasts are unchanged from last month at $13.50 to $14.50 per cwt, $15.50 to $16.50 per cwt, and $14.00 to $15.00 per cwt, respectively.

Global 2011/12 rice supply and use are lowered from a month ago. World 2011/12 production is forecast at a record 461.0 million tons, down 0.4 million from last month due mainly to decreases for Burma, Cambodia, Laos and Thailand, which are partially offset by an increase for China. Thailand’s 2011/12 rice crop is lowered nearly one million tons as losses in the main-season crop from recent flooding are partially offset by an expected re-planting of some of the main season crop in the Northern Region along with an expected record dry-season crop. Flooding also lowered crop prospects in Burma, Cambodia and Laos. China’s 2011/12 crop is raised 2.0 million tons to a record 141.0 million, due to an increase in harvested area. Harvested area is increased based on recent indications from the government of China. The increase in global consumption is due mostly to an increase for China. Global exports are lowered slightly due to reductions for Burma and Cambodia, which are partially offset by increases for Argentina and Brazil. Global ending stocks for 2011/12 are projected at 100.6 million tons, down 0.8 million from last month, but an increase of 2.6 million from the previous year.

Oilseeds
Total US oilseed production for 2011/12 is projected at 91.2 million tons, down 0.5 million from last month due to lower soybean and cottonseed production. Soybean production is forecast at 3.046 billion bushels, down 14 million from last month. The soybean yield is forecast at 41.3 bushels per acre, down 0.2 bushels from last month. Soybean exports are reduced 50 million bushels to 1.325 billion mainly due to a slow export sales pace through October. Soybean ending stocks are projected at 195 million bushels, up 35 million from last month.

Soybean oil ending stocks and exports for 2011/12 are reduced this month due to lower beginning stocks resulting from changes in the 2010/11 soybean oil balance sheet. Changes for 2010/11 include reduced soybean oil production and ending stocks. These changes are based on industry indications of soybean crush and soybean oil stocks. Soybean meal production and domestic use for 2010/11 are also reduced due to lower October-September year crush. Soybean meal changes for 2011/12 include reduced domestic use and higher exports.

The US season-average soybean price range is projected at $11.60 to $13.60 per bushel, down 55 cents on both ends of the range. The soybean meal price is projected at $310 to $340 per short ton, down $25.00 on both ends of the range. The soybean oil price range is projected at 53 to 57 cents per pound, unchanged from last month.

Global oilseed production for 2011/12 is projected at 454.8 million tons, up 1.3 million tons from last month. Global soybean production accounts for a quarter of the increase with larger crops projected for Brazil, Paraguay and Mexico. Brazil soybean production is increased 1.5 million tons to 75 million with improved yield prospects related to rapid planting progress and good early season moisture throughout the country. These gains are partly offset by lower production projected for Argentina, which is reduced 1.0 million tons to 52 million due to reduced area as producers shift to corn. Global sunflower seed production is raised due to larger crops in Ukraine, EU-27 and Argentina. Increased yields are projected for Ukraine as harvest nears completion. Other changes include increased rapeseed production for EU-27, increased cottonseed production for Turkey and increased palm oil production for Malaysia.

Global oilseed trade is projected at 113.3 million tons, down 0.8 million. Reduced soybean exports for the United States and Argentina are only partly offset by increases for Brazil and Paraguay. Soybean imports are reduced for Japan and Russia. Global oilseed crush is reduced 0.2 million tons to 389.1 million with reduced soybean crush in Argentina partly offset by increased sunflower seed crush in Ukraine. Global oilseed ending stocks for 2011/12 are raised 0.9 million tons to 73.9 million. Soybeans account for most of the change with increased stocks for the United States and China more than offsetting lower stocks in Argentina and Japan.

Sugar
Projected US sugar supply for fiscal year 2011/12 is increased from last month, as higher beginning stocks and imports more than offset lower production. Sugar production is decreased 50,000 tons, based on lower forecast US sugarbeet production. Imports from Mexico are increased based on increased supplies – higher beginning stocks and increased tariff rate quota imports – and reduced consumption and ending stocks in Mexico

This month's 2010/11 US sugar supply and demand reflect final estimates of stocks, production, and use in Farm Service Agency’s Sweetener Market Data report and final import data from the Foreign Agricultural Service. Ending stocks are modestly higher than estimated last month. Mexico's government data for fiscal-year 2010/11 are the basis for decreasing imports and domestic use and increasing ending stocks.

Note: Beginning this month, sugar supply and use data in the WASDE report will be shown in ‘actual weight’. The WASDE report will continue to show US sugar supply and use, including imports from Mexico, in raw value. Raw value for Mexico sugar converts from actual weight by multiplying by 1.06. The Foreign Agricultural Service will continue to report world sugar supply and use, including for Mexico, in raw value.

[Mustang Sally Farm]

Wednesday, November 16, 2011
Pork Surplus Likely to Soon Turn to Shortage
THAILAND - Pork could be harder to find starting in January, as pig producers are now rushing to sell their live animals for short-term profit in order to avoid risking greater loss from the floods.


Prawit Asanatham, president of the Pork Traders Association, said the present oversupply has seen the price of live swine drop to 53 baht a kilogramme on average and as low as 40 baht in some areas.

Wholesale pork price is priced at 100 baht a kilo and retail pork at 120-130 baht, reports Bangkok Post.

Last month, live swine went for 57 baht a kilo, while pork was sold for 110 baht wholesale and 130-140 baht retail.

Mr Asanatham said the severity of any shortage will depend on government policy, especially that involving the control of live swine exports.

"If the government can keep these exports at an appropriate level, then there may be a shortage in flooded areas, but it won't be too severe overall," he said.

Regarding the distribution of goods, Santichai Santawanpas, a deputy director-general of the Internal Trade Department, said modern-trade operators are in the process of recovering their distribution centres now that the water has started to recede in Ayutthaya's Wang Noi district.

Private operators have also rented space in several areas to serve as distribution centres, so the department expects improved goods distribution in the coming days.

The department found no shortage of goods in traditional grocery stores and family-run shops, as they source products directly from suppliers, but consumer behaviour has changed more to buying from modern-trade operators, said Mr Asanatham.

So far, 40 consumers have called the department's 1569 hotline to complain about high prices, especially for eggs and drinking water.

Mr Santawanpas said the department has coordinated with drinking-water producers upcountry to supply more products in Bangkok.

The Layer Farmers Association will supply more eggs to modern retail chains, which require a million eggs a day. Suchat Sinrat, director of the department's monitoring and operations division, said supplies and prices of construction materials and cleaning equipment will be watched closely, as these will be in high demand for renovations once the floodwater subsides.

[Mustang Sally Farm]

Sustaining Feed, Fuel and Food in the Future
Consumer spending on food is expected to double over the next decade, writes editor in chief, Chris Harris.

In the developed world, there will be 1.6 billion people spending more on food and there is a direct link with the demand for corn in countries such as the US and China that are driving the global markets and the increase in production of biofuels around the world.

However, Jeroen Leffelaar, the Global Head of Animal Protein at Rabobank International, told the recent World Pork Conference in Bonn Germany, that in general biofuels are commercially not viable and the sector will necessarily remain dependent on government subsidies for the next 10 years.

At present, biofuel policies around the world are being sharpened and are moving away from tax support to mandatory requirements combined with tangible sustainable targets.

This move in policy will affect the production of crops that are not only used for biofuels but also for feed.

Mr Leffelaar said that the crops used for the production of biodiesel – rapeseed, soybeans and palm oil – and those for ethanol production – corn in the US and sugar cane and beet – will all have an affect on animal feed production.

While the use of soybeans for biodiesel will produce feed through the soybean scrap and corn will see the production of dried distillers' grains for feed, increased land usage, particularly in the case of corn, will place them in competition with feed.

"Only sugar cane production in Brazil will not affect the production of feed," said Mr Leffelaar.

Consumer Spending on Food 2010-2020



Demand for Agri-Commodities

He said there is a disparity in the production of corn around the world because in China and Brazil, it is grown to produce animal protein whereas in the US the focus is on growing corn for ethanol. In all, 40 per cent of the corn grown in the US goes to ethanol production.

When a significant amount of the corn crop goes to produce ethanol, there are tight corn stocks and this drives feed prices up.

However, Mr Leffelaar said that the demand for agri-commodities is expected to continue to rise but the way the commodities are used will vary around the world. The use of crops for feed is more related to regions with large populations, where the demand for fuel is largely in the developed markets.

This variation, together with social changes that will see more wealth in the developing world, will mean that feed costs are likely to remain high and volatile.

At present, just 36 per cent of the global land surface is suitable agricultural land and less than one-third of this is suitable arable land. Most of the global agricultural land is suitable as pasture land.

At the same time, the amount of agricultural land per capita is declining and improvements in yield are not meeting consumption demand. The gap between food consumption and yield of arable land is growing.

Against this background of high and volatile corn and fed prices, Mr Leffelaar said that pork prices this year have been rising because of a drop in production in the US and EU and also because of the growth in imports into South Korea and China.

However, he said that unlike the situation in 2008 when prices were high and there was a fall in the market in 2009, prices are not expected to fall next year after their rise this year.

He said that the market is going to see China still importing large volumes of corn and soy for feed to increase their domestic pig production but the high feed prices in the US will continue to hinder production.

In the EU, production will continue to decline and a drop in the sow herd numbers is expected.

Growth in the Brazilian pork industry will be hampered by the strength of the currency (the Real) and by the ban on imports by Russia.

"A two per cent production rise is expected in Brazil, but this growth could be quicker if the Russians raise their ban," said Mr Leffelaar.

In all, global production is expected to see a 0.2 per cent rise in production next year.

But Mr Leffelaar issued a warning note: "Higher prices and increased volatility are the new standard and the agricultural industry including pork farmers and meat processors must adapt to this new reality.

"Rabobank expects strong pork prices in 2012, assuming stagnation in Europe and the US and continuous economic growth in emerging countries," he said.

November 2011

[Mustang Sally Farm]

World Agricultural Supply and Demand Estimates – November 2011
While beef and broiler production forecasts for 2011 are lowered, pork and turkey production are increased, according to the latest World Agricultural Supply and Demand Estimates (WASDE) report for November.

Livestock, Poultry and Dairy
The 2012 forecast of total red meat and poultry production is reduced from last month. Beef production is reduced due to slightly lower cattle slaughter during the year and slower growth in carcass weights. Broiler production is forecast lower as sharper declines are expected in bird numbers during late 2011 and into 2012. Turkey production is raised as prices are expected to favour expansion during 2012. Pork production is unchanged. For 2011, beef and broiler production forecasts are reduced, but pork and turkey production is increased. Egg production is forecast higher in the last quarter of 2011 and for 2012.

The beef import forecast is raised slightly for 2011. Beef export forecasts for 2011 and 2012 are raised slightly as strong global beef demand supports continued gains in US exports to a number of Asian markets. Small changes are made to US pork imports for 2011 and 2012 and pork exports for 2011. Broiler exports are raised for 2011 and 2012 on strong demand in a number of countries and a relatively weak dollar.

Cattle prices are forecast higher for the remainder of 2011 and through 2012. Strong demand is expected to carry into next year along with tight cattle supplies. Hog prices are raised for 2011 and 2012 on demand strength and support from lower beef and broiler production. Broiler prices are lowered for the last quarter of 2011 and the first quarter of 2012 as weakness in domestic demand and current overhanging supplies pressure prices.

Milk production forecasts for 2011 and 2012 are unchanged from last month. Commercial exports are forecast higher for 2011. Fat and skim-solids ending stocks for 2011 are lowered.

Cheese, butter and whey prices are forecast higher for both 2011 and 2012, but the non-fat dry milk (NDM) price forecast is reduced for 2011 and unchanged for 2012. Class III prices are raised for 2011 and 2012 on the increased price forecast for cheese and whey. The Class IV price is unchanged for 2011 as the higher butter price is mostly offset by a lower NDM price forecast. However, for 2012 with an unchanged NDM price forecast, the Class IV price forecast is raised due to higher butter prices. The all milk price is forecast at $20.10 to $20.20 per cwt for 2011, and $18.05 to $18.95 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered nine million bushels based on updated production estimates for the states resurveyed following the 30 September Small Grains report. Adjustments to production in these states, where significant acreage remained unharvested in early September, lowers production estimates for Hard Red Spring (HRS) wheat and durum. An increase in white wheat production is partly offsetting. Projected use for 2011/12 is unchanged for all wheat; however, domestic food use is projected higher for Hard Red Winter (HRW) wheat and lower for HRS wheat. Projected exports are raised for HRS and lowered for HRW. All wheat ending stocks are lowered nine million bushels in line with the production change. The season average farm price is projected lower at $7.05 to $7.75 per bushel compared with $7.10 to $7.90 last month, reflecting the latest reported prices.

Global wheat supplies for 2011/12 are projected 2.6 million tons higher mostly reflecting higher production in Kazakhstan and EU-27. Kazakhstan production is raised 2.0 million tons as an extended harvest period capped off a nearly ideal growing season, confirmed by the latest government reports. EU-27 production is raised 1.2 million tons with further upward revisions for France and Spain and higher reported production in the United Kingdom and Czech Republic. Partly offsetting these increases is a 0.5-million-ton reduction for Argentina and 0.3-million-ton reductions for both Algeria and Ethiopia.

World wheat trade is raised for 2011/12 with higher expected imports for China, a number of African countries, including Morocco and Algeria, as well as for Brazil and several FSU-12 countries neighboring Kazakhstan. Partly offsetting is a reduction in projected imports for South Korea where more corn feeding is expected. Exports are raised 1.0 million tons each for EU-27 and Russia reflecting larger supplies in EU-27 and the continued heavy pace of shipments from Russia.

Global wheat consumption for 2011/12 is raised 2.4 million tons with increased feeding expected for Kazakhstan, Brazil and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas, raising the potential for more feeding. Higher consumption is also expected for EU-27, Ethiopia, Kenya and several smaller FSU-12 countries. Global ending stocks are projected 0.2 million tons higher. Rising stocks in Kazakhstan, China, and Morocco are partly offset by reductions in major exporting countries including Russia, Argentina and EU-27.

Coarse Grains
US feed grain supplies for 2011/12 are projected lower with reduced corn and oats production more than offsetting small increases for sorghum and barley. Corn production for 2011/12 is forecast 123 million bushels lower with the national average yield forecast 1.4 bushels per acre below last month. At 146.7 bushels per acre, this year’s yield would be the lowest since 2003/04. Feed and residual use is lowered 100 million bushels with the smaller crop and further reductions in the outlook for broiler production. Projected US ending stocks are lowered 23 million bushels. The season-average farm price is unchanged at $6.20 to $7.20 per bushel.

Other 2011/12 changes include small adjustments to projected ending stocks for sorghum, barley and oats, reflecting this month’s production changes. Projected sorghum exports are reduced 10 million bushels as sales and shipments continue to lag earlier expectations. A 10-million-bushel increase in expected sorghum food, seed and industrial use is offsetting. Projected farm prices for sorghum are unchanged, but projected ranges are narrowed for barley and oats, and the barley farm price is projected lower based on reported malting barley prices.

Changes for 2010/11 corn mostly reflect a 13-million-bushel increase in food, seed, and industrial use with usage raised for sweeteners, starch and ethanol, all based on the latest available data. In addition, there are small adjustments to imports and exports based on August trade data from the US Census Bureau. These changes reduce 2010/11 feed and residual use 11 million bushels.

Global coarse grain supplies for 2011/12 are projected slightly lower with reduced US corn production and lower EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 corn, barley, oats production and higher Kazakhstan barley production. Corn production is lowered for a number of countries with the biggest reduction for Mexico where production is lowered 3.5 million tons. A late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico’s summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011/12 corn production prospects. Reservoir levels are well below those necessary to sustain a normal seasonal draw down in the northwestern corn areas which normally account for 70 to 80 per cent of Mexico’s winter corn crop.

Increases in 2011/12 corn production for a number of countries partly offset reductions in Mexico, the United States and Serbia. Corn production is raised 2.5 million tons for China with increases in both area and yields in line with the latest indications from the China National Grain and Oils Information Center. EU-27 corn production is raised 1.9 million tons mostly reflecting higher reported output in France, Romania and Austria. Argentina production is raised 1.5 million tons with higher expected area. FSU-12 production is raised 0.7 million tons with higher reported yields in Belarus and Russia. There are also a number of production changes this month to corn and sorghum production in Sub-Saharan Africa which reduce coarse grain production for the region.

World coarse grain trade for 2011/12 is raised with increased global imports and exports of barley and corn. Barley imports are raised for Algeria, Saudi Arabia and Jordan with exports increased for EU-27 and Russia. Corn imports are increased for China, Mexico and South Korea. Higher expected corn exports from Argentina and EU-27 support these increases. Higher sorghum exports from Argentina offset the reduction in expected US sorghum shipments. Global corn consumption is mostly unchanged with higher industrial use and feeding in China and higher corn feeding in EU-27 and South Korea offsetting reductions in Mexico and the United States. Global corn ending stocks are projected 1.6 million tons lower with reductions in EU-27, Mexico, Brazil and the United States outweighing increases for China and Argentina.

Rice
US all rice production in 2011/12 is forecast at 188.1 million cwt, 1.2 million above last month due to an increase in yield. Average all rice yield is estimated at 7,167 pounds per acre, up 44 pounds from last month, and the second highest yield on record. Harvested area is unchanged at 2.62 million acres. Long-grain rice production is raised 0.7 million cwt to 117.5 million, while combined medium- and short-grain production is increased 0.4 million to 70.6 million. No changes are made to rice use for either all rice or the rice by-class forecasts. All rice domestic and residual use is forecast at 127.0 million cwt, and all rice exports are forecast at 91.0 million, both down from a year ago. All rice ending stocks are forecast at 37.5 million cwt, up 1.2 million from a month ago, and a decrease of 10.9 million from the previous year.

The long-grain, combined medium- and short-grain, and all rice 2011/12 season-average farm price forecasts are unchanged from last month at $13.50 to $14.50 per cwt, $15.50 to $16.50 per cwt, and $14.00 to $15.00 per cwt, respectively.

Global 2011/12 rice supply and use are lowered from a month ago. World 2011/12 production is forecast at a record 461.0 million tons, down 0.4 million from last month due mainly to decreases for Burma, Cambodia, Laos and Thailand, which are partially offset by an increase for China. Thailand’s 2011/12 rice crop is lowered nearly one million tons as losses in the main-season crop from recent flooding are partially offset by an expected re-planting of some of the main season crop in the Northern Region along with an expected record dry-season crop. Flooding also lowered crop prospects in Burma, Cambodia and Laos. China’s 2011/12 crop is raised 2.0 million tons to a record 141.0 million, due to an increase in harvested area. Harvested area is increased based on recent indications from the government of China. The increase in global consumption is due mostly to an increase for China. Global exports are lowered slightly due to reductions for Burma and Cambodia, which are partially offset by increases for Argentina and Brazil. Global ending stocks for 2011/12 are projected at 100.6 million tons, down 0.8 million from last month, but an increase of 2.6 million from the previous year.

Oilseeds
Total US oilseed production for 2011/12 is projected at 91.2 million tons, down 0.5 million from last month due to lower soybean and cottonseed production. Soybean production is forecast at 3.046 billion bushels, down 14 million from last month. The soybean yield is forecast at 41.3 bushels per acre, down 0.2 bushels from last month. Soybean exports are reduced 50 million bushels to 1.325 billion mainly due to a slow export sales pace through October. Soybean ending stocks are projected at 195 million bushels, up 35 million from last month.

Soybean oil ending stocks and exports for 2011/12 are reduced this month due to lower beginning stocks resulting from changes in the 2010/11 soybean oil balance sheet. Changes for 2010/11 include reduced soybean oil production and ending stocks. These changes are based on industry indications of soybean crush and soybean oil stocks. Soybean meal production and domestic use for 2010/11 are also reduced due to lower October-September year crush. Soybean meal changes for 2011/12 include reduced domestic use and higher exports.

The US season-average soybean price range is projected at $11.60 to $13.60 per bushel, down 55 cents on both ends of the range. The soybean meal price is projected at $310 to $340 per short ton, down $25.00 on both ends of the range. The soybean oil price range is projected at 53 to 57 cents per pound, unchanged from last month.

Global oilseed production for 2011/12 is projected at 454.8 million tons, up 1.3 million tons from last month. Global soybean production accounts for a quarter of the increase with larger crops projected for Brazil, Paraguay and Mexico. Brazil soybean production is increased 1.5 million tons to 75 million with improved yield prospects related to rapid planting progress and good early season moisture throughout the country. These gains are partly offset by lower production projected for Argentina, which is reduced 1.0 million tons to 52 million due to reduced area as producers shift to corn. Global sunflower seed production is raised due to larger crops in Ukraine, EU-27 and Argentina. Increased yields are projected for Ukraine as harvest nears completion. Other changes include increased rapeseed production for EU-27, increased cottonseed production for Turkey and increased palm oil production for Malaysia.

Global oilseed trade is projected at 113.3 million tons, down 0.8 million. Reduced soybean exports for the United States and Argentina are only partly offset by increases for Brazil and Paraguay. Soybean imports are reduced for Japan and Russia. Global oilseed crush is reduced 0.2 million tons to 389.1 million with reduced soybean crush in Argentina partly offset by increased sunflower seed crush in Ukraine. Global oilseed ending stocks for 2011/12 are raised 0.9 million tons to 73.9 million. Soybeans account for most of the change with increased stocks for the United States and China more than offsetting lower stocks in Argentina and Japan.

Sugar
Projected US sugar supply for fiscal year 2011/12 is increased from last month, as higher beginning stocks and imports more than offset lower production. Sugar production is decreased 50,000 tons, based on lower forecast US sugarbeet production. Imports from Mexico are increased based on increased supplies – higher beginning stocks and increased tariff rate quota imports – and reduced consumption and ending stocks in Mexico

This month's 2010/11 US sugar supply and demand reflect final estimates of stocks, production, and use in Farm Service Agency’s Sweetener Market Data report and final import data from the Foreign Agricultural Service. Ending stocks are modestly higher than estimated last month. Mexico's government data for fiscal-year 2010/11 are the basis for decreasing imports and domestic use and increasing ending stocks.

Note: Beginning this month, sugar supply and use data in the WASDE report will be shown in ‘actual weight’. The WASDE report will continue to show US sugar supply and use, including imports from Mexico, in raw value. Raw value for Mexico sugar converts from actual weight by multiplying by 1.06. The Foreign Agricultural Service will continue to report world sugar supply and use, including for Mexico, in raw value.

[Mustang Sally Farm]

Monday, November 21, 2011
Chinese Meat Production to Increase
CHINA - The United State Department of Agriculture has forecast China’s 2012 total meat production to increase three per cent year-on-year, to 81.4 million tonnes.


Pork production is expected to continue to account for the predominant share, at 63 per cent of total meat output, followed by poultry (23 per cent), beef (seven per cent) and sheep meat (six per cent).

Meat and Livestock Australia market analysts say that China’s beef production has been forecast to continue its downward trend into 2012, falling one per cent on 2011, to 5.5 million tonnes, as the cattle herd is anticipated to decline one per cent year-on-year, to 46.2 million head.

Contributing to the decreased beef production has been the comparatively poor returns to beef cattle farming relative to swine and poultry farming.

The longer production time for beef cattle, combined with continuing high feed prices have created significant disincentives for small producers, who account for the vast majority of China’s cattle operations.

High labour costs, rising utility bills, transportation, and water expenses have also limited beef production growth potential, MLA says.

Following the slow domestic beef production, China was expected to increase beef imports by seven per cent to 45,000 tonnes cwt in 2012. Beef exports were also forecast to increase four per cent to 57,000 cwt, fuelled by strong demand in China’s traditional markets in Asia.

[Mustang Sally Farm]

Monday, November 28, 2011
Asian Meat Consumption Performing Strongly
ANALYSIS - Animal protein has become increasingly important in Asian diets over the past decade, according to Peter Duggan from the Strategic Information Services of Bord Bia-Irish Food Board.


This surge in demand is being helped by strong GDP growth, increasing tourism and existing retailers gradually shifting their focus to secondary and tertiary towns and cities.

However, while there appears to be a surge in meat consumption in the Asian countries, they still lag some distance behind the more developed countries with the greatest density of consumption in the US and Australia. The big meat producing countries of South America and Europe also have high meat consumption per head of population, writes ThePigSite Editor in Chief, Chris Harris.

According to Dr Henning Steinfeld from the Food and Agriculture Organisation of the UN, by 2050 the world will need 50 per cent more food and between 70 and 80 per cent more meat to feed a population that is expected to grow by 30 per cent.

Pork and poultry consumption accounts for the vast proportion of animal protein in a typical Asian diet, and this is down to the fact that these meats are produced more quickly and less expensively than beef.

The recent World Agricultural Supply and Demand Estimates gave some cheer to beef producers as it predicted that while beef and broiler production forecasts for 2011 have been lowered and pork and turkey production increased, beef export forecasts for 2011 and 2012 are raised slightly as strong global beef demand supports continued gains in US exports to a number of Asian markets.

But in the long term, global meat consumption is expected to grow by 40 million tonnes in the decade from 2010 to 2020.

In China alone, pork consumption equates to over half of total meat consumption of SE Asian countries that also include the Philippines, Viet Nam, Indonesia, Taiwan, Thailand, Malaysia and Hong Kong.

Consumption now stands at 38kg per head, an increase of 19 per cent on 2001 levels. Asian meat consumption for the SE Asia countries and China is expected to show a 30 per cent increase on 2001 levels.

At the recent World Pork Conference in Germany, Richard Brown from market analysts Gira said that a third of the growth in meat consumption, which will favour cheaper meat cuts and products at present because of the global economic situation, will come in China and 60 per cent of that growth will be in poultry meat. Peter Duggan says that there are some promising trends that have appeared for beef consumption in countries like Viet Nam, Hong Kong and Malaysia according to a recent report by Meat and Livestock Australia.

The strongest growth has been evident in Viet Nam, where consumption over the last six years has risen by 114 per cent to 541,000 tonnes.

Some further strengthening in Vietnamese consumption looks likely as beef import tariffs are set to fall over the coming years.

Strong demand is also evident on the Hong Kong market, but some doubts surround these figures due to an unknown volume of meat imports being re-exported.

In most of the selected countries, the retail grocery sector is expected to boom over the coming years reflecting a growing middle class community combined with an expending retail reach.

Most of these countries with the exception of Singapore and to a lesser extent Hong Kong are expected to post extremely strong double digit in this area over the next five years.

This development is likely to help boost meat consumption levels and allow further opportunities for meat exporters to develop their business to these regions even further.

Asian Meat Consumption (millions of tonnes)

[Mustang Sally Farm]

Tuesday, November 29, 2011
Prices Stay High in Difficult Times
ANALYSIS - There have been some unusual movements in the global agricultural and livestock markets recently, writes TheMeatSite editor in chief Chris Harris.

It seems that the pig and beef sectors around the world are seeing fewer slaughter numbers and higher prices.

And these trends look likely to continue for some time, particularly as they have been affected by reductions in the pig and cattle herds.

In the US, market analysts Steve Meyer and Len Steiner reported that the CME live prices are nearing record highs at $124.90/cwt and the cut out prices for Choice beef has hit $196.64/cwt.

While in the past, spikes in prices have been followed by swift fall, it is felt that the strong prices are likely to continue for the next two years.

Much of the reasoning behind the forecast is not only a drop in slaughter numbers in the US, but also slaughter weights and beef production in general, which is 3.8 per cent lower than a year ago.

There is a similar picture north of the border in Canada, where there is a continued drop in the Canadian beef herd combined with the reduced supply from the US.

The Alberta government reports that the rise in cattle prices that started in 2010 has continued throughout this year, bringing a smile back onto the faces of the Canadian beef producers.

Prices for prime feeder cattle have now reached around C$161/cwt - levels not reached since 2003.

Across the Atlantic, the European cattle trade is strong and over the last year it has achieved what a few years ago in the face of falling cattle numbers would have been thought to be impossible - a beef surplus.

For the first eight months of the year, the EU exported around 200,000 tonnes of beef more than it imported.

One of the main reasons has been the change around in the global financial situation, particularly the rising values of the South American currencies compared to the EU and even the US.

This has led to the major beef producing countries in South and North America and Australia seeing prices around the EU level of between €3.50 and €3.80 a kilo.

While this has levelled out prices, the South American market has still been hit by concerns over sanitary controls from the EU market and imports of Brazilian beef have dropped to just 80,000 tonnes. In 2007 they were 363,000. Similarly Argentina, that has also seen domestic government restriction son it beef exports, has seen exports to the EU drop by two thirds to 42,000 tonnes from 122,000 tonnes.

The pig sector in North America - both the US and Canada - has already seen a sharp reduction in the breeding herd, and this has brought about a reduction in sow slaughter.

Steve Meyer believes that when the USDA produce figures in December on the latest state of play for the pig sector, the breeding herd will appear reasonably stable.

While some producers have reduced their sow numbers, particularly if they wanted to concentrate on the presumed profits from corn and soybeans, others have retained gilts. However, with a stable breeding her, the US has seen output grow and the increased output is expected to be carried over into 2012.

Going forward, prices in the US are still going to be affected not only by numbers, but also feed prices, fuel prices and currency fluctuations. The present economic situation will have a far reaching impact well into next year and beyond and this situation will also be reflected in Europe.

For instance at present, in Europe, pig prices have remained high and processing companies are starting to gear up for the Christmas boom in the pig trade.

Coming into 2012 they too will be affected by what happens to the global economic picture and in turn domestic economies are also going to be affected by agri-commodity market speculation and fluctuations.

In the UK on Tuesday (29 November) in the Chancellor of the Exchequer's autumn statement, George Osborne, warned that much of the future success for the UK's recovery depended on what happens on both fuel and agriculture and food prices.

This is not only a concern for the UK economy but every economy trying to reduce its deficit and balance the books.


Chris Harris, Editor-in-Chief

[Mustang Sally Farm]

Wednesday, December 07, 2011
Food & Agriculture Exports Jump to New High
SOUTH KOREA - South Korea's exports of food and other agricultural products surged to a new monthly high for the year last month, largely on growing demands from Japan and China, the government commented.


The country shipped US$654.9 million worth of food and agricultural products in November, up 15.1 per cent from the same month last year, according to the Ministry of Food, Agriculture, Forestry and Fisheries.

In the first 11 months of the year, South Korea exported $6.6 billion worth of food and agricultural products, already surpassing the $5.88 billion for the whole of 2010.

"Exports to newly emerging countries continued to grow throughout the year with exports to China growing 43.8 per cent (on-year) and the Association of Southeast Asian Nations (ASEAN) surging 38 per cent," the ministry said in a press release.

As of the end of November, the number of countries that have purchased over $100 million worth of products from South Korea this year came to 11, the largest ever in history, it added.

Exports to Japan have also grown 24 per cent so far compared to all of 2010, exceeding $2 billion for the first time since 1999, according to the ministry.

"At the current pace, the country's exports to Japan will likely reach an all-time high this year," it said.

[Mustang Sally Farm]

Tuesday, December 13, 2011
China's Economic Trends Drive Change to Modern, Efficient Agriculture
ANALYSIS - With a growing population but a shrinking rural population, China's farmers are changing from man-power to iron horse-power as they move to a more contemporary approach to agriculture, writes Sarah Mikesell, senior editor of ThePigSite.

China's Economic and Agricultural Trends
China is clearly experiencing a rise in their standard of living which is resulting in a change in their consumer habits, said Alexander Haus with VDMA at the Sino-European Conference "The Rising Professional Approach in China's Agriculture" held during Agritechnica in Hannover, Germany.

"We see China's households moving toward higher quality food and their everyday food mix is changing to include more meat, milk, wheat noodles and potatoes," Haus said. "Self-sufficiency for basic food products one of the main targets for China's central government."

Larger state-owned and private farms are already dominating the leading areas for field crops. China's made no secret of the fact that state-owned and private companies are investing in agriculture outside of China in an effort to ensure food security.

The average farm size in China is increasing rapidly. And with fewer farmers living in rural areas, China has compensated with increasing their accessibility and use of agricultural equipment. The average agricultural mechanization use in 2000 was only 20 per cent, but annual growth of the last 10 years was about three per cent. However, Haus said the use of farm equipment varies dramatically depending on the area, noting that it's as high as 90 per cent in Heilongjiang.

China is also seeing a growing demand for contracted services with small and medium-sized farmers contracting for different types of field work in the arable sector. Contractors are very well equipped with agricultural machinery, and the general decision about which machinery to invest in is based on return of investment.

Agricultural Machinery Market in China
China's agricultural machinery market is the second largest global market after the US. Over 95 per cent of agriculture machinery is locally-made. The main scope for the last five years has been on the basics - tractors and harvesting machinery. However, the core scope for the next five years will be on more modern implements, including soil-working, seeding and plant protection machinery as well as livestock equipment.

Various international brands are successfully operating in China and European suppliers are playing an important role in the agricultural machinery sector. China is already among the top five countries exporting tractors and agricultural equipment and continues to see growth, said Haus.

Expectations and Perspectives
"The structural changes in agriculture and growth of mechanization will continue to move forward, increasing demand for efficient machinery," Haus said. "The main customers for high-tech machinery will be larger state-owned and private farms as well as contractors and cooperatives."

Haus believes China's central government will continue to strongly support the farming sector. And machinery investment decisions will depend not solely on price, but more on the price-performance ratio, return on investment, product quality and service provided.


Sarah Mikesell, Senior Editor

[Mustang Sally Farm]

US Cattle Outlook – December 2011
Beef exports will continue to grow, whilst dairy exports are expected to fall next year, according to the latest Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service.


Pork/Hogs: October pork exports were more than 42 per cent greater than a year ago, propelled primarily by very strong Asian demand (ie, Japan, China, and South Korea). Strong export growth is expected to continue through the fourth quarter, before tailing off in 2012. Total US pork exports are expected to be 5.1 billion pounds, both this year, and in 2012.

Beef/Cattle: Disproportionally large cow slaughter has kept average dressed weights lower during most of 2011 than if steers had constituted half or more of beef slaughter, as they typically do. Packer margins and high feed and feeder cattle prices are exerting downward pressure on fed cattle prices.

Beef/Cattle Trade: US beef exports are expected to increase by 21 per cent in 2011. Although US domestic beef supplies will be 5 per cent lower in 2012, exports should remain strong and stay about even with levels exported this year. As tight global beef supplies will continue into next year, US beef imports are expected to increase only moderately into 2012.

Poultry: Sharply lower broiler chick placements and slower growth in bird weights have lowered the fourth-quarter 2011 broiler meat production estimate by 25 million pounds to 9.0 billion pounds and resulted in decreased estimates for the first and second quarters of 2012. The lower production is expected to gradually lo'wer stocks. Turkey production was basically unchanged in October as slightly higher bird numbers were offset by lower bird weights. Cold storage holdings for whole turkeys continued below those of a year earlier, putting upward pressure on prices.

Poultry Trade: Broiler and turkey shipments rose in October. Broiler exports totaled 689.7 million pounds, a 2.5- per cent increase from a year ago. Turkey exports totaled 59.2 million pounds, an increase of 20.7- per cent from October 2010.

Sheep/Lamb: The sheep industry, buoyed by strong prices and an industry policy to grow the inventory, may be poised to see its first inventory increase since 2006. Consistently high Choice Slaughter lamb prices at San Angelo coupled with reductions in production and live trade may be signaling increased retention.

Dairy: An improved feed price outlook is balanced by lower milk prices in 2012. Production in 2012 is forecast to rise slightly based on higher milk output per cow. Exports are likely to decline next year compared with 2011, contributing further to the lower milk price outlook.


Beef/Cattle
Large Cow Slaughter Holding Average Dressed Weights Lower
Thus far in 2011, federally inspected cow slaughter has been large relative to the January 1, 2011 cow inventory, surpassing last year’s cow slaughter for the same period, which was also atypically large for its January 1 inventory. Year-to-date (through November 26, 2011), cumulative weekly federally inspected cow slaughter in 2011 was 4.3 per cent greater than for the same period in 2010. For beef cows, year-to-date slaughter in 2011 was 14 per cent above the same period in 2009, while dairy cow slaughter was only 2 per cent above 2009 slaughter. Because cows generally have lower dressed weights than steers, heifers, or bulls, these atypically large proportions of cow slaughter have resulted in lower average dressed weights for all cattle than trend lines and typical steer and heifer dressed weights and proportions of total slaughter would indicate.

Beginning with December 2009 prices for 750-800 pound Medium and Large No. 1 Oklahoma City feeder cattle prices that were 4 per cent above 2008 prices, feeder cattle prices have exhibited year-over-year increases every month. Increasingly scarce supplies of feeder cattle, especially heavier, older yearlings, make it likely that feeder cattle prices will continue high for the next 2 or 3 years until calf crops begin increasing year-over-year. Additional longer term support for feeder cattle prices will come as the expected lower corn and feed prices materialize in 2012-13.

March was the only month in 2011 that did not have higher year-over-year placements of feeder cattle under 600 pounds. This has resulted in an atypical inversion of price premiums between Central and Southern Plains fed cattle prices (See Cattle Sector Production Practices and Regional Price Differences, http://www.ers.usda.gov/Publications/LDP/2011/04Apr/LDPM2021/). January, July, and September are the only months in 2011 (through November) in which Texas-Oklahoma fed steer prices (35-65 per cent Choice) were higher than Nebraska fed steer prices (65-80 per cent Choice)..

Despite the high fed cattle prices, profit margins have stayed at breakeven levels or lower, in some cases much lower. In addition, cattle feeders continue to place expensive feeder cattle in anticipation of higher fed cattle prices in 2012, when supplies of fed cattle are expected to become scarce. However, fed cattle supplies will likely continue at or near current levels until sometime during the first half of 2012 because of the large numbers of lightweight feeder cattle that were placed on feed during the last half of 2011. These fed cattle will likely be marketed during the first half of 2012.

Packer margins are negative at a time when they typically recover. Negative margins have driven packers to reduce slaughter numbers somewhat and have dampened their willingness to continue to pay the record and near-record-high prices for fed cattle.


Beef/Cattle Trade
Foreign Demand for US Beef To Remain Strong into 2012
US beef exports for 2011 continue to remain robust. Twenty-one-per cent growth is expected this year as beef exports are forecast at 2.78 billion pounds. Key factors supporting the strong export market in 2011 are: (1) increased demand for US beef as disposable incomes of foreign consumers increase, (2) a worldwide multi-year decline in total cattle inventories and beef production, (3) an increased number of foreign countries purchasing US beef, and (4) a favorable exchange rate (with a relatively weaker US dollar making US product more attractively priced in global markets).

Through October, the largest increases in US beef exports have come from South Korea (+45 per cent), Japan (+31 per cent), and Canada (+33 per cent). Along with Mexico (+1 per cent), these countries are the largest importers of US beef, totaling almost two-thirds of the total US beef exported through October 2011. Notably, export totals to Hong Kong (+41 per cent), Egypt (+23 per cent), and Russia (+85 per cent) have also posted strong growth increases. Through October, the seven countries listed above imported just over 80 per cent of total US beef exports. In 2012, with US beef production expected to be down 5 per cent, total exportable supplies will be squeezed. The strength seen in the export market, however, is expected to continue into next year, including growth in Asian markets. Although there will be a tighter US supply, beef exports are expected to be about even with this year’s levels.


2012 Beef Imports to the United States Expected To Show Only Modest Recovery
US beef imports for 2011 are expected to be 11 per cent below year-earlier levels, at 2.05 billion pounds. Through October, imports from traditional major suppliers are down. Imports from Australia and Canada are down 25 and 22 per cent through October. These two countries have historically been beef suppliers to the United States, and, combined in the last 10 years, have averaged over 60 per cent of total US beef imports in the last 10 years. Imports from New Zealand (-3 per cent), Brazil (-53 per cent), and Uruguay (-11 per cent) are also lower year-over-year, while imports from Mexico (+49 per cent) and Central America (+29 per cent) through October are higher. The increase in federally-inspected plants in that country, as well as increased grain-fed beef production, are increasing the supply of higherquality, exportable beef. Tight global beef supplies, however, will continue into 2012 when US beef imports are expected to increase by 2 per cent to 2.09 billion pounds.

Dairy
Higher Domestic Milk Production and Stronger Competition in Export Markets Will Lower Milk Prices in 2012
The December corn price forecast for 2011/12 is $5.90 to $6.90 a bushel. This adjustment represents a lowering of 30 cents a bushel on each end of the price range from last month. Although the 2011/12 use numbers were changed only slightly, prices received by farmers are reported to be below cash market bids, reflecting deliveries of grain that were forward-priced earlier in 2011. Also, declines in futures prices since November have tempered the price outlook for the coming months. Soybean meal prices have also been lowered, the December forecast being $280 to $310 a ton in 2011/12. Lower forecast production is balanced by lower expected domestic use. The preliminary November price for alfalfa hay was reported in the Agricultural Prices report at $198 a ton, a slight decline from October’s reported $206 a ton but still well above year-earlier prices. With a return to more normal weather conditions next year, alfalfa hay prices should moderate in 2012. The preliminary milk-feed price ratio for November was estimated at 1.80, virtually unchanged from October but well below the 2.23 a year earlier.

Cow numbers were virtually unchanged from the November forecast at 9,200 thousand head for 2011 and remain at 9,190 thousand head in 2012. Dairy cow slaughter for the January to October 2011 period is about 4 per cent above slaughter for the corresponding period of 2010 according to the November Livestock Slaughter report, and replacement heifer prices are steady. This suggests no major liquidation is in the offing, but cow numbers are expected to decline slightly next year. Output per cow continues to rise, and lower expected feed prices are the basis for the increase in the December projected output per cow to 21,315 pounds this year and 21,610 pounds next year. Slightly more milk is forecast in December than in November, both this year and next. Production is forecast at 196.1 billion pounds this year, rising to 198.5 billion pounds in 2012.

Fat-basis milk equivalent dairy import forecasts in 2011 were raised this month to 3.3 billion pounds, based on slightly higher imports of butterfat and food preparations. In 2012, fat-basis imports are forecast at 3.2 billion pounds, unchanged from the November forecast but down from 2011. Skim-solid basis import forecasts were left unchanged from last month at 5.3 billion pounds. In 2012, skim-solid basis imports are forecast to fall slightly to 5.2 billion pounds.

Milk equivalent fat-basis exports were raised slightly this month to 9.3 billion pounds. The export total was raised due to higher than expected milk and cream shipments. Next year, fat basis exports are forecast at 8.6 billion pounds, unchanged from last month. This year’s skim-solid basis exports are forecast at 33.6 billion pounds, up from November due to stronger skim milk powder exports. Next year, the forecast is unchanged from last month at 31.9 billion pounds. Increased global production will likely present stronger competition for US exporters of skim powder products.

Commercial domestic use is projected at 188.8 billion pounds fat basis for 2011 and 191.9 billion pounds in 2012. Commercial domestic use on a skim-solid basis is forecast to reach 166.9 billion pounds this year, a decline from November’s forecast, but an increase from 2010. Next year, skim-solid domestic use is forecast to rise from 2011 to 171 billion pounds, an increase from November expectations and a 2.5 per cent rise above 2011 expected totals.

Cheese prices are forecast to average $1.820 to $1.830 a pound in 2011, unchanged from November’s forecast, but are projected lower in 2012 at $1.675 to $1.755 a pound. Domestic use of cheese was lower in the third quarter of 2011 compared with 2010, and both domestic and Oceania prices have recently declined sharply, supporting the lowered price forecast. Recent weakness in butter prices has led to a lowering of 2011 butter prices from November projections to $1.935 to $1.965 a pound in the December forecast. Stronger global competition in 2012 is expected to moderate butter prices even further in 2012. Butter prices are forecast at $1.605 to $1.715 a pound next year. Higher global production will similarly affect NDM prices. NDM prices are projected at $1.495 to $1.515 a pound this year, a slight downward revision from last month. Next year, prices are expected to drop more significantly to $1.360 to $1.420. The outlier is whey. Exports have been brisk in 2011 and are likely to continue strong in 2012. Whey prices are forecast at 52.5 to 53.5 cents a pound in 2011, unchanged from last month. Next year, prices are expected to rise from 2011 to 53.5 to 56.5 cents a pound, a substantial upward revision from November.

Milk prices will be lower next year based on lower product prices. Class III prices are expected to be $16.90 to $17.70 per cwt next year, down from an expected $18.30 to $18.40 per cwt in 2011. Lower cheese prices will probably overcome the relative strength in whey prices, lowering the Class III price. The Class IV price is also expected to be lower in 2012 at $16.35 to $17.25 per cwt, a decline from $18.95 to $19.15 per cwt in 2011. The 2012 all milk price is forecast at $18.10 to $18.90 per cwt, down from $20.05 to 20.15 per cwt in 2011.


Pork/Hogs
Fourth-Quarter Pork Export Forecast Increased On Strong Asian Demand
The US pork industry is expected to ship 1.4 billion pounds of pork products to foreign destinations in the fourth quarter of this year, an increase of more than 22 per cent over the same period in 2010. Sales are expected to be strong to Asia, where demand for US pork is expected to increase year-over-year due to a combination of factors, including continued low-exchange values of the US dollar and government efforts to moderate consumer pork price increases brought about, in part, by recent outbreaks of various swine diseases. With larger fourth-quarter exports, total exports for 2011 are expected to reach slightly more than 5.1 billion pounds, an increase of 21 per cent over exports in 2010.

Export growth next year is expected to tail-off as Asian pork production increases, and consumer food price inflation abates. Total US pork exports in 2012 are expected to be about the same as this year, 5.1 billion pounds.

Pork products available to the domestic US market, evaluated in terms of retail weight per capita quantities, are likely to be year-over-year larger next year for the first time since 2009. With higher domestic availability, the average 2012 price of live-equivalent 51-52 per cent lean hogs should decline about 1.6 per cent, averaging $63-$68 per cwt, compared with $66.32 in 2011. Further declines in hog prices are likely to be checked by expected lower 2012 poultry production (-1.8 per cent, yearover- year) and sharply lower 2012 beef production (-4.6 per cent, year-over-year). Substitution effects from higher retail prices for poultry and beef prices should keep 2012 retail pork prices in the high $3.40s per pound.


Shipments to Asia Continue To Lift US Pork Export
US pork exports in October were over 482 million pounds, more than 42 per cent above October 2010 shipments. Similar to patterns set early in 2011, 80 per cent of October exports went to five countries: Japan (+37.8 per cent year-over-year), China (almost 4 times greater than a year ago), Mexico (+.3 per cent year-over-year), Canada (+27.4 per cent year-over-year), and South Korea (+64.5 per cent yearover- year).

US pork imports in October were 69 million pounds, 11 per cent less than a year earlier. As has become the norm, almost 12 per cent of October imports were of Danish origin, and 77 per cent came from Canada. Imports from Denmark were almost 15 per cent ahead of a year ago, while shipments from Canada were off by more than 14 per cent. Live swine imports from Canada in October were almost 498,000 head, 9 per cent above a year ago. All categories of finishing animals (segregated early-weaned pigs and feeder pigs) were up strongly, while slaughter hog imports declined 9 per cent compared with October 2010.

USDA will release the Quarterly Hogs and Pigs Report on December 23. The report will contain December 1 hog and pig inventories, as well as fourth-quarter (September-November) farrrowing, pig crop, and litter rate information. Additionally, the report will detail producers’ second set of farrowing intentions for the first quarter of the new year (December-February (2012)), and the first set of producers’ farrowing intentions for the second quarter (March-May) of 2012.

[Mustang Sally Farm]

Poultry
Broiler Meat Production in October Falls by 3 per cent
Broiler meat production, which has fallen in 3 of the last 4 months, totaled 3.1 billion pounds in October, down 3 per cent from the previous year. Total broiler meat production during the first 10 months of 2011 was 31.4 billion pounds, 2.6 per cent higher than in the same period a year earlier. In October, the number of birds slaughtered fell to 700 million, down 3.2 per cent from the previous year, as integrators have been reducing the number of chicks placed for growout over the last several months. The lower number of birds slaughtered was partially offset by an increase in the average live weight of birds at slaughter, up fractionally to 5.94 pounds. Average broiler weights at slaughter are expected to continue higher in November and December, but the rate of growth is expected to be much slower than it was over the first three- quarters of 2011. With these expected changes, the estimate for fourth-quarter 2011 broiler meat production was decreased 25 million pounds to 8.98 billion pounds, 5.4 per cent below the previous year. This lowers the annual forecast for broiler meat production in 2011 to 37.3 billion pounds, an increase of 1 per cent from 2010. The broiler meat production projections for firstand- second-quarter 2012 were each reduced by 100 three quarters of 2012. The revised forecasts in the first two quarters are down 5.3 and 4.2 per cent on a yearover- year basis, and the revised total broiler meat production for 2012 is now 36.5 billion pounds, down 2.1 per cent from 2011.

With relatively high corn prices forecast for the remainder of 2011 and into 2012, and with relatively weak prices for most breast meat products, broiler integrators are expected to scale back production through much of 2012. The number of chicks being placed for growout continues to be well below that of the previous year. Over the last 5 weeks, (November 5 to December 3), chick placements have averaged 154 million, down 6.6 per cent from the same period in 2010. Chick placements are expected to remain below year-earlier levels through the first half of 2012 and gradually pull even with and then exceed year-earlier levels in the second half of 2012.

Cold storage holdings of broiler products at the end of third-quarter 2011 were revised downward slightly to 639 million pounds, down 6 per cent from the previous year. With strong declines in broiler meat production expected in fourth-quarter 2011 and the first two quarters of 2012, ending stocks are expected to remain below year-earlier level through third-quarter 2012.

Broiler stocks at the end of October totaled 667 million pounds. This is an increase of around 28 million pounds from September, but still about 5 per cent lower than the previous year. Stocks for most broiler products continue to be well below their year- earlier levels, with the exception of breast meat products. With lower yearover- year production expected and resulting lower stocks levels, broiler product prices are expected to get some upward pressure.

Prices for almost all broiler products were higher in November than the previous year. The lone exception was whole broilers, which are still considerably lower (down 6 per cent). Strong exports continue to place upward pressure on leg quarter prices (up 31 per cent) and other leg meat products such as boneless/skinless thighs (up 27 per cent) and whole thighs (up 44 per cent).

The forecast lower boiler production levels through the first half of 2012 are expected to gradually place upward price pressure on almost all broiler products. Whole bird prices are expected to be at $0.77-$0.78 per pound in fourth-quarter 2011, down 3 per cent from the previous year. However, prices in 2012 are expected to increase and be above year-earlier levels throughout the year.


October Turkey Production Even with Year Earlier Output
Turkey meat production in October totaled 525 million pounds, almost identical to production a year earlier. Although the total meat production was unchanged, the number of turkeys slaughtered rose by 0.5 per cent to 23.3 million. The increase in the number of birds slaughtered was offset by a slight decline in the average weight at slaughter from a year earlier to 28.3 pounds.

The fractional growth in turkey meat production in October contrasts to the strong expansion in production over the first half of 2011, when production was up 5.5 per cent compared with the same period in 2010. Over the first 10 months of 2011, turkey meat production has been 3.4 per cent higher. The second half of 2011 is expected to be a sharp contrast as production was only 0.5 per cent higher in the third quarter, and the fourth-quarter production forecast is 1.5 billion, only 0.3 per cent above the previous year.

With little growth in production and turkeys being taken out of storage in preparation for the Thanksgiving holiday, stocks of all turkey products fell by over 100 million pounds between the end of September and the end of October. Total turkey stocks were 407 million pounds at the end of October, down almost 1 per cent (0.7) from the previous year. This is a significant change from stocks at the end of September that were 7.6 per cent higher than the previous year.

Declines in stocks of whole birds accounted for 69 per cent of the decline in total turkey product stocks from September to October. Whole turkey stock levels always decline at this point in the year, but stocks of whole birds fell by almost 71 million pounds, dropping the level for whole birds to 209 million pounds, almost 14 per cent lower than the previous year. Whole bird stocks at the end of September were only 2.6 per cent lower than the previous year. The decline in stocks of turkey products was much less (down 32 million pounds), and stocks of turkey products at the end of October were 199 million pounds, 18 per cent higher than in October 2010.

With the steep October decline, the estimate of ending stocks for 2011 was lowered to 205 million pounds, down 10 million pounds from the previous estimate but still 7 per cent higher than a year earlier. The stock estimate for first-quarter 2012 was lowered by 15 million pounds to 325 million. However, the estimates for the second and third quarters were both increased to 500 million pounds. Anticipating a strong drawdown in stocks during in the holiday period in 2012, ending stocks for 2012 were reduced by 10 million pounds to 200 million.

During the first 11 months of 2011, the national price for whole hens has been higher than the previous year on a year-over-year basis. Prices for November were $1.14 per pound, up 7 per cent from a year earlier and 38 per cent higher than the 2009 price. Prices are expected to decline seasonally in December but remain well above a year earlier, and the average for fourth-quarter 2011 is forecast at $1.10- $1.11 per pound, an increase of over 6 per cent from fourth-quarter 2010. Lower stocks of whole birds during most of 2011 have placed upward pressure on prices. Even with higher production, low stock levels at the start of 2012 are expected to pressure prices higher and whole hen turkey prices are expected to average $0.90- $0.94 per pound in first-quarter 2012, an increase of approximately 2 per cent from the previous year. However, production gains in 2012 are expected to gradually reduce prices, with hen prices in the second and third-quarters lower than the previous year.

Over the first 10 months of 2011, turkey poults placed for growout totaled 232 million, an increase of 0.9 per cent from the same period last year. The small increase would indicate that turkey production in the first half of 2012 is likely to be close to or slightly higher than in 2011. Given the strong wholesale prices for whole birds and most turkey products in the second half of 2011, turkey producers would normally be more heavily expanding production, but forecasts for continued high feed prices and a weak domestic economy through 2012 are likely contributing to producer resistance to expand.


Table Egg Production Continues Higher
The table egg laying flock in October was estimated at 282 million hens, 0.9 per cent above the previous year. Changes in the table egg flock numbers on a year-overyear basis have generally been lower in 2011. The flock size was higher in only 3 of the first 10 months, although table egg production has been higher throughout the year. The table egg flock is expected to remain higher than the previous year through the remainder of 2011, but only slightly. At the beginning of November the estimate of the number of birds in the table egg flock was down, but the decrease was less than 1 per cent. With expected higher feed prices and continuing economic uncertainties, egg producers are not expected to have much of an incentive to expand production in 2012.

Even with table egg production higher throughout the first 10 months of 2011, total production has been 5.5 billion dozen, only marginally higher (0.8 per cent) than the same period in 2010. In October, production was 562 million dozen, an increase of 1.9 per cent from the previous year. Fourth-quarter 2011 table egg production is estimated at 1.69 billion dozen, or about 1.1 per cent higher than the previous year. Even with the higher forecast, table egg prices are expected to remain strong through the end of the year. The fourth-quarter 2011 wholesale price for one dozen Grade A eggs in the New York market is forecast to average $1.27 to $1.28, up about 10 cents per dozen from third-quarter 2011 and about 4 per cent higher than a year earlier.

Hatching egg production has been lower than the previous year through the first 10 months of 2011. Over the first half of 2011, hatching egg production was down by relatively small amounts per month, but since July the declines have been much sharper, averaging around 3 per cent per month. Although there have been some declines in the number of egg-type eggs produced, the majority of the decline has come from a lower number of broiler-type eggs. The decrease in the production of broiler-type eggs is expected to continue through the first half of 2012 or until broiler integrators begin to expand production.


Total Egg Exports Fall in October
Monthly exports of eggs and egg products had been mostly higher in 2011 on a year-over-year basis through September, but fell in October to the equivalent of 22.4 million dozen eggs, 13.3 per cent below a year earlier. The exports were down to Canada, Hong Kong, and Germany and a number of smaller markets, but were partially offset by higher shipments to Japan and Mexico. Exports of both shell eggs and egg products declined in October, with shipments of shell eggs at 11.5 million (down 12 per cent) and shipments of egg products at the equivalent of 10.9 million dozen (down 12 per cent). The October shipments were likely impacted by strengthening US prices. Domestic shell egg prices have continued to strengthen in November and into December. Over the first 10 months of 2011, total egg shipments were 232 million dozen, up 6.7 per cent from the same period in 2010.

Poultry Trade
Broiler Shipments Remain Strong in October
October broiler shipments were up from a year ago. Broiler meat shipped in October 2011 totaled 689.7 million pounds, a 2.5- per cent increase from the same period in 2010, although last October shipments in 2010 were at the highest monthly volume recorded that year. There are several notable differences in trade flows between 2011 and 2010. Shipments to Russia in October 2010 totaled 211 million pounds, which accounted for 31.5- per cent of the US broiler exports for that month. In October 2011, Russia imported only 64.4 million pounds, a 69.5- per cent reduction. One reason for this big change is that imports were high in 2010 as the US re-entered the Russia’s market following resolution of trade restrictions.

Another market that made a considerable difference in 2011 October broiler shipments was Hong Kong. Broiler shipments to Hong Kong totaled 55.7 million pounds in October 2011, a 45-per cent increase from last October. In October 2010, shipments to Angola totaled only 14.4 million pounds. However, 12 months later these shipments rose to 60.5 million pounds, a 320-per cent increase from a year ago. Secondary markets also imported more broiler meat in October 2011, offsetting lower shipments to Russia.


Turkey Shipments Rose in October
Turkey shipments totaled 59.2 million pounds in October, up 20.7- per cent from a year ago. Shipments to the largest US market, Mexico, totaled 31.4 million pounds, accounting for 53 per cent of total turkey exports. Exports to China, the second largest US turkey market, rose considerably in October, from 3.2 million pounds in October 2010 to 5.2 million pounds in October 2011. Sizable turkey shipments also went to the Philippines, for an increase of over 1 million pounds from a year earlier. Through October, turkey exports are up 23- per cent in 2011.

Sheep/Lamb
Sheep Industry Buoyed by Strong Prices and Industry Policy
The sheep industry, with strong prices and an industry policy to grow the inventory, may be poised in 2012 to see its first inventory increase since 2006. A number of factors points to this. The 2011 live auction slaughter lamb prices at San Angelo, Texas have consistently remained above 2010 levels. Choice Slaughter lamb prices at San Angelo have remained in a fairly narrow range, between $155-$175 per cwt for the entire year. Though fourth-quarter Choice prices are forecast at the bottom of that range at $155-$156 per cwt, continued high prices could trigger a higher than normal rate of lamb retention as producers engage in herd rebuilding in anticipation of even higher prices.

At the beginning of the year the industry launched a “let’s grow program” designed to encourage producers to increase their flocks. Indications are that this policy may be working, as producers appear to be holding on to their animals for longer periods. For the first three quarters of 2011, less than 54,000 head of live sheep (mainly older ewes) were exported, a decline of 58 per cent from the same period last year. In 2010, the number of live sheep exports exceeded 150,000 head. Live exports for 2011 are expected to be significantly lower than in previous years.

Signs of increased retention can also be seen in the sharp drop in production. Although sheep inventory was about 2 per cent lower on January 1, 2011, compared with the previous year, with similar per centage declines in both the breeding inventory and market lambs, lamb and mutton production has been down 8 per cent in the first three quarters of 2011 compared with the previous year and is forecast to be down around 9 per cent for 2011. Through October 2011, the number of sheep slaughtered was 11 per cent lower than in the same period last year. Fourth-quarter 2011 commercial production of lamb and mutton is forecast at 37 million pounds. This is about 13 per cent below the fourth quarter of 2010. Typically, distinct seasonal increases begin in the fourth quarter, but in November less than 12 million pounds of lamb and mutton were produced and December is expected to be below 2010. It is likely that high prices and increased retention could be contributing to the low production levels in 2010.


Lamb and Mutton Trade Still Vibrant
Despite fairly strong Australian and New Zealand currencies relative to the US dollar and a slow economic recovery during 2011, imports have been relatively strong, continuing to offset tight domestic supplies. For the first 10 months of 2011, lamb and mutton imports were 140 million pounds, up 6 per cent from the same period last year. Imports for October 2011, though typically lower than most other months, were 16 per cent above the same period last year. Fourth-quarter 2011 imports are forecast at 43 million pounds, 2 per cent above the same period last year. Import increases are expected for the rest of 2011, as continued tight domestic supplies are expected to persist.

Lamb and mutton exports have shown strength and are forecast at 18 million pounds for 2011, up 12 per cent from 2010. October exports were 1.6 million pounds, 80 per cent higher than last year. Fourth-quarter 2011 exports are forecast at 4 million pounds, up 33 per cent above the same period in 2010.

[Mustang Sally Farm]

Monday, December 19, 2011
This Week's Pig News Round-Up
ANALYSIS - Russia and Ukraine have stepped up controls against African swine fever (ASF), writes Jackie Linden, senior editor. ASF is also in the news in Uganda, while FMD has been found in a pig as a Taiwan slaughterhouse. Pig producers in the north of the UK have been warned to look out for signs of swine dysentery and to step up biosecurity.

The Russian food safety and veterinary authority, Rosselkhoznador, has stepped up it measures to counter the outbreak of African Swine Fever (ASF) in the Kursk and Oryol regions.

The authorities are concerned that the disease could run rampant in the region which is close to the borders with Ukraine and Belarus.

In a bid to get a grip on the outbreak, Rosselkhoznador has enhanced its monitoring measures and introduced steps to eliminate ASF in the Kursk and Oryol regions. However, despite strict controls being implemented, the authorities appear to be fighting a battle to get on top of the disease.

Ukraine and the European Commission have reached agreement on taking joint measures to counter the spreading of ASF into the territory of Ukraine and the European Union member states, according to a statement made by the State Veterinary and Phytosanitary Service.

"We, jointly with the European Commission, have commenced work on creation of a control zone to avoid and suppress spreading of the virus onto the Ukrainian and, of course, the European territory," said Agrarian Policy and Food Supplies Minister, Mykola Prysiazhniuk.

He added that, during a meeting with EU Commissioner for Agriculture and Rural Development, Dacian Ciolos, agreement was reached on stepping up control over movements of animal products, grain from the Russian territory affected by ASF, and also control over migration of wild animals.

In Uganda, residents of Adjumani District have ignored health warnings about the risks associated with eating pork from pigs killed by ASF. Although the veterinary department placed a quarantine on pigs, the number of pigs killed by swine fever has risen from 60 to 120, in just two weeks, curity operatives and officials from the production department have arrested two residents of Patua Village for exhuming pig carcasses for consumption.

Pig farmers in the UK, particularly in Yorkshire, are being encouraged to raise their level of biosecurity, to join a producer group and to to be on the alert for signs of disease, following several confirmed outbreaks of swine dysentery in the UK recently. Our report covers what stockmen and farmers should be looking out for and what to do. In a more detailed report on control measures, eradication is a feasible solution in the medium term, according to a veterinarian based in the region. If the disease strikes, she recommended transparency with suppliers, neighbouring pig farmers and abattoirs to minimise the risk of spreading the infection.

With a growing population but a shrinking rural population, China's farmers are changing from man-power to iron horse-power as they move to a more contemporary approach to agriculture.

China is clearly experiencing a rise in their standard of living which is resulting in a change in their consumer habits, said Alexander Haus with VDMA at the Sino-European Conference held during Agritechnica in Hannover, Germany, recently.

Mr Haus said: "We see China's households moving toward higher quality food and their everyday food mix is changing to include more meat, milk, wheat noodles and potatoes. Self-sufficiency for basic food products is one of the main targets for China's central government."

Returning to disease issues, a pig with symptoms of foot and mouth disease (FMD) has been found in a Taiwan slaughterhouse.


Jackie Linden, Senior Editor

[Mustang Sally Farm]

Wednesday, December 21, 2011
CME: Drop In Domestic Meat Consumption Expected
US - USDA’s December forecasts indicate another sharp drop in US domestic meat and poultry consumption is coming in 2012, writes Steve Meyer and Len Steiner.


That should come as no surprise to industry observers but the cumulative reductions of the past few years are rather shocking in historical context. The top chart at right shows total US meat and poultry per capita consumption on a boneless equivalent (BE) basis from 1960 through 2011 with the 2012 observation representing the boneless equivalent of USDA’s December WASDE forecasts of retail weight consumption.

We use boneless equivalent here because it best represents the amount actually consumed by people after allowing for pet food usage (a major contributor to the difference between carcase and retail weight) and wastage such as bones and skin, the latter being an important factor for chicken.

These data indicate that the average American will consume 12.2 per cent less meat and poultry in 2012 that they did in 2007. Note that the high for BE consumption was in 1999 at just over 190 pounds per person. After a seven pound decline through 2001 due to reductions in domestic consumption of all three major species — primarily driven by growing exports –- total consumption stabilised from 2002 through 2007 at very near 189 pounds. Then came 2008 and the beginning of this precipitous drop.

The bottom chart shows the same data for each of the four major species with the vertical black line marking 2007. Note that that year marks the beginning of downtrends for all species, including chicken whose steady growth, before that point, had been practically bullet-proof. Even pork consumption, which had been quite steady since the early 1980s began to fall in 2008 and the downtrend for beef consumption accelerated. There are a number of reasons for the change. Among them are:

Growing exports. This is especially true for pork which saw exports jump by more then 40 per cent in 2008 and will set another record this year. Beef exports also grew as they recovered from the 2003 BSE discovery. Larger exports meant lower domestic “availability” and thus lower consumption. This began to be a real factor when production increases were limited by the next factor.

Higher costs. It is no coincidence that the rapid growth of cornbased ethanol production coincides with the downtrend in U.S. meat and poultry consumption. The first major diversions of corn to ethanol drove feed costs higher and producers of all species saw floods of red ink. Some reduced output. Others were forced out of business thus further reducing market supplies. Domestic availability was reduced in order to push prices high enough to cover the new level of costs. It was a classic economic response to a heretofore outside shock. Exploding oil prices added fuel to the fire (pun fully intended) by making ethanol, and thus corn as a fuel feedstock, even more valuable.

The fruition of 30-40 years of government policy. This doesn’t get a lot of talk but, to us, it is the elephant in the room. If the federal government and its agencies decide to wage war on a product and continue that war for long enough, it will eventually have an impact. And the feds have indeed waged war on meat protein consumption for many years. Add in the efforts of a large number of non-governmental agencies that oppose meat consumption for reasons ranging from the environment to animal rights to social justice and one could conclude that it was amazing that consumption held up as long as it did.

Will meat and poultry consumption turn around? We concur with USDA that they will not, at least in the short run. The drop to 165.5 pounds in 2012 will be driven by lower beef and chicken supplies. The latter of those may level off in 2013 but beef output will almost certainly decline again with the total very likely falling below the 162.9 of 1973 and quite possibly reaching the 161 of ‘66

[Mustang Sally Farm]

Friday, December 23, 2011
Agricultural Incomes - Not as Bright as They First Appear
ANALYSIS - The figures released by Eurostat this week on farm workers incomes and farm production in the EU on the surface appear to make happy reading, writes ThePigSite Editor in Chief, Chris Harris

Farm workers are largely earning more and both crop and livestock production is up, the Eurostat estimates say.

However, the picture might not be as rosy as it appears.

For while agricultural producer prices rose by 7.5 per cent with crop production up by 5.4 per cent and livestock production up by 6.7 per cent in value and 1.1 per cent in volume, the cost of production is expected to rise by 9.7 per cent.

The reasons for this steep rise in input costs is down to an increase in feed costs of 16.8 per cent, fertilisers and improvers by b14.6 per cent, energy and fuels by 11.8 per cent.

The rise in input costs is only kept down because the costs of seeds and planting stocks which rose by 4.3 per cent and maintenance of building which rose by 3.8 per cent were below the average.

Feed fertilisers and energy are expected to keep on rising and this is going to put an increasingly heavy strain on production costs.

If the costs of labour, which on average rose by 6.7 per cent, are then added to these costs, the cost of production is going to go up even more and more sharply.

This in turn can only lead to one thing, higher food inflation and a rise in prices for meat and cereals in the EU.

The rise in farm worker incomes is also patchy and not even across the EU.

Some of the largest rises can be found in the new member states - Romania, Hungary, Slovakia, Poland, Estonia and Latvia - where rises of more than 40 per cent are seen in some cases.

This is because the farm incomes are starting from a low base and are rising rapidly to match incomes in the older member states.

However, Germany with a 14.7 per cent increase in incomes, Denmark with 20.2 per cent and Austria with 12.2 per cent, are leading the way for the countries not only with a developed agricultural sector but also with a reasonably stable economy.

How some of the countries will sustain large rises in incomes with production prices rising more slowly than production costs is going to be one of the great challenges for the agricultural sector in Europe in 2012.

This challenge is going to be made even more acute by what happens to the Euro zone economies and the survival or otherwise of the Euro itself.

How sustainable the Irish agricultural sector will find its 30.1 per cent rise in agricultural wages has yet to be seen, particularly as the country is entering into a period of severe belt-tightening with large rises in taxes and cuts in expenditure.

While the Irish rise in wages brought the average wage back over 2005 levels, Italy, which faces similar challenges, saw an agricultural wage rise of 11.4 per cent but this has still kept the farm workers well below 2005 levels.

Greece, Portugal and Spain - all countries that have been the subject of either bail-outs or deep concern over their economic survival - all saw cuts in their agricultural wages and each of them has wages that are on average below 2005 levels.

In these countries as the Euro austerity measures start to bite, the agricultural sector could be hit hardest.

France, which has agricultural wages 10 points above the 2005 levels saw cuts in wages of 2.6 per cent this year. With an election around the corner in 2012, President Sarkozy can be expected to throw out some enticing financial bones to the vociferous rural electorate along with endeavouring to gain some concessions in CAP negotiations.


Chris Harris, Editor-in-Chief