Philippines continue efforts to begin pork exports to Singapore
[20 October 2010] The Philippines will again try to renegotiate with Singapore in its efforts to begin pork exports to the city state. Bureau of Animal Industry (BAI) Director Dr Efren Nuestro said that the BAI is drafting a letter to the Agri-Food and Veterinary Authority of Singapore this week, after livestock in the farms accredited for export tested negative for Ebola Reston virus (ERV). The Philippines was about to send its first batch of exports to Singapore in December 2008 when news that blood samples from pigs from Luzon tested positive for the ERV, prompting the Philippine government to voluntarily halt the shipment. Dr Nuestro said however that they have no target date for the initial shipment.

 Jollibee acquires 70% of Mang Inasal restaurant chain
[20 October 2010] Philippine fast food giant Jollibee has added another brand to its roster with the acquisition of Mang Inasal Philippines, which own Mang Inasal restaurant, for a reported PHP 3 billion (USD 69.12 million). In a disclosure to the Philippine Stock Exchange, Jollibee said that the company's offer to buy 70% of Mang Inasal Philippines has been “unconditionally and irrevocably accepted by Injap Investments, Inc, parent company of Mang Inasal Philippines.” The sale is expected to be finalised in 30 days following complete due diligence. The purchase will expand Jollibee's store network in the Philippines by 19% and on a worldwide basis by 16%. Mang Inasal, a barbeque fastfood chain anchored on its chicken product, was earlier reported to be eyeing an initial public offering. 
 
 
 

RP to Re-open Pork Trade Talks with Singapore
PHILIPPINES - Manila may start renegotiating with Singapore on pork trade that was stalled as the two sides wait for results of the Ebola Reston antigen test done at the facilities of exporter Matutum Meat Packing Corp.



The test results will be sent to Singapore this week, according to the Bureau of Animal Industry.

“We are preparing to communicate with our Singaporean counterpart within the week. The tests conducted on accredited swine farms near the exporting meat plant proved negative to the Ebola antigen test," Animal Bureau Director Efren Nuestro told reporters at the sidelines of 18th anniversary of the National Meat Inspection Service.

Areas near and around the Matutum Meat facilities, including the five farms that were accredited to export pork to Singapore tested negative, the bureau said.

“We’ll immediately inform the farms if Singapore will allow the exportation so they can prepare the volume. Meanwhile we just have to wait," he added.

According to GMA News.tv, Singapore made it clear that Philippines should have an updated status report on viral contamination to ensure that the virus has been eradicated before the country starts exporting its meat.

An infection outbreak in several pig farms in Pandi, Bulacan in 2008 spoiled the country’s first bid to export 50 metric tons to Singapore. The outbreak had since been contained with the help of a 22-member team from three United Nations agencies.

Matutum Meat in Polomolok, South Cotabato was supposed to make its first export of pork and pork products to Singapore when the departments of Health and Agriculture confirmed the contamination in Bulacan.

Matutum Meat was the first and only Philippine meat processing plant accredited by the Agri-Food and Veterinary Authority of Singapore to ship pork products to the island nation.

CME: YTD Pork Exports Higher; Beef Exports Lower
US - First today, a correction. In my item on Friday regarding GIPSA’s complaint against JBS Swift, I inadvertently referred to JBS United in one place. JBS United is an Indiana-based feed company that is in no way related to JBS Swift. JBS United has nothing to do with the GIPSA complaint. My apologies for getting my JBS’s mixed up, writes Steve Meyer.



US beef exports totaled nearly 200 million pounds carcass weight equivalent in August. Tha number is almost precisely 5 million lower than in July and was 19.6 per cent higher than in August 2009. The monthly shipments bring year-to-date beef exports to 1.468 billion pounds, 17.1 per cent higher than last year through 2009. The industry continues to recover from the December 2003 discovery of BSE but this year’s YTD exports through August are still 15 per cent lower than those of 2003.

Mexico remains the number one destination for US beef but shipments to Mexico remain well below one year ago. Mexico bought 44.9 million pounds of US beef in August, 7.2 per cent less than in August 2009. Year-to-date exports to Mexico are 25.7 per cent lower than in 2009, but that decline is the smallest since February. Japan continues to be the second largest market for US beef with August exports up 21 per cent from last year and year-to-date exports 21 per cent higher as well. Canada remains our number three beef export destination but growth there has been small, up only 7 per cent from last August and 2.3 per cent YTD. The fastest growing market for US beef is Russia, where YTD shipments have grown by over 10-fold. Of course, that huge number is primarily the result of VERY small exports in ‘09.


Pork exports in August totaled 302.2 million pounds carcass weight equivalent, 25 million pounds fewer than last month and 0.8 per cent lower than last year. Year-to-date, pork exports are still 4.5 per cent higher than in 2009. Japan was still the largest customer for US pork but the gap between Japan and Mexico narrowed significantly in August. August shipments to Japan were 0.7 per cent higher than last year. YTD exports to Japan are 1 per cent higher than last year through August. Year-to-date shipments to Mexico are 21.4 per cent larger than last year. Canada is a distant third on the rankings of US pork destinations but August shipments northward were 16 per cent higher than last year and YTD shipments are nearly 12 per cent higher.

Russia and Korea remain troublesome markets for US pork exporters. After Russian shipments increased quickly after resuming back in April and reached just over 25 million in May. But that growth did not last long and shipments to Russia amounted to only 9.2 million pounds in August, 36 per cent below last year. YTD shipments to Russia are 63 per cent lower than in 2009. Exports to Korea have fallen each month since April and are now 15 per cent lower than last year.

Australian lamb exports to Asia still high
[19 October 2010] Australian lamb exports to Southeast Asia and Greater China eased 6% to 2,525 tonnes swt in September compared with the same time last year. Despite the dip, shipments to the region during the nine months to September remained at a record high volume of 25,484 tonnes swt - up 16% year-on-year. Also impacted by high prices and the rising Australian dollar, Australian mutton exports to Southeast Asia and Greater China during September fell 34% on the same period in 2009, to 1,673 tonnes swt. Shipments to the region over the first nine months of 2010 decreased 21%, to 17,332 tonnes swt, with Malaysia (5,626 tonnes swt), Singapore (4,271 tonnes swt) and China (4,051 tonnes swt) now the largest buyers in the region.

Productivity growth must increase 25% by 2050
[18 October 2010] An agricultural productivity report said that for food productivity to double by 2050 in a sustainable way with the same amount of land, less water and reduced inputs, it will require an annual average growth of at least 1.75% in “total factor productivity”. This is defined as the increase in output per unit of total resources employed in production. Between 2000 and 2007, USDA’s Economic Research Service estimates global agricultural total factor productivity growth averaged at 1.4% per year. To close the gap without additional land and resources, we must increase the rate of productivity growth at an average of 25% per year over the next 40 years.

 USGC confirms adequate supply of US feed grains
[18 October 2010] The U.S. Department of Agriculture recently released its World Agricultural Supply and Demand Estimates (WASDE) reflecting the third-largest corn crop and yield on record. While this month’s report lowers U.S. corn yield and production estimates from the previous month, U.S. Grains Council President and CEO Thomas C. Dorr said these market challenges will be addressed. “U.S. farmers have always responded to market signals and have been able to produce an adequate supply to meet market demand. The US is a reliable, long-term supplier of coarse grains and co-products,” said Mr Dorr. In 2008, the United States produced 12.1 billion bushels of corn with an average yield of 153.9 bushels per acre. USDA forecasts 12.7 billion bushels with an average yield of 155.8 bushels per acre.
 
 
 
 

Russian Federation - Livestock and Products Semi-Annual Report 2010
Feed shortages resulting from this year's drought have accelerate the slaughter of cattle and pigs, according to Morgan Haas and Mikhail Maksimenko in the latest GAIN report from the USDA Foreign Agricultural Service.


Report Highlights
Slaughter rates have and will continue to increase in 2010 and 2011 as widespread drought throughout Russia sharply decreased current and future feed supplies. As a result, red meat supply will be larger than earlier expectations but adversely impact supply potential in 2011. Red meat imports to date are revised upward, reflecting year-to-date trade and have similar market access potential in 2011.

Summary
Changes in USDA Moscow's forecast for swine and pork reflect the shortage in feed supplies that will mostly impact 2010 and 2011 inventories, realised imports through the first six months of 2010, as well as revised expectations of live hog trade. Although kills increased in 2010, slaughter weights were adversely impacted as hogs were marketed earlier than expected and incurred reduced weight gain from the historically hot summer.

Swine Inventory
Total swine inventory increased 1.8 per cent to 16.6 million, while agricultural enterprises increased swine inventory 8.0 per cent. Private households account for 36.6 per cent of swine herd at the end of June 2010 (39.7 in June 2009).

Imports of live swine for slaughter are down sharply in 2010, as the tariff was raised from five per cent to 40 per cent but not <0.50 €/kg. The domestic pork industry continues to push for full closure of the market but slaughter houses will continue to require imported hogs until the domestic industry can fill capacity.

Russia imports pedigree swine to improve domestic breeding stock from the European Union and Canada.

Production
Russian livestock production represented 46 to 52 per cent total agricultural production value during 2000-2008.

Russia produced 4.4 million metric tons (MMT) of meat and poultry meat (live weight) in the first half of 2010, 8.3 per cent more than the first half of 2009. Agricultural enterprises increased meat and poultry production 14.7 per cent (live weight) in the first half of 2010 compared to 2009 (in 2009 – 10.1 per cent over 2008).

The Ministry of Agriculture plans that Russia will produce 82 per cent of total meat and poultry supply to the Russian market in 2012. According to Ministry figures, Russia currently supplies 69 per cent of its beef, 75 per cent of its pork and 75 per cent of its poultry.

Feed Supply
Russia will experience problems with feed supplies for the remaining part of 2010 and in 2011 due to the 2010 drought in the Central, Volga and Ural districts of Russia. In total, 27 regions were declared emergency drought situations in 2010. The grain harvest in 2010 will be lowest since 2003 when 67MMT of grain was harvested. The drought adversely impacts not only the 2010 feed supply but also the seeding of winter crops for next year's feed supply, as well as presents a new threat to Russia's developing pork and beef industries.

The government of Russia (GOR) has taken several measures to soften the drought's impact. The GOR postponed state grain purchases, instituted a grain export ban and decided instead to release 3MMT of grain from the state reserves for drought-stricken regions. Grain is being distributed on the basis of a quota system to enterprises in the processing and milling industry. The shares for each region are based on meat and milk production volume. The regions themselves will be responsible for distributing the grain internally. Furthermore, Prime Minister Vladimir Putin said the GOR will provide 35 billion rubles (RUB; US$1.2 billion) in financial aid to drought-stricken farmers, including RUB10 ($300 million) billion in direct payments and RUB25 billion ($830 million) for three-year discounted federal loans. The money is being disbursed in two stages, the first in August and the second in October-November.

Pork Production
Higher feed prices and therefore higher slaughter rates in the second half of 2010 will increase pork production 8.8 per cent in 2010 but only 4.9 per cent in 2011. The larger slaughter numbers will slow the pace of herd expansion from 3.4 per cent in January 2010 to 2.4 per cent in January 2011.

Pork producers
The major producers of pork are large agricultural enterprises. They increased pork production 14 per cent in 2008 and 21 per cent in 2009. Agricultural enterprises produced 24.4 per cent more pork in the first half of 2010 compared to the first half of 2009. Club-100 swine enterprises increased from 18.9 per cent to 59 per cent at the same time.

According to Rosstat, the 11 largest pork producers (>100,000 head) produced 23.9 per cent of Russia's pork in 2006-2008. These enterprises featured the lowest production costs while average daily weight gain was highest at enterprises between 50,000 to 60,000 head. According to the Intesco Research Group study, Pork Market: the Results of 2009 and Forecast for 2010 – 2011, the three largest Russian pork producers are Prodo, Agro-Belogorie and Miratorg. They account for 15 per cent of the Russian pork production (live weight). Cherkizovo, Siberian Agrarian Meat Processing Group, SV-Volga and Agrifarm Ariant represent the second tier at 10 per cent of the market. Krasnodar region produces 9.3 per cent of the Russian meat, Belgorod region – 8.5 per cent, Rostov region – 6.5 per cent, Omsk region – 4.3 per cent, the Republic of Tatarstan – 3.8 per cent.

The Ministry of Agriculture subsidised the modernisation of 422 pig farms during the last three years. These farms produced 200,000MT (live weight) in 2009 and will add 160,000MT after they are fully operational. The average feed conversion rate was 3.6 on renovated farms and 3.0 on newly built pig farms in 2009.

In particular, the Belgorod region continues to invest in pork production. The agro-industrial holding Miratorg, one of the largest meat producers and suppliers of the Russian market, is investing RUB13.5 billion ($450 million) into the construction of nine hog complexes. The first of the facilities will be started in 2011. Each complex will have an annual capacity of 112,000 hogs. The herd will be slaughtered at an establishment that processes three million animals annually, producing 165,000MT of meat.

The Russian Union of Pork Producers reports producers are experiencing problems with marketing. The Union underlines the reason is that only five per cent of pigs are subject to initial processing at the enterprise, while the rest are traded live. The Union expects this number to grow to 50 per cent by 2012. At this time, the Union believes 90 per cent of pork will be produced by large agricultural enterprises.

Policy
Supply Control (Import Substitution)
Government support for domestic meat production in Russia has and continues to be primarily provided through methods of supply control. In addition to the introduction of the TRQ regime in 2003, trade outside the quota is subject to largely prohibitively high tariffs. Furthermore, trade within the quota is hindered by highly prescriptive, non-science-based Russian technical and veterinary-sanitary requirements that can at times result in country-specific allocations not being accessible.

Agricultural Development Programs
Federal development programs have served as an additional tool of planned support for Russian poultry production. On 21 December 2005, ‘Development of the Agro-industrial Complex’ was issued as one of four priorities for national development, with a focus on revitalizing Russian livestock and poultry production. To further stimulate domestic agricultural production, the federal law ‘On Development of Agriculture’ was approved in 2006 and came into force on 11 January 2007. Later, the GOR approved the ‘Program for Development of Agriculture, Regulation of Agricultural Commodity Markets, and Rural Development for the period 2008-2012’ which called for RUB1.1 trillion ($37 billion) to be spent over five years, with funding being split between federal and provincial budgets.
In line with these programmes, subsidising interest rates for investment projects has been Russia's primary tool of direct support to the producer. However, these benefits are not universal to all producers, as they service only the largest investors and must be in line with the Ministry of Agriculture's vision of the development programme.
In an effort to maintain a positive rate of development in 2009 in the wake of the global financial and economic crisis, the Ministry of Agriculture allocated RUB165.1 billion ($5.5 billion) for the implementation of the State Agricultural Development programme 2009-2012. The Ministry spent RUB45.0 billion ($1.5 billion) from this sum to increase the authorised capital of JSC Russian Agricultural Bank and RUB17.0 billion ($570 million) to subsidize interest payments. Additionally, Russia extended short-term loans for six months, investment loans for three years, and maximum-term eight-year investment loans to 11 years. The subsidy level for investment loans also increased from two-thirds of the central bank rate to 100 per cent for dairy and beef cattle (and to 80 per cent for poultry). The Ministry of Agriculture also noted the single agricultural tax as well as fixed prices for fuel and fertiliser amounted to RUB30 billion ($1 billion) in indirect subsidies to the producer in 2009. These programs continued in 2010, and they will continue for the foreseeable future.
The Ministry of Agriculture reported that 2010 investments will not meet the State programme due to lower-than-expected profits in the industry.

Government Purchases
President Medvedev has tasked Minister Elena Skrynnik to investigate the state purchases of beef in Rosrezerv, as well as to clarify the feasibility of increasing the production of canned white chicken meat. As noted by the President of Cherkizovo, there is a need consider changes of the state reserve purchases since domestic beef supplies are shrinking while poultry is ‘oversupplied’.

Development of the Feed Industry
Also in the planning is a draft development project to improve this component of the supply chain through the construction and modernization of feed mills, with the aim of increasing the production of plant-origin protein feeds. Most recently, the GOR has taken action to support producers impacted by the short feed supplies.

Trade
Russia maintains a TRQ regime for raw pork (HS-0203) and beef (HS-0201, 0202) products with country specific allocation to the United States, European Union, and “other countries”. The pork and beef quotas for 2011 remain unchanged from 2010.

Pork
Russia imported 315,537 MT of pork during January – June 2010, 15 per cent above 2009. The major exporters of pork to Russia are the European Union, Brazil, United States, and Canada. The European Union is the dominant supplier of fresh/chilled and processed pork. The US share of the frozen pork market has fallen steeply for three main reasons: competitive prices in other markets, the virtual ban on US pork through the first five months of 2010, and a reduced quota (from 100,000 MT in 2009 to 57,000 MT in 2010). Russia's recent closure of several US pork facilities on the grounds of tetracycline-group antibiotics will continue to threaten the US's ability to fulfill its quota allocation for the remainder of the year.

There are mixed opinions on decreasing the pork TRQ quantity further before the end of 2012, but focus will remain on preventing growth of out-of-quota pork and live hog imports as well as using sanitary and technical barriers to further regulate in-quota and quota-exempt pork products.

Customs Union
Kazakhstan and Belarus, as well as other CIS countries, have duty-free, quota-free access to Russia for domestically produced meat.

Customs Union members recognise equivalency of each other's veterinary service. Kazakhstan?s Ministry of Agriculture has expressed its intent to utilise this advantage to export 4,000MT of meat (specifically, beef) to Russia in 2010, compared to 400MT in 2009.

Belarus increased meat and poultry exports to Russia by one-third to 72,000MT during January-June 2010. The Government of St Petersburg earlier reached an agreement with Belarus to import 41,100MT of beef, 11,100MT of pork and 8,200MT of poultry meat in 2010.

Consumption
Development of livestock primary processing for 2010-2012
The Ministry of Agriculture has developed a programme for livestock primary processing to support the modernisation of the Russian meat processing industry. The programme envisages the allocation of state subsidies for meat processors from the federal budget. Subsidies will be spent to compensate interest rates from loans taken for construction and modernisation of processing facilities and cold storages as well as for purchasing meat for primary and industrial processing. Planned implementation of the program will allow Russia to increase the collection and processing of the animal to 90 per cent of its live weight.

The Ministry believes that fulfillment of the programme will also increase per-capita consumption of meat and meat products to from 65.9kg in 2008 to 66.1kg in 2012.

Canada: Where We've Been; Where We Might be Going
CANADA - Canada like the rest of North America and several other pork exporting nations in the world has had extreme pressure on its pork industry in the last three years, writes Bob Fraser from Sales and Service at Genesus Ontario.

 

Many factors have contributed to this not the least of which has been the extended period of low equity draining prices. However this is been greatly exasperated by the weakened access to the US market due their MCOOL (mandatory country of origin legislation) but most importantly by the rapid appreciation of the Canadian Dollar.

In the period depicted in the chart below the Canadian Dollar has been below sixty five cents US till rising quite rapidly to par and beyond for a period till hovering just under par with the US dollar today. To put this another way the common transfer price and long term average cash price of $32 US for a SEW goes from $50 CDN to $32 CDN in this scenario. Even a Canadian Dollar at eighty cents US where we’ve been for extended periods results in the $32 US – SEW converting to $40 CDN. Although market access (MCOOL), the misnamed “swine flu” and greatly higher grain prices aided and aggravated the decline in the Canadian swine since its peak in the first quarter of 2005 the changes in our exchange rate to the US explains the most of it. Also it is highly debatable other than magnitude whether the scenario depicted in the graph would have been appreciably different in the absence of any of these other factors. The Canadian exchange rate has been and remains a huge driver for better or worse to the Canadian swine industry.


So given this what is the Canadian swine industry to do? Same message given to T. Rex (and apparently not listened to), “Adapt or Die”. The Canadian swine producer’s history shows him quite good at doing just that. His early embrace of quality genetics, high health, along with other technology long gave him an enviable production advantage over many other producers in the world particularly the US. No longer! The greatly improved communication and technology transfer globally has resulted in any technical competitive advantage to at best be fleeting.

Many Canadian swine industry leaders suggest our salvation comes from highlighting our quality pork and garnering a slight premium for it. A laudable goal for sure, but carving a niche for an entire nation’s swine industry is a big niche indeed. Perhaps a better path is for the Canadian industry to align its costs with the American producer. As a colleague says correctly “if we can’t compete with the Americans at par we can’t compete with them at all”. A deflated currency makes us all smarter but also often leads to taking one’s eye off the ball. Costs are important, but particularly benefits to costs. More pigs per sow are a tremendous driver in lowering costs and achievable through superior genetics coupled with sound management and nutrition. As with growing corn if you can figure out how to get 200 bushels per acre rather 150 bushels things tend to work out better.

We are seeing this move by the survivors of the Canadian industry to aligning their costs by demanding true demonstrable cost effective benefits to genetics, nutrition and all their other inputs. They are looking at acquisition of devalued assets to lower their cost structure. They are also reviewing structures that served them well in the past but went through a period of less favour. Farrow to finish, land based units although by no means the only model have proved quite resilient in these trying times. The “original integrators” of pigs to manure to land to crops and back again have seen their model vindicated and now appear at the forefront of sustainable agriculture.

The Canadian swine industry remains bright to those who are adaptable, innovative and resourceful. Probably the same skill set that has always propelled the success of the industry.




 

Pork Commentary: Corn Price Shock
CANADA - This week's North American Pork Commentary from Jim Long.

Jim Long is President &
CEO of Genesus Genetics.
It was the Canadian Thanksgiving this past weekend. There were lots to be thankful for, but one item that as hog producers we did not feel thankful for was the USDA Corn Crop estimate that was released last Friday.

The USDA forecasted US corn production at 12.664 billion bushels, down 3.8 per cent from 13.16 billion production forecast last month. The average expert guess was 12.95 billion bushels prior to the report. Corn a bushel by Monday afternoon had gone up to $5.60 a bushel with talk of $7.00 a bushel being put out there by the corn bulls.

The USDA is now projecting the ending US corn inventory at 902 million bushels. The USDA is now forecasting for this market year an average cash price of around $5.00 bushel – up 60 cents from last month’s forecast.

The corn price move over the lasts couple months higher has increased swine cost of production approximately $15.00 per head which is a real margin implosion.


It will be interesting if higher feed prices put downward pressure on slaughter weights. In our opinion, this might lower weights slightly but when packer grids continue to encourage heavier weights there will be little buyer encouragement.


We expect these higher feed prices will be a major factor in curtailing much thought of sow herd expansion. Bankers already reluctant to lend money to swine production will see this jump in feed prices as a great reason to keep the brakes on funding swine projects.


When grain producers see $5.00 corn it makes them less interested in feeding hogs. This will take the edge off small pig demand unless lean hog futures push over $90 which is not inconceivable when June lean hogs Monday were $86.50 per pound. With $5.00 corn breakevens are approaching 80 cents lean per pound.


The corn ethanol subsidization by the US government continues to be a testament to government policy gone astray. A policy of burning our food to fuel our cars is continuing to disrupt the global food network with little environmental benefit. It will be interesting how $5.00 corn works in corn ethanol production. Last time there was a corn price spike some corn ethanol producers went broke and failed to pay their farmers for their corn.
In the coming weeks the Southern Hemisphere crops will be planted. Strong grain prices will certainly encourage plantings. You wonder at what point the USDA will stop funding land not to be planted. It’s a rich society that subsidizes corn ethanol at the same time it pays for millions of acres of land not to be planted. In the coming weeks we expect wild gyrations in grain prices as Chicago traders get their Christmas early.


Author: Jim Long, President & CEO, Genesus Genetics

World Agricultural Supply and Demand Estimates - October 2010
The forecast of total US meat production is raised for 2010 but lowered for 2011, according to the latest USDA World Agricultural Supply and Demand Estimates.


LIVESTOCK, POULTRY, AND DAIRY: Beef and broiler production forecasts for 2010 are raised as second half production is higher than previously expected, but the pork production forecast is reduced due to lower slaughter and slower growth in slaughter weights. The 2011 beef production forecast is raised primarily in the first quarter as larger-than-expected third quarter 2010 placements are marketed. Pork production for 2011 is lowered from last month as relatively high feed prices are expected to keep the growth in sows farrowing modest and dampen hog weights. Broiler and turkey production forecasts for 2011 are lowered from last month as higher feed prices slow growth. Likewise, egg production for 2011 is forecast lower.

Beef import forecasts are lowered for 2010 and 2011 as supplies in Oceania are expected to be relatively tight while foreign demand strengthens. Export forecasts for beef are raised on continuing strong sales to a number of markets. Pork and poultry trade forecasts are unchanged from last month.

The cattle price forecasts for 2010 and 2011 are virtually unchanged. Hog prices are forecast higher on tighter supplies for both 2010 and 2011. The broiler price for 2010 is forecast lower on increased production, but the price forecast is raised slightly for 2011 on reduced output. Egg prices for 2010 and 2011 are forecast lower.

Forecast milk production for 2010 is raised slightly from last month as higher milk per cow more than offsets lower cow numbers. The forecast for 2011 is reduced as higher feed prices are expected to slow the rate of growth in cow numbers and milk per cow compared with last month. Import and export forecasts are unchanged. Fat basis stocks are reduced for 2010 as stocks of butter are forecast to be tight. Skim solids stocks are unchanged.

Continued strength in demand for cheese and relatively tight supplies of butter support higher forecast prices for 2010 and 2011. Price forecasts for nonfat dry milk (NDM) are raised for 2010 and 2011 as supplies are tighter. The 2010 whey price forecast is increased slightly but is unchanged for 2011. Both Class III and Class IV price forecasts for 2010 and 2011 are raised due to the higher product prices. The all milk price is forecast to average $16.45 to $16.55 per cwt for 2010 and $16.00 to $16.90 per cwt for 2011.

WHEAT: US wheat ending stocks for 2010/11 are projected 49 million bushels lower this month with lower estimated production and higher expected feed and residual use. Production is lowered 41 million bushels based on the Small Grains 2010 Summary report. Feed and residual use is raised 10 million bushels on higher-than-expected disappearance during the June-August quarter as indicated by the September 1 stocks. Higher carryin with small upward revisions to estimated 2009/10 production and ending stocks are partly offsetting. The 2010/11 season-average farm price is projected at $5.20 to $5.80 per bushel compared with $4.95 to $5.65 per bushel last month.

Global wheat supplies for 2010/11 are projected 1.0 million tons lower mostly reflecting lower production in the United States. World production for 2010/11 is projected at 641.4 million tons, down 1.6 million tons from last month; however, beginning stocks are raised 0.6 million tons with upwardly revised 2009/10 production estimates for South America and Canada. For 2010/11, production is lowered 0.5 million tons for Mexico and 0.3 million tons each for Algeria and Canada. Production is raised 0.5 million tons for Europe and 0.3 million tons for Ethiopia.

World wheat trade for 2010/11 is nearly unchanged this month. Imports are raised for North Africa and Mexico, but lowered for EU-27 and Iran. Exports are raised for Uruguay, but lowered for Mexico. World exports for 2009/10 are raised 1.6 million tons on the latest available trade data. Large late-season shipments boost 2009/10 Argentina and EU-27 exports 1.0 million tons and 0.6 million tons, respectively.

Global consumption is raised 2.1 million tons for 2010/11 with higher expected feed use for EU-27, Canada, and the United States. Global ending stocks for 2010/11 are projected 3.1 million tons lower with the largest reductions for EU-27 and the United States. Other reductions include Canada, Uruguay, Syria, and Iran. Ending stocks are projected higher for Brazil and Egypt. At the projected 174.7 million tons, 2010/11 stocks remain 50.2 million tons above the recent low in 2007/08.

COARSE GRAINS: US feed grain production for 2010/11 is projected lower this month based on reduced forecasts for corn and sorghum and smaller production estimates for barley and oats from the Small Grains 2010 Summary report. Corn production is forecast 496 million bushels lower as a 258,000-acre increase in harvested area is more than offset by a 6.7-bushel-per-acre reduction in yield. As forecast, this year’s yield and production still would be the third highest on record.

Higher 2010/11 corn beginning stocks raise prospects for 2010/11 feed and residual disappearance, especially during the September-December quarter. Ending stocks for 2009/10 are raised 322 million bushels based on the September 1 stocks estimate. Larger-than-expected carryout of old-crop corn combined with an unusually early start to this year’s harvesting suggest heavy new-crop corn use before the September 1 beginning of the 2010/11 marketing year. Individual state harvest progress reports suggest that 600-700 million bushels of corn were harvested across the South, Southern Plains, and southern Corn Belt before September 1. This is about double the level of the preceding 2 years and similar to what happened between the 2006/07 and 2007/08 marketing years. New-crop corn usage ahead of September 1, 2007, lowered feed and residual disappearance during the June-August quarter of 2006/07 and boosted feed and residual disappearance during the September-December quarter of 2007/08.

Despite the increase in 2010/11 beginning stocks, lower forecast production and higher projected domestic disappearance leave ending stocks down sharply from last month. Feed and residual use for 2010/11 is projected 150 million bushels higher reflecting the expected impact of new-crop corn usage before September 1 on indicated disappearance during the current marketing year. Exports are lowered 100 million bushels with tighter available supplies, higher prices, and increased competition from Argentina. US ending stocks for 2010/11 are projected 214 million bushels lower at 902 million. The season-average farm price is projected at $4.60 to $5.40 per bushel, up 60 cents on both ends of the range.

A number of changes are made this month to 2009/10 corn usage with the biggest a 358-million bushel reduction in feed and residual use as indicated by the September 1 stocks and small upward revisions to exports and food, seed, and industrial (FSI) use based on the latest available data. Sorghum FSI use and exports for 2009/10 are also lowered slightly this month. Changes to 2009/10 feed and residual use for barley and oats reflect small revisions to June 1 stocks from the September 30 Grain Stocks report.

Global coarse grain supplies for 2010/11 are nearly unchanged with lower US supplies offset by increased foreign coarse grain production. World corn production is lowered 6.4 million tons with the lower US production and a 0.5-million-ton reduction for Russia only partly offset by increases for Argentina, Serbia, EU-27, and several Sub-Saharan Africa countries. Production for Argentina is raised 4.0 million tons on higher expected area as rising corn prices and favorable early season soil moisture support a rapid pace of early corn planting. Global barley production is lowered 1.4 million tons with reductions of 0.7 million tons for EU-27, 0.5 million tons for Russia, and 0.3 million tons for Canada.

Global coarse grain exports for 2010/11 are increased this month mostly reflecting higher expected corn exports from Argentina, which are raised 3.5 million tons, along with small increases for Paraguay, Mexico, and Zambia. Corn imports are increased for Turkey, Colombia, Indonesia, and South Korea supporting higher expected corn feeding in these countries. Global corn ending stocks for 2010/11 are projected 3.2 million tons lower this month despite increases for Argentina, EU-27, Zambia, and Iran. The reduction in US corn ending stocks outweighs these increases.

RICE: US rice production in 2010/11 is forecast at a record 242.3 million cwt, but down 13.1 million from last month due entirely to a decrease in yield. Average yield is estimated at 6,687 pounds per acre, down 360 pounds from last month, and the lowest yield since 2005/06. Harvested area is unchanged at 3.62 million acres. Long-grain production is forecast at a record 182.0 million cwt, 9.8 million below last month, and combined medium- and short-grain production is forecast at 60.3 million, down 3.25 million. The import and domestic- and residual-use forecasts are unchanged from a month ago. The total rice export projection at 119 million cwt is unchanged from a month ago; however, the rough rice export projection is raised 1.0 million, and the combined milled- and brown-export forecast (rough-equivalent basis) is lowered the same amount. Total rice ending stocks are projected at 52.5 million cwt, down 13.1 million from last month and the largest stocks since 1985/86.

The 2010/11 all rice season-average price is forecast at $12.10 to $13.10 per cwt, up $1.80 per cwt on both ends of the range compared to $14.00 per cwt for 2009/10. The long-grain season-average price range is projected at $10.50 to $11.50 per cwt, up $2.00 per cwt on each end of the range compared to $12.80 per cwt for last year. The combined medium- and short-grain price range is projected at $17.30 to $18.30 per cwt, up $1.30 per cwt on each end compared to $17.70 per cwt for 2009/10. The price increase is due to a smaller US crop, higher global prices, and a weaker dollar.

Projected global 2010/11 rice production and consumption are lowered from a month ago, and trade and stocks are little changed. World rice production is forecast at a record 452.5 million tons, down 2.1 million from a month ago mostly owing to decreases in the United States, Burma, and India. India’s 2010/11 rice crop is lowered 2.0 million tons to 97.0 million due mostly to below normal monsoon rains in the east. Global consumption is lowered 1.7 million tons owing to a reduction in India. Global 2010/11 ending stocks are projected at 94.3 million tons, down 0.3 million from last month, and nearly the same as 2009/10.

OILSEEDS: US oilseed production for 2010/11 is projected at 102.8 million tons, down 2 million from last month. Soybean production is forecast at 3.408 billion bushels, down 75 million based on both lower harvested area and yield. Harvested area is reduced 1.2 million acres to 76.8 million. The soybean yield is projected at 44.4 bushels per acre, down 0.3 bushels. Sunflowerseed and peanut production are also projected lower this month while canola and cottonseed production are projected higher.

US soybean exports are increased 35 million bushels to 1.520 billion reflecting strong export sales and reduced export prospects for Argentina resulting from lower beginning stocks. Soybean crush is raised 15 million bushels to 1.665 billion due to improved prospects for domestic soybean meal disappearance and to a small reduction in the projected soybean meal extraction rate. The September 1 soybean stocks estimate confirmed a third consecutive marketing year of relatively low residual use. For 2010/11 residual use is reduced to 32 million bushels, down 38 million from the previous estimate. Soybean ending stocks are projected at 265 million bushels, down 85 million from last month.

Prices for soybeans and products are all raised this month, supported by strong prices for corn. The US season-average soybean price range for 2010/11 is projected at $10.00 to $11.50 per bushel, up 85 cents on both ends of the range. The soybean meal price is projected at $290 to $330 per short ton, up $20 on both ends of the range. The soybean oil price range is projected at 39.5 to 43.5 cents per pound, up 2 cents on both ends.

Global oilseed production for 2010/11 is projected at 440.6 million tons, unchanged from last month. Global soybean production is projected at 255.3 million tons, up 0.4 million. Brazil soybean production is raised to 67 million tons, up 2 million due to increased area. India soybean production is raised 0.4 million tons to 9.2 million, also due to increased harvested area. Global sunflowerseed production is reduced this month as lower production for Russia is only partly offset by an increase for Ukraine. Other changes include increased cottonseed production for Australia and India. Global oilseed stocks for 2010/11 are reduced 1.7 million tons to 71.4 million. Soybeans account for most of the change, with a reduction for the United States partly offset by projected increases for Brazil and China.

SUGAR: Projected US sugar supply for fiscal year 2010/11 is increased 63,000 short tons, raw value, from last month, due to higher beginning stocks more than offsetting lower production. Florida cane sugar production is reduced 65,000 tons to match processor production projections, while Hawaii is increased 35,000 tons to be in line with the previous year=s estimate. Sugar use is increased 100,000 tons, in line with the increase for 2009/10.

For 2009/10, US supplies are increased 208,000 tons, due to higher production and imports. Production is increased 98,000 tons to account for larger-than-expected September output of US beet sugar and Hawaii cane sugar. Imports are increased 110,000 tons, mainly due to higher imports from Mexico. Total use is increased 115,000 tons to reflect the strong demand for imported sugar and minor changes in sugar exports and deliveries for re-export products. Ending stocks are increased 93,000 tons, to 1.6 million tons or 14.4 per cent of total use.

 Vietnam's small pig farms have an edge
[15 October 2010] Most smallpig farms in Vietnam can remain competitive if they continue to exploit their advantages over larger farms. These advantages, according to the outcome of a three-year research project, were the low labour costs and the ability to supply freshly slaughtered meat, which is still preferred by most Vietnamese diners over chilled or frozen meat from bigger piggeries. The research project was run by the Kenyan-based International Livestock Research Institute and funded by the Australian Centre for International Agricultural Research. It said that smallholder pig producers played an important role in the economy as they supplied about 80% of Vietnam's pork. 
 
 
 

Cargill nets 68% in profits
[14 October 2010] The world’s largest agricultural commodities trader Cargill recorded a 68% increase in net profits to USD 883 million in the first quarter ended August 31, from USD 525 million a year earlier, thanks to soaring grain prices. It said its trading and processing segment was the fastest-growing contributor to earnings.

Hong Kong lifts ban on pork from South Korea
[11 October 2010] Hong Kong has removed its ban on South Korean pork imports, becoming the first state to do so since Seoul was declared free of foot-and-mouth disease (FMD). However, the Ministry of Food, Agriculture, Forestry and Fisheries said South Korean exporters still need to follow required quarantine procedures before shipping any pork products to Hong Kong. Outbound shipments of pork were halted in January when the country's first FMD case since 2002 was reported. Since regaining FMD-free status from the OIE, South Korea has been working to resume its pork exports also to Japan, Vietnam and the Philippines.

Vietnam urged to launch campaign on GM crops
[12 October 2010] Reynaldo V. Ebora, director of the National Institute of Molecular Biology and Biotechnology at the University of the Philippines Los Banos College says that Vietnam should have a proper campaign to inform the public of the economic benefits of genetically modified (GM) crops and address concerns about this biotechnology,to clarify the science behind the technology.Mr Ebora said available analyses and scientific studies on food safety and proteins proved GM crops including corn were as safe for use as conventional products, and there had not been problems reported since the commercial introduction of agricultural biotech in 1996.