A Geneticist's Perspective: What Are the Traits that Further Sustainable Production?

An outline of selection structure, sustainable traits and measuring genetic progress in egg production and feed conversion by Dr Neil O'Sullivan of Hy-Line International.

 


Genetics companies sit at the apex of a pyramid of livestock production and are constantly improving the genetic potential of the next generation of animals. Therefore genetic companies must weigh seriously the current demands of the marketplace and predict future demands of the consumer. Genetic improvement relies on measurements of phenotypic traits in pureline and crossbred progeny of pureline animals to evaluate the genetic potential of these animals under commercially relevant environments.
 


Neil O'Sullivan PhD
 
The best animals are selected on the basis of these evaluations to reproduce the next generation and to multiply out these genetic improvements to the livestock industries they serve.

In the egg layer industry, we select on a large group of traits, divided into five trait groups, namely production, egg quality, efficiency, animal wellbeing and reproduction. Many of the individual traits within these trait groups have a direct impact on the sustainability of production of eggs as food. Egg layers are among the elite of animal agriculture production systems in terms of their sustainability, with their low carbon footprint, high reproductive rate and most importantly, their high yield relative to low input costs.
 
Selection Structure
 
Pedigreed populations, both pureline and crossbred progeny are evaluated for more than 30 different traits in individual animals and in group environments, each and every generation. Only a small percentage of the very best animals with the highest genetic value will be multiplied to produce future production stocks and to perpetuate the pureline themselves.

Such a rigorous system needs very high throughput evaluation systems with high accuracy and repeatability of each measurement taken. Today, the phenotype evaluation is accompanied by more and more genotype information from DNA markers such as microsatellite and single nucleotide polymorphism which have been validated to show an association with differences in a trait's performance.

So selection decisions are now made based on a triangulation of data from pureline, crossbred and DNA marker data points. This use of multiple data sources and complex pedigrees over multiple generations requires very large computing power also.

Today, egg layers are evaluated in breeding programmes where crossbred birds are measured under commercial conditions. This allows very good group performance data evaluation for behaviour traits. These traits are important from a sustainable perspective, avoiding feed and water wastage, feather cover of the hens, low social stress and livability related traits along with efficiency traits' direct impact on sustainability.

The trait groups are production traits which include sexual maturity, peak rate of lay, persistency of egg production and post-moult rate of lay.

The animal well-being trait group include livability of pullets and adult layers, specific disease resistance such as Marek's disease, feather cover, social behaviour, reducing fear and nesting behaviour. The quality trait group includes, shell strength, freedom from cracks, shell colour, albumen quality, egg size, yolk weight, percent solids in eggs and freedom from blood or meat spots.

The efficiency trait group includes residual feed intake, group bird performance, low feed wastage, dry manure, and low maintenance body cost.

The reproductive trait group includes fertility, natural mating ability of males, hatchability, sperm count and sperm mobility.
 
Sustainable Traits
 
Productivity, number of eggs laid and eggs of saleable quality are key factors in sustainable egg production. Livability is a sustainable trait as spreading pullet capital costs must be done over long-lived, viable and productive animals.

Nutrition of the egg is a factor in sustainable egg production as egg quality and especially the percent yield of egg solids and albumen quality, play a key role here.

The kilos of feed needed to produce a kilo of eggs is obvious as a sustainable trait, however, low feed and water wastage as well as complete feather cover all have roles in this trait.

The social behaviour of the animals with low dominance drive, low cannibalism and wastage due to social stress are all necessary to factor in along with the use of nests by the birds.
 



Figure 1. Hy-Line Brown shows ongoing increase in eggs per hen housed in North Carolina tests
 





Figure 2. Hy-Line Brown shows continued improvement in feed conversion in North Carolina tests
 
Measuring Genetic Progress
 
In the graphs above, we see continued year-over-year improvement in genetic stocks of Hy-Line Brown.

Clearly from data on public tests such as the North Carolina Layer Performance and Management Tests, long-term progress can be seen for feed efficiency and eggs per hen housed.

When we look to animal protein prices to the consumer, we see eggs are the most affordable, followed by poultry meat and other meats. It is obvious the genetic trends show no sign of loss of progress over time.

This article was first published in International Hatchery Practice.

August 2011

North American Hog Inventory up One Per Cent
US & CANADA - This publication is a result of a joint effort by Statistics Canada and the USDA's National Agricultural Statistics Service (NASS) to release the total inventories of hogs, breeding, market hogs, sows farrowed and pig crop for both countries within one publication.
 

United States and Canadian inventory of all hogs and pigs for June 2011 was 76.9 million head. This was up one per cent from June 2010, but down three per cent from June 2009. The breeding inventory, at 7.10 million head, was down slightly from last year but up slightly from last quarter. Market hog inventory, at 69.8 million head, was up one per cent from last year and up two per cent from last quarter. The pig crop, at 35.7 million head, was down slightly from 2010 and down two per cent from 2009. Sows farrowed during this period totalled 3.56 million head, down two per cent from last year and down five per cent from 2009.

United States inventory of all hogs and pigs on 1 June 2011 was 65.0 million head. This was up one per cent from 1 June 2010 but down three per cent from 1 June 2009. The breeding inventory, at 5.80 million head, was up slightly from last year and last quarter. Market hog inventory, at 59.2 million head, was up one per cent from last year, and up two per cent from last quarter. The pig crop, at 28.9 million head, was up slightly from 2010 but down one per cent from 2009. Sows farrowed during this period totalled 2.88 million head, down two per cent from 2010 and down five per cent from 2009.

Canadian inventory of all hogs and pigs on 1 July 2011 was 11.9 million head. This was up one per cent from 1 July 2010 but down one per cent from 1 July 2009. The breeding inventory, at 1.30 million head, was down one per cent from last year and last quarter. Market hog inventory, at 10.6 million head, was up one per cent from last year and last quarter. The pig crop, at 6.8 million head, was down three per cent from 2010 and down seven per cent from 2009. Sows farrowed during this period totalled 678,000 head, down four per cent from last year and down eight per cent from 2009.

Global Market Report – Canada
CANADA - Better days are ahead for Ontario pig producers, writes Bob Fraser, Sales and Services for Genesus Ontario.
 

In his last column, Mr Fraser suggested 'better days ahead'. He says he is a 'glass half full' candidate. It would be difficult operating in this business without being an optimist. Also with better days ahead, he says he was thinking about a time line a little longer than a month. However, he goes on to take a look at least in his area of Ontario.

The Ontario market
(OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Program Lead, Stratford OMAFRA)
Week ending on Friday 15-Jul-11 22-Jul-11 29-Jul-11 5-Aug-11 12-Aug-11
Average price (C$/ckg, DW total value) 194.28 188.39 193.08 202.53   
Low price ($/ckg, DW total value) 165.70 158.60 164.79 171.26   
High price ($/ckg, DW total value) 207.28 201.78 206.85 216.09   
Weekly average dressed weight (kg) 96.17 95.55 94.81 95.17   
Market hogs sold 86,149 86,023 89,499 74,351   
Market hogs sold (as % of previous year) 110 110 108 101   
100% formula price ($/ckg, 100 index) 166.72 164.90 171.65 183.88 192.95
Previous year - 100% formula price ($/ckg, 100 index) 146.96 148.03 154.01 157.72 157.27
Weaned pig value (C$/pig) – formula value 43.35 42.87 44.63 47.81 50.17
Feeder pig value (C$/pig) – formula value 68.77 68.02 70.81 75.85 79.59
Estimated grow-finish feed cost for current week 95.84 96.40 95.68 97.84 96.87
Estimated margin after feeder pig and feed 20.13 17.51 22.64 34.08 43.61

Mr Fraser continues that there is a $23.48 increase in margin after feeder pig and feed or 117 per cent improvement in margin in a month. Not sure even I was that optimistic but probably qualifies as 'better' by most anyone's definition. Of course, the question always remains "Yes but will it last?" Part of that lies in whether the 15,000 head or more than seven per cent drop week-on-week in market hogs sold is just an aberration of summer heat and a holiday shortened week or something deeper going on. Certainly in my travels in Canada I don't see anything to give us more market hogs anytime soon beyond the normal seasonal 4th quarter expansion, and as a genetic salesman, I have reason to be looking hard for any sow expansion.

So supply looks at worst to be flat. As for demand we are setting new price highs and perhaps establishing a new price plateau more in synch with the apparent new price plateaus of grains. Finally, on the demand side as Canada very much appreciates as a trading nation is exports are strong and look to remain so as reinforced by Jim Long’s recent around the world Commentaries. Therefore the supply/demand balance looks favourable to prices but what about from the cost side? Will it be enough to outstrip grain and feed prices?

From his view of his own share-cropped corn this year and just what he sees from the road in his travels, the crop well perhaps not great has recovered marvellously from a difficult spring to certainly look like a good, if not a very good crop. Now, he says, this may be the view of 'rose-tinted' glasses. However, it seems supported by an article in this week's Ontario Farmer newspaper on entitled 'Corn crop makes a comeback'. The article quotes several seed corn agronomists suggesting the following 'Just a month ago, there were plenty of concerns about the crop's uneven development, pollination and cob fill in hot, dry weather, and its ability to mature on time. Not all the concerns have been alleviated but things look a lot better as the crop approached mid-August.' The article goes on to suggest the crop has caught up three weeks over the course of the summer and now with timely rains, suggesting at least average yields of 145 bushels with potential of 200+ in some areas. So, not the bin buster of 2010 but hardly a disaster either.

Mr Fraser adds that he appreciates Iowa may spill more corn than Ontario grows such that the latter crop has little if any bearing on price. Nevertheless for the land-based pork producers, the backbone of the Ontario swine industry, it looks like their corn supplies will be adequate allowing them to maximise their return on corn putting it through hogs.

In summary "better days ahead", he adds. He believes we have already made significant gains that we might consider as we navigate the challenges of a volatile environment.

Genesus Global Market Report
Prices for week of 15 August 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 101.39¢
US$/lb carcass 75.02¢
Canada (Ontario) 1.89
C$/kg carcass 69.52¢
Mexico (DF) 22.10
MXP/kg liveweight 80.76¢
Brazil (south region) 2.23
BRR/kg liveweight 63.06¢
Russia 94
RUB/kg liveweight $1.47
China 19.29
RMB/kg liveweight $1.37
Spain 1.23
€/kg liveweight 80.30¢



 

CME: Price Concern as Hog Futures Drifting Lower
US - Hog futures have been drifting lower in recent days as market participants have become increasingly nervous about prospects for hog prices into the fall, write Steve Meyer and Len Steiner.


Seasonally, hog supplies increase as weather cools off (higher weights) and more hogs come to market.

But seasonality in hog prices in hardly a surprise. It was known to market participants all along and still they were willing to push October futures at almost $94/cwt.(8/2).

Since then, October futures have lost almost 700 points and there is plenty of fear that the recent pull-back in pork prices could herald a repeat of last year when pork cut-out dropped in the mid 70s by late October (see chart).

So what has changed since early August? Back then, bears were arguing that summer prices were inflated by the sudden surge in Chinese export demand. They thought Chinese purchases were temporary.

Also a factor that the authors noted repeatedly in this report was the sharp decline in hog weights. This further limited output and forced end users to bid up spot prices.

As those factors were rectified going into the fall, the expectation of bearish observers was that pork and hog prices would pull back by more than what futures were indicating at the time. Bulls, on the other hand, argued that pork export demand would continue to be a factor and keep prices at elevated levels through the end of the year.

High feed costs and limited feeder pig imports from Canada were also seen as a driver. And while $90+ hog prices would be unheard of for October, so were $106 hogs for early August and we surpassed those levels.

At this point, bears appear to be in the drivers seat as evidenced by the sharp drop in cash hog values.

On Wednesday (24 August), the IA/MN lean hog price (wt. avg.) was quoted at $95.18/cwt, still some $13/cwt higher than a year ago but $11/cwt lower than the annual peak in early August. One argument for the lower values are rising carcass weights.

However, USDA Mandatory Reporting system reported hog weights for Tuesday (23 August) at 199.17/lb per carcass, slightly lower than a year ago.

It is possible that packers are seeing a slow-down in export orders but that is only speculation at this point. One item that has been particularly negative for the pork cut-out are bellies.

The belly primal (which is 16 per cent of the cut-out) was quoted on Wednesday at $126.64/cwt, $26/cwt lower than just 10 days ago.

During the same period, the pork cut-out has declined from $109.45 (on 15 August) to $104.04 (on 24 August).

The drop in belly values has accounted for almost 80 per cent of the drop in the value of the cut-out.

What happens if/when demand for other primals, particularly loins, softens up after Labor Day?

Ham prices have been relatively weak to this point and they need to appreciate significantly to support the cut-out levels implied by October futures. Trim and drop credits can help you only so much.

Vision for Future of the UK Pig Industry
UK - BPEX has just produced a new health and welfare strategy with support from across the industry and launched by Chief Veterinary Officer at a press conference in London yesterday, 24 August.
 

Improved pig health and welfare could easily be worth as much as £25 million a year to the British industry.

An extra 50g weight gain per day as a result of improved health would return between £2 and £3.50 per pig – between £15 and £25 million a year.

BPEX has just produced a new health and welfare strategy with support from across the industry and launched by Chief Veterinary Officer Nigel Gibbens.

20:20 Pig Health and Welfare builds on the success of the first strategy launched at the end of 2003.

One of the key elements is the Pig Health Improvement Project (PHIP). The national Stage 1 is underway and in addition there will be pilot projects with groups of producers across the country. It aims to change completely the way endemic pig diseases are managed, mitigated and controlled across the country.

This will require a radical change in the mindset of all involved – from a rather singular, self-contained approach to a far more inclusive, co-ordinated and collaborative one.

BPEX Chairman, Stewart Houston, said: "Improving the health and welfare of pigs is of paramount importance to all of those involved in the industry in England.

"It affects our cost of production, our ability to compete in a highly competitive EU market, our impact on the environment, the safety of the food we produce, our responsibility to the animals in our care, our reputation as a producer of high welfare pork, bacon, ham and other pork products and ultimately our ability to produce a secure supply of food in an increasingly volatile world.

"Despite the progress we have already made we remain behind many of our immediate competitors on key measures of efficiency. Improving pig health is key to closing this competitiveness gap," said Mr Houston.

The key elements of the strategy are:

Support pig producers in delivering their objectives for continual improvements in pig health and pig welfare
Eliminate or control significant enzootic pig diseases locally, regionally and nationally
Eliminate or control significant infections of food safety and public health concern (eg Salmonella)
Develop and promote new knowledge on the assessment of welfare outcomes
Promote the open exchange of information on the disease status for herds and regions
Promote and encourage responsible and appropriate use of antimicrobials
Maintain freedom from notifiable exotic and emerging diseases of pigs
Deliver an integrated approach to improving pig health and welfare with all stakeholders, allied support industries, retailers, foodservice and Government.
BPEX Interim Head of Research and Development, Derek Armstrong, said: "The really encouraging part is that there are a lot of organisations committed to working together to deliver a coherent vision of health and welfare."

Chinese Seek Deal for British Pigs
UK & CHINA - British pigs are still the tops, particularly with the Chinese who are looking to buy new breeding stock.
 

A Chinese delegation has just paid a visit to the UK looking to buy 1,000 pigs for an integrated operation.

The visit came about following the BPA's presence on the BPEX stand at the China International Meat Industry Exhibition jointly funded by BPEX and UKTI.

BPEX Director Mick Sloyan, who hosted a dinner for the visitors, said: "British breeding stock is still prized the world over.

"The Chinese are bringing their agriculture up-to-date at a tremendous rate and British pigs use less feed, therefore produce much less manure and they also need less land. This will in turn reduce the environmental impact quite markedly."

BPA Export Promoter, Chris Jackson, said: "They were specifically looking for pedigree Large White and pedigree Landrace pigs.

"It was a very successful visit and we took the delegation all around the country. We are looking forward to doing business with them."

Tuesday, August 23, 2011Print This Page
Pork Commentary: Road Trip Continues - Thailand & India
THAILAND & INDIA - "The odyssey continued last week, not quite Jason and the Argonauts but we are covering a lot of ground. As you probably read in previous commentaries we have travelled one week Russia, one week China, this past week Thailand and India," writes Jim Long in this week's Pork Commentary.

Jim Long is President &
CEO of Genesus Genetics.
Our observations:

Thailand has a hot and humid climate. The people are quite pleasant and very polite.


Bangkok is everything you have ever heard about. We would be surprised if there were any middle aged white men left in Europe currently. It must be a European tradition to travel without your wife. Just an observation but we are not cultural experts.


My 14-year-old son who has been on the odyssey was quite quick to observe, "Bangkok is a lot different than where we live." He is a quick study.


Thailand has about one million sows and the price of market hogs is about 85 Baht (THB) a kilogram live weight or about US$2.25 a kilo (US$1.00 ive weight a pound). Producers told us current market hog prices are the highest in history. Profits per head are about $100.


We had a meeting with Government officials and several producers who collectively made up about 30 per cent of Thailand’s sow herd.


Feed prices are similar to USA. Thailand produces about 80 per cent of its corn needs. Soybean meal is imported.


We were told Thailand hog prices are record high because of low hog prices in the past couple years and what they called 'Chinese PRRS'. The PRRS that we wrote about last week in China got to Thailand. Lots of abortions and dead pigs, it reminds us of a few years ago when Larry Pope (now CEO of Smithfield Foods) spoke at the National Pork Industry Conference and basically said that PRRS is the producer’s friend: it cuts supply and increases prices. People were somewhat shocked at what Mr Pope said but it has some real logical merit. Then again, you do not get to be CEO of the world’s largest pork company by being unable to do your own thinking.


Our impression of Thailand is that its production base is more technical and consolidated than China. The percentage of backyard pigs is significantly less than China’s. About 100 entities make up the bulk of Thailand’s industry, almost all family-owned.


Producers in Thailand prefer Duroc-, Yorkshire- and Landrace-based genetics. Synthetic lines with Pietrans have proven to be too disease-susceptible and too slow growing. The climate where 20° C. or 68° F. is the lowest recorded temperature puts a significant premium on genetics with appetite and disease resistance.


Thai producers do not get paid by grades on hogs directly but fat pigs get discounted.
Summary
Thailand is a fascinating country with a relatively mature swine production base. Like many other countries in the world, they have these highest prices and profits in history. The producers we talked to were all veterans of the 'pig wars'. As one said, "We know it won’t last, we got to get ready for the next downturn." Sounds like home!

India
We had a quick stop in India. India’s swine industry is small. Official statistics are limited. Like other parts of the world, as people's disposable income increases so does demand for meat. Many Indians are vegetarians because of lack of income for meat, not necessarily for religious reasons.

We were stimulated for our visit by project development by South East Asian associates of Genesus that look at investing. We expect outside expertise for India because of proximity and business ties.

One interesting aspect of India is that no grain can be exported so feed prices are relatively insulated. Current feed grain stocks in India due to the ban on exports are 61 million tonnes - a level challenging grain storage facilities.

India like other countries wants meat and poultry. For India, with over one billion people, a little bit per capita of pork is a lot. We see current project developments as a pebble in an ocean.

Summary
The odyssey is almost over. We are writing this in Indira Gandhi International Airport, New Delhi India. It is a big world; we will have gone around by the time we get home. Take home message: hog producers are good people in every country. My final thoughts as I listen to flights being called for Kabul and Kandahar, Afghanistan: not only is there no pork on these flights but as Dorothy said in 'The Wizard of Oz', "There is no place like home."


Author: Jim Long, President & CEO, Genesus Genetics 

, August 23, 2011
Pork Producers Advised to Secure Feed Supplies
US & CANADA - An agricultural Economics professor with the University of Missouri is advising North American pork producers to consider securing feed supplies in advance of need and locking in some margin on their hogs during the coming months, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

FarmScape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 

Although the summer of 2011 has seen some record high North American hog prices high feed costs have taken a big bite out of profitability.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, notes USDA is advising livestock and poultry producers to expect this year's corn crop to be sold at and average price of around 6.75 a bushel, 1.45 a bushel higher than the 2010 crop which currently holds the record.

Dr Ron Plain-University of Missouri
Feed cost is a big factor and I contend that trying to stay a little bit bought ahead on feed is a good strategy.

Interestingly in the last several years we have seen the low in corn prices coming a bit earlier in the fall than normally.

It used to be that October was the odds on favorite for the low price month for corn and it seems now that more August and September is when we very often have the bottom so staying bought ahead on feed I think is a good strategy.

Then, as far as marketing hogs and particularly trying to hedge prices using futures contracts, past experience indicates that those hogs that go to slaughter during the fourth quarter or the first quarter of the year generally have offered a little better opportunity to hedge at a gain than prices sold during the summer of the year so I would argue producers might be looking at some of these futures contracts and locking in some margin here in coming months.

Dr Plain observes these record prices put a lot of pressure on producers to manage their cash flow.

He says there's a lot money flowing through pork producers fingers and they've got to be sharp managers to hang on to enough of it to pay the bills.

World Agricultural Supply and Demand Estimates – August 2011
Meat and poultry supplies are expected to remain stable while corn, wheat and oilseed supplies this month are forecast to be down, according to the August World Agricultural Supply and Demand Estimates.

Livestock, Poultry and Dairy
Small changes are made to the 2011 forecast of total red meat and poultry production. Beef production is reduced slightly. Although fed cattle slaughter is raised to reflect the large number of cattle placed in feedlots during the second quarter due to drought in the Southern Plains, second-half carcass weights have been reduced. The pork production forecast is lowered due to the expected short-term effect of recent hot, humid weather on third-quarter hog weights. For the year, broiler production is unchanged from last month. Production in June was higher than expected which offsets a sharper expected decline in second-half production. Turkey production is raised as higher forecast turkey prices are expected to moderate the expected decline in second-half production. The egg production forecast is reduced slightly from last month.

For 2012, beef production is reduced due to slower carcass weight growth and slightly lower later year slaughter. Higher feed prices are expected to slow the pace of later year marketings as cattle are kept on forage longer. Pork production is lowered as tight feed supplies pressure hog weights. Broiler production is forecast lower as the stronger second-half production declines carry into the first part of 2012. Turkey production is expected to grow more slowly as higher feed prices partly offset higher turkey prices. Egg production is reduced from last month on higher feed prices.

Beef imports are forecast higher in 2011 as demand for processing meat remains relatively strong. Beef exports are raised for both 2011 and 2012. A favourable exchange rate is expected to support exports to a number of countries. Likewise, pork export forecasts are raised for both 2011 and 2012. A favourable exchange rate and relatively strong demand for pork in Asia are expected to boost exports. US pork imports are reduced slightly in both years. No change is made to broiler exports for either 2011 or 2012 but turkey exports in 2011 are expected to be slightly stronger.

Cattle prices are forecast slightly lower for the third quarter but subsequent forecasts are unchanged. Hog prices are forecast higher for both 2011 and 2012 as stronger export demand in both years support prices. Broiler prices are lowered in both 2011 and in the first part of 2012 as supplies remain relatively large.

The milk production forecast for 2011 is reduced. Although the July Cattle report indicated that producers are holding relatively large numbers of dairy replacement heifers which supports a higher forecast dairy herd, recent hot, humid weather and relatively high priced feed may constrain the growth in milk per cow. Milk production is forecast higher for 2012, reflecting a larger herd in the first part of 2012 but slightly slower growth in milk per cow. Commercial exports for 2011 are forecast higher on the strength of butterfat exports. Imports are lowered reflecting lower imports of cheese and milk proteins. Trade forecasts for 2012 are unchanged.

Cheese, butter, and whey prices are forecast higher for 2011, but non-fat dry milk (NDM) is forecast lower. Tighter milk supplies are expected to support higher product prices but softening international prices will likely weigh on US NDM markets. The Class III price is raised, based on higher forecast cheese and whey prices, but lower forecast NDM prices will outweigh higher butter prices and the Class IV price forecast is reduced. For 2012, NDM prices are forecast lower on expected weaker early-year demand but cheese prices are forecast slightly higher. Forecast butter and whey prices are unchanged from last month. The Class III price is raised reflecting higher forecast cheese prices but lower NDM prices result in a reduced forecast for the Class IV price. The all milk price forecast is raised to $20.30 to $20.50 per cwt for 2011 and $17.80 to $18.80 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered 30 million bushels this month as higher forecast winter wheat production is more than offset by lower area and production for durum and other spring wheat. Total use for 2011/12 is lowered 30 million bushels with a reduced outlook for exports more than offsetting an increase in expected feed and residual use. Exports are projected down 50 million bushels with increased competition, particularly from FSU-12 countries, where production prospects are raised. Projected feed and residual use is raised 20 million bushels, reflecting a continuation of competitive prices for feed-quality wheat and lower projected corn supplies. Ending stocks are nearly unchanged. The 2011/12 season-average farm price for all wheat is projected at $7.00 to $8.20 per bushel, up from last month’s range of $6.60 to $8.00 per bushel supported by higher projected prices for corn.

Small changes are made to 2009/10 and 2010/11 supplies and usage reflecting the latest revisions to trade estimates from the US Bureau of Census. These revisions result in adjustments to feed and residual use in both years.

Global wheat supplies for 2011/12 are projected 11.4 million tons higher with higher beginning stocks and a sharp increase in production. World wheat production for 2011/12 is raised 9.7 million tons with increases in FSU-12, India, China and EU-27 more than offsetting a reduction for Argentina. Russia production for 2011/12 is raised 3.0 million tons on harvest reports for winter wheat and continued favourable weather in most of the country’s spring wheat areas. Ukraine production is increased 3.0 million tons on higher-than-expected yields; however, heavy rains during harvest have reduced this year’s crop quality. Kazakhstan production is increased 1.0 million tons on abundant spring and early summer rainfall. India wheat production is up 1.9 million tons based on the latest official government estimates. China production is raised 1.5 million tons based on the latest official government indications. Production is increased 1.4 million tons for EU-27 with increases for France, Romania and Bulgaria. Harvest results from France indicate yields were hurt less by prolonged spring dryness than early reports had suggested. Partly offsetting is a 1.5-million-ton reduction in expected production for Argentina as the latest planting progress reports suggest less acreage increase this year.

The 2011/12 outlook for world wheat trade and consumption this month is shaped by growing supplies of wheat, especially in FSU-12 and EU-27, and tighter supplies of corn in the United States. Imports are raised 3.0 million tons with increases for South Korea, Algeria, Indonesia, Syria and Kenya. World wheat feeding is increased 4.9 million tons with higher expected feeding in EU-27, China, Canada, South Korea and the United States. Exports are raised 4.0 million tons for Russia and 1.5 million tons for Ukraine, more than offsetting reductions of 1.5 million tons for Argentina, 1.4 million tons for the United States and 1.0 million tons for Canada. World wheat ending stocks for 2011/12 are projected 6.7 million tons higher at 188.9 million tons. Stocks are expected to decline slightly from 2010/11 with higher usage but remain 62.9 million tons above their recent low in 2007/08.

Coarse Grains
US feed grain supplies for 2011/12 are projected lower this month with sharp drops in forecast corn and sorghum production. Corn production for 2011/12 is forecast 556 million bushels lower with a reduction in harvested area and lower expected yields. The national average yield is forecast at 153.0 bushels per acre, down 5.7 bushels from last month’s projection as unusually high temperatures and below average precipitation during July across much of the Corn Belt sharply reduced yield prospects.

Total projected corn use for 2011/12 is reduced 340 million bushels. Feed and residual use is projected 150 million bushels lower reflecting the smaller crop and higher expected prices. Corn use for ethanol is projected 50 million bushels lower with tighter supplies and lower forecast gasoline consumption for 2011 and 2012. Projected corn exports for 2011/12 are reduced 150 million bushels with wheat feeding expected to increase. Ending stocks are projected 156 million bushels lower at 714 million. The stocks-to-use ratio is projected at 5.4 per cent, compared with last month’s projection of 6.4 per cent. The season-average farm price is projected at $6.20 to $7.20 per bushel, up 70 cents on each end of the range.

Other significant 2011/12 feed grain changes include a sharp reduction in the forecast sorghum yield and production with prolonged drought and excessive heat in the central and southern Plains. Sorghum exports are projected 20 million bushels lower. Domestic use is also projected lower with a 10-million bushel reduction in food, seed and industrial use and a 25-million bushel reduction in feed and residual use.

Small changes are made to 2009/10 feed grain supplies and usage reflecting the latest revisions to trade estimates from the US Bureau of Census and revisions for 2010 calendar year ethanol production from the Energy Information Administration. Estimated feed and residual use for 2009/10 is adjusted based on these revisions.

Global coarse grain supplies for 2011/12 are projected lower with a 3.6-million ton increase in beginning stocks more than offset by a 14.0-million ton reduction in output. The decline in global production is driven by reduced corn and sorghum production in the United States with foreign corn, barley and oats production all expected higher. Corn production is raised for Brazil, Ukraine and EU-27 but lowered for Egypt. Barley production is raised for Ukraine and Argentina but lowered for EU-27. World oats production is raised slightly with an increase for EU-27. World rye production is reduced with a smaller expected crop for EU-27.

Global coarse grain exports for 2011/12 are lowered slightly as reduced US corn and sorghum exports are mostly offset by higher expected foreign corn and barley shipments. Corn exports are increased 1.0 million tons for Ukraine, 0.5 million tons for Argentina and 0.5 million tons for Canada making up more than half of the reduction in US exports. Barley exports are increased 0.7 million tons for Ukraine, 0.5 million tons for EU-27 and 0.4 million tons for Argentina with the bulk of those increases to Saudi Arabia.

Global coarse grain consumption is projected down 8.4 million tons with most of this resulting from lower world corn feed and residual use. More than half of the reduction is from lower corn and sorghum feed and residual use in the United States. Corn feeding in lowered for EU-27, Canada and South Korea as rising supplies of competitively priced feed quality wheat displace corn usage. World corn ending stocks are projected down 1.1 million tons with increases for Brazil and EU-27 mostly offsetting the US reduction.

Oilseeds
US oilseed production for 2011/12 is projected at 91.7 million tons, down 4.7 million from last month. Soybean, canola and sunflower seed production are all projected lower. Soybean supplies for 2011/12 are reduced as lower forecast production is only partly offset by higher beginning stocks. Soybean production for 2011/12 is projected at 3.056 billion bushels, down 169 million due to lower harvested area and yields. Harvested area is projected at 73.8 million acres, down 0.5 million (using rounded data) mainly reflecting reductions for South Dakota. The first survey-based yield forecast of 41.4 bushels per acre is 2.0 bushels below last month's trend yield projection and 2.1 bushels below last year's yield. Soybean ending stocks are projected at 155 million bushels, down 20 million from July as reduced supplies are only partly offset by reduced exports and crush. Soybean exports are reduced 95 million bushels to 1.4 billion mainly due to the lower crop and increased projected supplies in South America this fall. Soybean crush is reduced 20 million bushels on lower domestic soybean meal use.

US changes for 2010/11 include reduced soybean crush and exports and increased ending stocks. Crush is reduced five million bushels to 1.645 billion reflecting reduced soybean meal exports. Soybean exports are reduced 25 million bushels to 1.495 billion reflecting lower-than-expected shipments in recent weeks. Soybean ending stocks are projected at 230 million bushels, up 30 million from last month.

Soybean and product prices for 2011/12 are all higher this month. The US season-average soybean price is projected at $12.50 to $14.50 per bushel, up 50 cents on both ends of the range. Soybean meal prices are projected at $355 to $385 per short ton, up $10.00 on both ends of the range. Soybean oil prices are projected at 54.5 to 58.5 cents per pound, up 0.5 cents on both ends of the range.

Global oilseed production for 2011/12 is projected at 451.4 million tons, down 4.1 million tons from last month mostly due to a reduction in the US soybean crop. Reductions for soybeans, rapeseed and cottonseed are only partly offset by increased sunflower seed and peanut production. Lower soybean production is projected for the United States, China and Ukraine. China’s production is projected at 14 million tons, down 0.3 million due to reduced harvested area. Brazil's soybean production is projected at 73.5 million tons, up one million tons due to higher expected yield. Production for Brazil’s 2010/11 crop is also raised this month to a record 75.5 million tons based on record yields. Rapeseed production is reduced for Ukraine and Belarus, reflecting lower yield prospects for both countries. Other changes include higher sunflower seed production for EU-27, higher rapeseed production for Australia, higher peanut production for China and lower cottonseed production for Brazil.

Rice
US total rice supplies for 2011/12 are projected at 257.2 million cwt, up 0.6 million from last month. Increases in both forecast beginning stocks and production more than offset a reduction in imports. USDA's first survey-based forecast of the 2011/12 US rice crop is 188.1 million cwt, up 1.1 million from last month's projection but down 23 per cent from the record 2010/11 crop. Average yield is forecast at 7,114 pounds per acre, up 55 pounds per acre from last month’s projection, and up six per cent from last year. Area harvested, at 2.64 million acres, is reduced slightly from a month ago. Long-grain production is forecast at 124.2 million cwt, up 0.7 million from last month, while combined medium- and short-grain production is forecast at 63.9 million, up 0.4 million from a month ago. The all rice import projection is lowered 1.0 million cwt to 18.0 million due in part to an expected slower pace of long-grain imports from South Asia.

US total rice use for 2011/12 is projected at 224.0 million cwt, down 3.0 million cwt from last month. Although all rice domestic and residual use is unchanged from last month at 127.0 million cwt, the long-grain projection is lowered 2.0 million to 94.0 million and the combined medium- and short-grain forecast is raised the same amount to 33.0 million. The export projection is lowered 3.0 million cwt from a month ago to 97.0 million based entirely on a decrease in combined medium- and short-grain exports. An increase in competition from both Australia and Egypt is expected in medium-grain markets in North Africa, the Middle East and Oceania. The long-grain export projection is unchanged from a month ago at 66.0 million cwt, and the combined medium- and short-grain estimate is lowered to 31 million. US all-rice ending stocks for 2011/12 are projected at 33.2 million cwt, up 3.6 million from last month, but down 35 per cent from the previous year.

The 2011/12 long-grain US season-average farm price is projected at $12.70 to $13.70 per cwt, up 70 cents per cwt on each end of the range. The combined medium- and short-grain price is projected at $14.50 to $15.50 per cwt, down $1.50 per cwt on each end of the range. The 2011/12 all rice price is projected at $13.20 to $14.20 per cwt, unchanged from a month ago. Higher prices are expected in Thailand due to a government intervention programme, which will provide support to global long-grain prices. Larger exportable supplies of medium-grain rice in both Australia and Egypt are expected to pressure global medium-grain rice prices.

Lower projected global 2011/12 total use more than offsets a slight increase in total supplies resulting in an expected increase in ending stocks. The increase in beginning stocks of nearly 0.7 million tons is primarily due to increases for India and Indonesia, which is partially offset by a reduction for Pakistan. Global production is lowered slightly due primarily to forecast reductions for Indonesia as well as North and South Korea, which is partially offset by an increase for Egypt and the United States. On the use side, global consumption is lowered 1.1 million tons, leading to an increase in projected global ending stocks. Domestic consumption is lowered for Pakistan and North Korea. Global exports are up from a month ago due to increases for Brazil, Egypt, India and Pakistan that are partially offset by reductions for Thailand and the United States. Global imports are up for Indonesia and China. Global ending stocks for 2011/12 are projected at 97.9 million tons, up 1.7 million from last month, largely the result of an upward revision for Thailand.

Global Coarse Grain Production Down Due to US Drop
World coarse grain production is down 14.0 million tons this month to 1,136.3 million tons, mostly because of reduced US prospects. In contrast, foreign production is projected up 1.7 million tons to 797.5 million, mostly due to increased corn and barley prospects. Foreign corn production is up 2.2 million tons this month to 532.5 million, led by increased prospects in Brazil. Foreign barley production is up 0.8 million tons to 128.7 million, boosted by improved prospects for Ukraine. EU oats production increased this month, boosting projected world production slightly. Global rye and mixed grains are each reduced 0.8 million tons this month as EU production prospects are reduced, mostly due to excessive rain during harvest in Poland and Germany.

Brazil's 2011/12 corn crop is projected up 2.0 million tons to 57.0 million, supported by increased area prospects. Planting for the main crop starts in September, and recent price increases for corn relative to those for other crops support expanded area, even in Brazil where climatic conditions often make soybeans less risky than corn. Brazil's estimated corn crop for 2010/11 remains at 55.0 million tons, with upward revisions reported for the main crop offsetting declining prospects for the second crop.

Ukraine's corn production prospects are increased 1.0 million tons to 16.5 million based on increased reported area. Favourable soil moisture during seeding and attractive prices encouraged corn plantings. EU corn production prospects are increased 0.8 million tons this month to 60.1 million, with improved yield prospects in Germany and increased reported area for Romania, Italy, Slovakia and Bulgaria more than offsetting lower-than-expected area in France.

Egypt's corn production prospects are cut 0.8 million tons to 5.9 million because producers are reported to have shifted area to rice, likely due to relaxed government controls. Canada's corn production prospects are trimmed 0.3 million tons to 11.0 million as yield prospects in Ontario are reduced by delayed crop development and dry conditions in some locations. Lower area and trimmed yield prospects are reducing Croatia's corn production prospects 0.2 million tons to 2.0 million. Ongoing drought in northeast Kenya is reducing corn production prospects 0.2 million tons to 2.8 million; the drought is also extending into Somalia, cutting 2011/12 corn production prospects in half to 60,000 tons. However, corn production in Kenya for 2009/10 and 2010/11 is revised 0.3 million tons and 0.4 million higher this month. Corn production for 2010/11 is also raised this month for India, the EU and Indonesia, more than offsetting a small decline for Mexico. A decline in 2010/11 Mexican sorghum production is more than offset by an increase for Argentina.

Barley production prospects in Ukraine for 2011/12 are up 1.0 million tons this month to 8.5 million. Nearly complete harvest data reveal higher-than-expected yields. Argentina's 2011/12 barley production prospects are increased 0.4 million tons to 3.1 million based on increased area prospects. The export quota regime for wheat makes barley an attractive alternative winter grain for producers who wish to avoid the uncertainty of the government's wheat export policy. Argentina's 2010/11 barley area was increased slightly, boosting production 0.05 million tons to 2.95 million. India reported a slightly higher barley yield, boosting 2011/12 production 0.07 million tons to 1.57 million, a rabi crop harvested months ago. China's winter grain harvest report also boosted barley yield slightly, increasing production 0.05 million tons to 2.6 million.

EU barley production prospects for 2011/12 are reduced 0.6 million tons this month to 51.5 million. Spring dryness in France and Germany, compounded by excessive harvest rains in Germany, trimmed barley yields. Also, Spain reported lower barley area. Kazakhstan reported no increase in barley area for 2011/12, reducing barley production prospects 0.1 million tons to 2.1 million. Croatia also reported no growth in barley area, reducing production prospects slightly.

World 2011/12 Beginning Stocks Increased This Month
Global coarse grain beginning stocks for 2011/12 are increased 3.6 million tons this month to 160.9 million. Foreign countries account for 2.1 million tons of the increase. Argentina's coarse grain beginning stocks for 2011/12 are boosted 0.7 million tons to 2.7 million with increased corn production estimated for 2009/10 and increased sorghum production for 2010/11. Area harvested is estimated higher. EU coarse grain beginning stocks for 2011/12 are increased 0.6 million tons to 15.7 million, mostly due to reduced barley feed use estimated for 2010/11. Beginning stocks are also increased for India, Indonesia, Russia, Kenya, and several other countries. Beginning stocks for 2011/12 are reduced 0.5 million tons for South Africa based on increased 2010/11 corn exports. Mexico's beginning stocks are also trimmed.

Global Coarse Grain Use Prospects Reduced
World coarse grain disappearance in 2011/12 is projected down 8.4 million tons this month to 1,150.0 million. Foreign use is forecast down 2.7 million tons to 849.5 million as strong prices ration demand. EU coarse grain domestic use is cut 2.0 million tons this month to 146.5. Coarse grains are being displaced by feed wheat in animal rations, cutting EU feed and residual prospects 2.7 million tons to 108.2 million. EU 2010/11 coarse grain feed use estimated for 2010/11 is also reduced this month. However, based on demand prospects reported by USDA's Foreign Agricultural Service posts in the EU, food, seed and industrial use in 2011/12 is boosted 0.75 million tons to 38.3 million, with most of the increase attributed to barley used for malting. Canada is also expected to have coarse grain feed use displaced by competitively priced wheat, cutting coarse grain feed and residual use 0.7 million tons this month to 14.2 million tons. South Korea and Thailand are expected to import wheat for feed, displacing coarse grains and trimming feed and residual use 0.5 and 0.2 million tons, respectively. Egypt, with reduced corn production prospects, has feed and residual forecast 0.3 million tons lower this month.

Partly offsetting the aforementioned declines are increased 2011/12 use prospects for Saudi Arabia, up 0.8 million tons, based on increased barley imports; India, up 0.5 million, with increased use estimated for 2010/11; Indonesia, up 0.3 million, due to growing feed demand; China, up 0.2 million, due to increased barley malting for beer production; and several other countries, up by smaller amounts.

Foreign Coarse Grain Ending Stocks Projected Higher
World coarse grain ending stocks in 2011/12 are projected down 2.0 million tons this month to 147.2 million but foreign stocks are forecast up 2.1 million tons to 126.6 million, roughly offsetting half the drop in US stocks. Increased foreign production and reduced coarse grain feed use because of ample supplies of competitively priced wheat combine to boost prospects for foreign ending stocks.

Brazil's coarse grain ending stocks in 2011/12 are increased 2.0 million tons to 8.5 million this month, supported by increased corn production prospects. Ending stocks for Brazil are still expected to decline for the fourth consecutive year. Saudi Arabia's coarse grain stocks are up 0.3 million tons to 1.6 million, based on strong barley imports. However, Saudi stocks are also expected to decline for the fourth straight year. Smaller increases are expected for Thailand, Ukraine, Turkey, Viet Nam and several other countries. Partly offsetting these increases are reduced stocks forecast for South Africa, down 0.5 million tons to 4.0 million, due to recent strong corn export shipments. Smaller reductions in stock prospects are expected for Mexico and some other countries.

US Corn Export Prospects for 2011/12 Reduced
US corn exports in trade year 2011/12 are projected at 45.0 million tons, down 3.0 million this month – down 150 million bushels to 1.75 billion for the local marketing year – due to tight US supplies and high corn prices, increased competition from other exporters and declining world corn trade caused by increased availability of competitively priced feed quality wheat.

World corn trade in 2011/12 is projected to reach 92.8 million tons, down 0.9 million this month. EU corn imports are reduced 1.0 million tons to 4.0 million because of increased production and feed use of wheat. EU wheat feed use is forecast up 2.0 million tons this month. South Korea, Thailand and Viet Nam have reduced corn imports forecast this month – down 0.5 million tons, 0.1 million and 0.1 million, respectively – due to increased import prospects for feed quality wheat. Partly offsetting are increased corn imports expected for Egypt, up 0.5 million tons, and Kenya, up 0.15 million, because of reduced production prospects.

Ukraine, with increased corn production prospects, is projected to export 8.5 million tons in 2011/12, up 1.0 million this month. Argentina, with increased estimated beginning stocks, is projected to export 17.5 million tons of corn in 2011/12, up 0.5 million tons this month. Canada's corn export prospects are increased 0.5 million tons this month to 1.0 million as the recent strong pace of sales and shipments is expected to slow but not cease in 2011/12. South Africa has shipped corn in recent months at a pace that indicates that port capacity and transportation infrastructure problems are not as severe as previously thought. Its corn export prospects for 2011/12 are boosted 0.3 million tons this month to 2.3 million. Croatia's 2011/12 corn exports are trimmed 0.15 million tons to 0.1 million due to reduced production prospects.

US 2011/12 Sorghum Export Prospects Drop
Sharply reduced US production prospects are limiting sorghum export prospects for 2011/12. Exports are projected down 0.4 million tons to 2.9 million – down 20 million bushels to 110 million for the local marketing year). Argentina's sorghum exports for the 2011/12 October-September trade year are boosted 0.3 million tons to 2.0 million, supported by increased production in the 2010/11 March-February local marketing year. EU sorghum imports are trimmed slightly for 2011/12.

US sorghum exports for 2010/11 are increased 0.2 million tons to 3.8 million this month based on the recent pace of sales and shipments and strong demand from Mexico. Demand growth in Mexico stems from reduced production prospects, especially in Tamalipas. According to Census data, US sorghum exports for October-June reached 2.9 million tons. Sorghum grain inspections in July 2011 were 0.3 million tons, up 50 per cent from a year earlier. As of 4 August, outstanding sales were 0.4 million tons, down just two per cent from last year at this time, supporting prospects for shipments in August and September 2011.

US 2010/11 Corn Exports Slump
US corn exports for 2010/11 are forecast down 2.0 million tons to 46.0 million – down 50 million bushels to 1.825 billion for the local marketing year. The pace of export sales and shipments has fallen short of expectations in recent months as US corn prices have not been competitive with feed-quality wheat, and other exporters have shipped aggressively. The 2010/11 forecast is down seven per cent from the previous year. Census exports for October-June reached 34.1 million tons, down five per cent from the previous year. July export inspections were only 3.9 million tons, down 14 per cent from a year ago. Moreover, as of 4 August, outstanding export sales reached only 5.7 million tons, down 23 per cent from the same week last year. With US corn in Southern States damaged by drought, less new-crop corn than usual is likely to be available for shipment in September 2011.

Partly offsetting the drop in US export prospects for 2010/11 are increased exports forecast based on the recent pace of shipments for Argentina, up 0.5 million tons; India, up 0.4 million; South Africa, up 0.3 million; Canada, up 0.2 million; and Thailand, up 0.05 million. Import forecast adjustments based on the pace of recent shipments include Japan, down 0.6 million tons; Viet Nam, down 0.3 million; Thailand, down 0.1 million; Indonesia, up 0.5 million; Turkey, up 0.2 million; and the United States and Kenya, up by smaller amounts.

August 2011

Feed Outlook – August 2011
Lower projected yields have reduced global production prospects, according to the latest report from the USDA Economic Research Service.
 

The first survey-based forecasts for corn and sorghum sharply reduce this month's outlook for 2011/12 US feed grain production. Harvested acres and yield are reduced this month for corn, resulting in a projection for the third-largest corn crop on record, falling behind the 2007 and 2009 crops. Sorghum production is forecast down from last month, also on lower expected harvested acres and yield. Reductions this month in projected corn feed and residual, food, seed and industrial (FSI) use, and exports lower total disappearance for 2011/12. Ending stocks for corn, sorghum, and barley are reduced and oats are increased slightly from last month. Prices for the four feed grains are expected to be stronger with tight domestic supplies and low global stocks.

World coarse grain production for 2011/12 is down this month but foreign production is up led by increased prospects for corn in Brazil and for corn and barley in Ukraine. Global coarse grain use is reduced by increased prospects for wheat feeding. Foreign coarse grain ending stocks are projected higher, offsetting about half this month’s decline in US stocks.

US Feed Grain Supply Prospects Diminish
Forecast US feed grain beginning stocks in 2011/12 are raised 1.5 million tons from last month but are down 20.6 million tons from the previous year, a 43-per cent reduction. US feed grain production is forecast at 338.6 million metric tons, 15.7 million below last month but 8.6 million above the 2010/11 estimate. Compared with the amounts in 2010/11, production is up for corn but down for sorghum, barley, and oats. This month saw sharp declines in projected production for corn and sorghum. Feed grain supply is projected at 368.4 million metric tons this month, 14.2 million short of last month and 12.2 million below 2010/11.

Total 2011/12 feed grain use is projected 10.0 million metric tons lower from last month and 5.3 million short of 2010/11. This month's reduction reflects lower estimates for feed and residual, FSI and exports for corn and sorghum. Lower forecast use for fuel ethanol was partially offset by increases in corn sweeteners and starch use. FSI is projected at 172.0 million metric tons in 2011/12, compared with 169.8 million in 2010/11. Exports are forecast at 47.5 million metric tons, down 4.3 million from the previous estimate and 2.9 million below last season.

The US Census Bureau issued revised numbers for calendar year 2010, affecting trade estimates this month for corn and sorghum in 2009/10 and for barley and oats in 2010/11. Imports are unchanged for 2009/10 but are up slightly for 2010/11, with a small increase for oats. Marketing year exports for feed grains in 2009/10 are lowered slightly to 54.7 million metric tons, mostly reflecting a small downward revision for corn. In 2010/11, forecast exports are lowered for barley and oats based on the Census revisions, with sorghum and corn export projections also adjusted based on the pace of shipments. Feed grain exports for 2010/11 are projected 1.0 million metric tons lower to 50.4 million. Ending stocks for 2010/11 are up by 1.5 million metric tons to 27.5 million.

When converted to a September–August marketing year, feed and residual use for the four feed grains plus wheat in 2011/12 is projected to total 133.6 million tons, down from 138.7 million last month and down three per cent from the 2010/11 forecast of 138.0 million. Corn is estimated to account for 93 per cent of total feed and residual use in 2011/12, up from 92 per cent in 2010/11.

Projected grain-consuming animal units (GCAUs) for 2011/12 are up slightly from last month at 94.5 million. Estimated GCAUs for 2010/11 are unchanged at 93.1 million. Feed and residual use per animal unit is projected at 1.42 tons, down from last month's 1.47 tons due to lower cattle carcass and hog numbers.

US Corn Crop Prospects Lowered
US corn production in 2011/12 is forecast at 12,914 million bushels, down 556 million from last month but up 467 million from 2010/11. Harvested acreage for 2011/12 is forecast at 84.4 million acres for grain, down 500,000 from last month but up 2.9 million from the previous year. Based on conditions on 1 August, yields are expected to average 153.0 bushels per acre, down 5.7 bushels from last month's projection of 158.7 bushels and just 0.2 bushels higher than the estimated 2010 yield of 152.8 bushels. Unusually high average temperatures and below-average precipitation across much of the Corn Belt in July sharply reduced yield prospects. As of 8 August, 60 per cent of the corn crop was rated in good-to-excellent condition in the 18 major corn-producing States, down 11 percentage points from a year ago.

US Corn Use Expected To Slip
Total US corn use for 2011/12 is forecast down 340 million bushels to 13,160 million this month as a result of decreased exports, feed and residual use and FSI use. FSI use is lowered 40 million bushels. Corn for fuel is lowered 50 million bushels, and use for 'cereals and other' is reduced five million bushels. However, high fructose corn syrup (HFCS), corn used for starch, and glucose/dextrose are each raised five million bushels. US exports are reduced by 150 million bushels as high prices reduce demand and world feeders shift to more competitively priced wheat.

Total corn use for 2010/11 is forecast down 60 million bushels to 13,245 million bushels this month. Food, seed and industrial use (FSI) is reduced 10 million bushels to 6,420 million bushels. Lower use for ethanol, down 30 million bushels to 5,020 million, is partially offset by increases on other FSI categories. HFCS is increased 10 million bushels to 520 million as a result of expected increased exports to Mexico and the year-to-year pace through the third quarter. Glucose/dextrose and starch are both raised five million bushels to 265 million and 260 million, respectively. US exports for 2010/11 are reduced 50 million bushels to 1,825 million. Reductions in use leave ending stocks for 2010/11 up 60 million bushels compared with last month’s projection.

US Census Bureau trade revisions included changes for calendar year 2010. In the 2009/10 marketing year, corn exports are lowered seven million bushels to 1,980 million. FSI use is raised 22 million bushels to 5,961 million because of revisions to monthly ethanol production estimates by the US Energy Information Administration. Together, the revisions lower feed and residual use 15 million bushels to 5,125 million for 2009/10.

Corn prices received by farmers for 2011/12 are projected at $6.20 to $7.20 per bushel, up 70 cents on both ends of the range this month. The marketing year average reflects higher prices for corn with tighter ending stocks and tight global feed grain supplies. The 2010/11 corn price range is narrowed $0.05 at each end for an estimated range of $5.20 to $5.30 per bushel.

US Sorghum Production Lower
US sorghum production for 2011/12 is forecast at 241 million bushels, down 59 million from last month and 104 million bushels below last year. Expected area harvested for grain is forecast sharply lower at 4.4 million acres and down 420,000 from 2010/11. Based on conditions on 1 August, yield is lowered by 10.6 bushels per acre this month and is projected 17.0 bushels per acre below the previous season. Hot dry weather in Texas, Kansas and Oklahoma has reduced prospects for the 2011 sorghum crop. As of 8 August, 27 per cent of the US sorghum crop was rated good to excellent, compared with 66 per cent a year earlier.

Total use of sorghum in 2011/12 is projected down 55 million bushels this month to 245 million due to tight supplies. Feed and residual is cut 25 million bushels to 55 million as it may be difficult to put together enough sorghum to encourage feedlots to switch rations to include sorghum. Sorghum FSI use is lowered 10 million bushels to 80 million, with lower expected use for fuel ethanol. Export prospects are reduced 20 million bushels to 110 million as demand from Mexico is expected to remain strong but supplies will be a constraint. US ending stocks projected at 22 million bushels represent minimal 'pipeline' stocks.

Total use for sorghum in 2010/11 is forecast at 360 million bushels, unchanged from last month. Feed and residual use remains forecast at 125 million bushels. Sorghum used for ethanol is expected lower during the summer quarter, with tightening supplies cutting FSI use 10 million bushels to 85 million. Exports are raised 10 million bushels to 150 million, reflecting strong sales in July and the ongoing pace of shipments. Ending stocks for 2010/11 are virtually unchanged at 27 million bushels.

Sorghum prices received by farmers for 2011/12 are expected to average $6.00 to $7.00 per bushel, up 90 cents on both ends of the range from last month, as reductions in domestic feed grain supplies raises prices for all feed grains. The 2010/11 average sorghum price is narrowed $0.05 on each end of the range to $5.15 to $5.25 per bushel.

US Barley Production Prospects Up
US barley production for 2011/12 is forecast at 168 million bushels, down four million bushels from last month and down 12 million from 2010. Based on conditions on 1 August, producers expect yields to average 70.4 bushels per acre, up 0.8 bushels from last month. Production is expected to reach record lows on lower harvested acreage and yield as compared with last year. Area harvested for grain is forecast at 2.4 million acres, slightly lower than last month's estimate and down three per cent from 2010. On 8 August, 72 per cent of this year's US crop was rated in good-to-excellent condition, compared with 83 per cent a year ago.

Total barley supplies in 2011/12 are lowered 4 million bushels this month to 268 million, as a result of lower production. Domestic use is forecast at 210 million bushels, unchanged this month. With lower supply and steady use, this month's ending stocks are projected down four million bushels to 58 million, compared with 89 million in 2010/11.

US Census Bureau revisions for calendar year 2010 increased barley exports for 2009/10 slightly. Exports for 2010/11 were reduced slightly. Imports were reduced 0.5 million bushels to 9.5 million.

Prices received by farmers for barley in 2011/12 are expected to average $5.80 to $6.90 per bushel, raised 15 cents on both ends of the range this month. This compares with $3.86 per bushel for 2010/11. Although prices for feed barley are expected to increase largely in line with those for corn and sorghum, price gains will be limited for malting barley as much of the crop is produced under contract.

US Oats Production at Record Low
US oats production for 2011/12 is forecast at 57 million bushels, increased slightly from a month ago. This would be down 24 million from 2010/11, and if realised, the lowest production on record. Harvested area is forecast at 0.9 million acres, unchanged from last month and a record low. Based on conditions on 1 August, producers expect yields to average 61.6 bushels per acre, an increase of 1.1 bushels from the July forecast but a decrease of 2.7 bushels from last year. On 8 August, 52 per cent of the oat crop in the nine major producing States was rated as good to excellent, compared with 77 per cent last year.

Total oats supplies for 2011/12 are edged up this month to 215 million bushels. Oats use estimates remain unchanged with total use at 169 million bushels.

US Census Bureau revisions for calendar year 2010 result in minor changes in oats exports for 2009/10 and raise exports for 2010/11 0.2 million bushels to an estimated 2.8 million. Census data indicate 2010/11 imports reached 85.1 million bushels, up 2.1 million from the previous month's forecast. Small increases in imports for marketing years 2009/10 and 20010/11 produced corresponding changes in feed and residual use. FSI for 2010/11 was reduced two million bushels to 74 million.

Prices received by farmers in 2011/12 are expected to average $3.40 to $4.00 per bushels, up 20 cents on both ends of the range. This compares with $2.52 per bushel for 2010/11.

US Hay Production Slips in 2011/12
All US hay production in 2011/12 is forecast at 132.0 million tons, down 13.6 million from 2010/11 due to extremely hot and dry weather. The all-hay yield is expected to be 2.29 tons per acre, down from 2.43 tons per acre in 2010/11. Harvested acres are forecast at 57.6 million acres, down 2.3 million from last year and the lowest all hay area on record going back to 1919.

Alfalfa hay production is forecast at 65.0 million tons, down four per cent from last year.

Based on crop conditions on 1 August, yields are expected to average 3.36 tons per acre, down 0.04 tons from last year. If realised, this will be the second highest yield since 2005. Harvested area is forecast at 19.3 million acres, unchanged from June but down three per cent from the previous year's acreage.

Other hay production is forecast at 67.0 million tons, down 14 per cent from last year.

Based on conditions on 1 August, yields are expected to average 1.75 tons per acre, down 0.2 tons from last year. If realised, this will be the lowest US yield since 1988. Harvested area, forecast at 38.3 million acres, is unchanged from June but down four per cent from last year.

Roughage-consuming animal units (RCAUs) in 2011/12 are estimated to be down from 2010/11. Even with lower RCAUs, the sharp drop in hay production leaves hay supply per RCAU down at 1.94 tons, compared with 2.10 tons in 2009/10.

With tighter hay supplies, prices have risen sharply in recent months. The preliminary July 2011 estimate for the average price received by farmers for all hay was $170 per ton, compared with $112 per ton in July 2010. The preliminary July estimate for alfalfa hay was $189 per ton, compared with $117 per ton last season. The preliminary July estimate for hay other than alfalfa and alfalfa mixtures was $119 per ton, compared with $97 per ton a year ago.

Thursday, August 18, 2011
China to Import More Pork
CHINA - The central government is thought to be considering importing more pork in order to bring food inflation under control.


China is expected to import more pork in the future if the domestic price of the country's staple meat continues to rise, experts said.

An official source reports that China's consumer price index, an important gauge of inflation, increased 6.5 per cent in July above what it had been a year ago, according to the National Bureau of Statistics.

The inflation rate, driven primarily by increasing food costs, is at its highest point in 37 months. A big contributor to that increase has been the price of pork, which was nearly 57 per cent higher in July than it had been a year ago, according to official figures.

Wang Jimin, deputy director of the Chinese Academy of Agricultural Sciences' agricultural economics and development institute, said: "The central government may consider importing more pork in the future, especially when the country has been harmed by long-term increases in pork prices.

"The country will continue to see high pork prices in the next few months of the year. Those will eventually be in line with the prices found in overseas markets."

Mr Wang said foreign meat suppliers will enjoy a heyday in China when domestic pork costs more than imported pork.

He said: "That's possible but it's hard to predict now when that will exactly happen."

Statistics from the US Department of Agriculture showed that US exporters sent 192,500 tons of pork and pork-related products to the Chinese mainland in the eight months leading up to February 2011. Those had a total value of $169 million. Over the same period, another 63,600 tons of the products were exported to Hong Kong, and most of that was then re-exported to the Chinese mainland, according to the US Department of Agriculture.

The amount of pork from the United States is expected to increase throughout the summer and possibly into next year, the agricultural department said.

Analysts blame the stubborn rise in pork prices in part on the shortage now seen in the domestic meat supply. That, they say, has been the result of many farmers' current reluctance to raise pigs.

An increasing number of rural residents are choosing not to cultivate their fields amid the rapid urbanisation occurring around them.

Mr Wang added: "Farmers now are not willing to spend their time and money raising pigs, which is a rather dirty and hard job compared with working in cities."

Making matters worse has been the spread of various severe pig diseases, which have dented farmers' incomes and forced many of them to give up raising pigs, said Liang Haoyi, a researcher at the China Animal Agriculture Association.

In July, the Chinese government introduced a series of fiscal policies meant to drive down pork prices and ease worries about inflation.

One of them will result in 2.5 billion yuan (CNY; US$391 million) being invested into large-scale pig farms this year. Beneficiaries of the policy will receive a CNY100 subsidy for each of the pigs they raise and CNY800 in compensation for every pig that dies from disease or other external causes.

Mr Liang added: "There is still a long way to go if new large-scale pig farms are going to provide the country's meat supply, since many of them now don't have much experience in raising pigs."

Mr Wang has other ideas. He added: "More subsidies should be given to lower-income earners to support their meat consumption."

Tuesday, August 16, 2011
Agricultural Output up Five Per Cent
PHILIPPINES - Agricultural output increased by 5.5 per cent, mainly due to increases in rice, corn and sugarcane production. Poultry meat and egg production was up more than three per cent, pig meat by one per cent and fishery output was down three per cent.


Agriculture Secretary Proceso J. Alcala has credited rice and corn for the expansion of the farm sector by 5.48 per cent in the first semester, according to Manila Bulletin. Palay (rice) yielded 7.58 million metric tons (MMT) and corn notched 3.31MMT to increase the crops sub-sector's growth to 11.1 per cent. This sub-sector contributed 51.8 per cent in total agricultural output.

The livestock and poultry sub-sectors, which grew by 0.85 per cent and 3.6 per cent, respectively, also added modestly to the gain of the first half of 2011.

Fisheries dipped by 2.9 per cent, as commercial and municipal fish catch slid during the semester.

The gross value of agricultural output amounted to 706.4 billion pesos (PHP) at current prices, about 16 per cent higher than last year's level.

Among major crops, sugarcane made a full recovery from the effects of a dry spell last year, and grew by 75.6 per cent.

The crops sub-sector grossed PHP411.8 billion at current prices, 31.1 per cent more than last year.

Livestock, which accounted for 15.3 per cent of total agricultural production, registered a 0.85 per cent rise in output this year. Hog output went up by one per cent. Gross value was placed at PHP103.1 billion at current prices, 1.6 per cent lower than last year.

The poultry sub-sector grew by 3.6 per cent, grossing PHP77.8 billion. Production of chicken grew by 3.8 per cent, while chicken eggs increased by 3.5 per cent. The sub-sector contributed 13.4 per cent to total agricultural production.

Manila Bulletin reports that the fisheries sub-sector – which had a share of 19.6 per cent to total agricultural production – dipped by 2.9 per cent during the first semester, as commercial and municipal fish catch decreased by 15.6 per cent and 2.7 per cent, respectively.

Tuesday, August 16, 2011Print This Page
Pork Commentary: Road Trip to China
CHINA - Last week we arrived in China after our visit to Russia, writes Jim Long.
 

Jim Long is President &
CEO of Genesus Genetics.
These are our observations:

The swine industry in China right now is quite profitable. Live hog prices are 19.05 a kilo or $1.35 US with profits reported to be $70 - $100 per head.


Between 50 – 65 per cent of all hogs produced in China are raised in backyards with less than 50 market hogs per year. The China sow inventory is estimated to be between 35 – 43 million. (Notice margin of error 8 million is greater than North America’s sow inventory).


There are large scale operations as we met groups with 65,000 sows, 25,000 sows, and 20,000 sows in production or under construction.


Over the last five years backyard production has declined about 15 per cent of total production. As we travelled throughout China you could see massive construction of apartments, most of the new tenants will come from the countryside. This will and has cut backyard production as no pigs will be raised in apartments.


Pork is a big deal in China. This is from the front page of the China Daily:
"China pork prices were unchanged week on week for week ending 7 August after declining for two straight weeks, the Ministry of Commerce said on Wednesday."

"High pork prices have become a huge concern for the country, as the consumer price index, the main gauge of inflation rose to a 37 month high of 6.5 per cent in July. Pork prices soared by nearly 57 per cent year on year, according to National Bureau of Statistics."

I have never seen hog price updates on the front page of the New York Times, writes Jim Long.

Many of the farms are really, really small, less than an acre. It’s intensive production but not very efficient as it is very difficult to mechanise. While in China we read a report where there is about 22 million hectares 46 million acres that will not be planted this winter in Southern China mainly because the people have left the farms and moved to the city. The same little farms had pigs and many of them are gone.


When we asked about why the big price surge in hogs, we got three reasons: liquidation last year due to low prices, urbanization, and then disease, which we were told is PRRS. One group told us there are fewer than 10 PRRS-free farms in China.


The disease factor is the biggest impediment to new barn construction as producers and bankers worry about its implications. The idea of a high health site is half a mile from other pigs. This is drug company heaven!


This Pork Commentary is translated every week into Chinese and available on The Pig Site China. On the tour, one of our readers has commented on Pfizer’s Improvac – Chemical castration vaccine. He said pigs with testicles have no value in China’s market and that it is illegal to sell their meat. He felt the Pfizer product got no traction at their meeting as too many producers were worried about missing one of the two shots and getting zero value for the boar. The cost of vaccine versus risk was not justifiable. To paraphrase old Chinese Proverb, "That dog won’t hunt".
The amount of labour used on farms in China is significantly higher than North America. One person per 2.5 sows farrow-to-finish and this is in automated facilities. The workers live on site in single rooms and do not leave the farm operation very often.

We flew from Beijing to Sichuan Province. The 'Iowa of China' with 4.5 million sows. It is hot and humid, and subtropical. The city of Chengdu was nine million people the province nearly 100 million. Producers there are making money and happy. It seems to go hand in hand in any country, the area had been hit by a major earthquake three years ago, rebuild is massive, it is incomprehensible the new buildings, their size, and the overall infrastructure. When the earthquake hit the province, the government divided the province up and put an individual province from somewhere else in the country to rebuild that specific area.


While in China, Genesus and our agents became the first foreign genetic company approved for sale of AI in China. This is a big step for us.


Also on our trip, we received confirmation that Genesus breeding stock imported already to China will become the genetic source of a 75,000-sow system organised in three pods.
Summary
China is where the USA was in the 1980’s. There has not been much consolidation or industrialized production. In our opinion that is about to change. Food service, retail supply, and food safety issues will push for larger production bases. The producers that capture the technology, available nutrition, health, genetics, barn design, and most importantly employee training will drive the others out of business. Rapid consolidation, we expect the building in the 80’s in America will pale to China’s in the next decade.

I am travelling with my 14-year-old son, adds Jim Long. He is holding together well. Seeing things like the Great Wall, Tiananmen Square, a hog farm with a huge wall alleged to keep pandas out! Modern as can be urban areas and rural areas in abject poverty. He is also seeing negotiation in a different culture and the desire for technology. I imagine he will remember long after I am gone. We are on our way to Thailand now; we will report our observations next week.


Author: Jim Long, President & CEO, Genesus Genetics

Monday, August 15, 2011
Beef, Pork Exports Close First Half with Solid Results
US - If the trend established in the first six months of the year holds up, US beef and pork exports are likely to set several new records in 2011 and each could eclipse the $5 billion mark for the first time ever.
 

According to statistics released by USDA and compiled by the US Meat Export Federation (USMEF), June beef exports achieved the second-highest value ever at $461.8 million. This was 23 per cent higher than June 2010, and has been surpassed only once – by the March 2011 value total of $475.2 million.

In terms of volume, June beef exports reached 111,362 metric tons – an increase of 15 per cent over June 2010. This brought the cumulative 2011 total to 620,851 metric tons valued at $2.55 billion, which was 25 per cent higher in volume and 40 per cent higher in value than last year's pace. For the first half of this year, beef exports equated to 13.8 per cent of total production with an export value of $192.42 per head of fed slaughter. The United States has also recaptured its position as the world's leading beef exporter, out-pacing Australia and Brazil.

June pork exports were slightly higher in volume (165,786 metric tons) than last year and six per cent higher in value ($451.2 million). This pushed first-half pork exports to 1.08 million metric tons valued at $2.81 billion – year-over-year increases of 14 per cent and 19 per cent, respectively. When compared to the all-time record year of 2008, the pace of this year's pork exports is six per cent higher in volume and 21 per cent higher in value. For the first half of this year, pork exports accounted for more than 27 per cent of total production with export value equal to $52.76 per head.

North American markets lead US beef exports but Asia remains very strong
Tremendous June results in Mexico and Canada firmly established their positions as the No. 1 and No. 2 markets for US beef. Demand for US beef in Mexico continues to rebound, as exports through June were eight per cent higher in volume (126,309 metric tons) and 25 per cent higher in value ($474.3 million) than in 2010. Canada was the value pacesetter in June with exports topping $96.6 million – a new monthly record. Cumulatively through June, exports to Canada were 23 per cent higher than last year in terms of volume (87,334 metric tons) and 44 per cent higher in value ($463.9 million).

June exports to Japan reached their highest monthly volume (17,626 metric tons) since 2003, pushing the 2011 total 50 per cent higher in volume (77,298 metric tons) and 54 per cent higher in value ($416.3 million). Other key Asian markets for US beef have cooled somewhat from the red-hot pace set earlier this year but the results remain very encouraging. Through June, exports to South Korea were 73 per cent higher in volume (86,890 metric tons) than last year and 69 per cent higher in value ($380.8 million). Hong Kong was up 82 per cent in volume (26,521 metric tons) and 109 per cent in value ($117.3 million).

Another sparkling growth region for US beef is Central and South America, where USMEF recently conducted a product showcase for US red meat, bringing US exporters to Panama City to meet with buyers from 11 different Latin American countries. To June, US beef exports to the region were 51 per cent higher in volume (12,795 metric tons) than last year and 71 per cent higher in value ($35.2 million), led by strong growth in Chile, Peru, Colombia and Guatemala.

Dan Halstrom, USMEF senior vice president for global marketing, commented: "The response we saw at the product showcase in Panama was very encouraging. What we saw there was a large contingent of buyers who weren't just window-shopping. They came to buy, and we expect this event will lead to new business relationships and new sales of US red meat."

Beef exports to the Middle East also continued to post strong growth, with volume (80,204 metric tons) up 38 per cent from last year and value ($153.7 million) running 51 per cent higher.

USMEF President and CEO, Philip Seng, said: "Heavy purchasing activity early in the year has led to high inventories in certain Asian markets, so it's not unexpected that we would see some cooling off of our beef exports to these countries. But this confirms the need for continued, aggressive promotion, so we can keep export growth to Asia strong throughout the year. It's also very encouraging to see exports performing so well in the Western Hemisphere and the Middle East."

Pork exports to Korea tremendous; Japan shows steady growth
South Korea has taken bold measures in recent months to deal with its dwindling pork supplies and rising prices, and US pork has been well-positioned to capitalise. With duty-free access on certain cuts and aggressive marketing programs firmly in place, US pork exports to Korea reached 122,880 metric tons valued at $301.5 million. This represented a 145 per cent increase in volume over the first half of last year, and nearly triple the value.

Coming off a record value year in 2010 of more than $1.6 billion, pork exports to Japan have increased another 10 per cent in volume (249,417 metric tons) and 13 per cent in value ($944.2 million) through the first half of this year. Exports to Canada have grown at a similar pace – achieving a 10 per cent increase in volume (97,204 metric tons) and 12 per cent growth in value ($335 million). The Hong Kong/China region – where access was limited in the early months of 2010 – was up 42 per cent in volume (173,462 metric tons) and 30 per cent in value ($260.5 million).

Mr Send added: "The situation in Korea stems from some unfortunate circumstances, as its hog herd has been devastated by foot-and-mouth disease. But it makes for an interesting case study for the remarkable growth we can achieve when we are not saddled with a 25 per cent tariff – something our members of Congress need to consider as they debate the Korea-US Free Trade Agreement. In addition, we've seen the market share for US pork increase versus our competition under comparable access conditions."

As for Japan, Mr Seng noted that this market continues to generate amazing returns for US pork producers. He remains hopeful that by December, the US will be challenging last year's record value – which is a mark many people would have said was unthinkable just a few years ago.

Mexico, the largest volume destination for US pork, saw exports fall by three per cent in volume (260,858 metric tons) and hold steady in value ($484.9 million) compared to last year. US ham and shoulder cuts were recently granted a tariff reduction (from 5.0 per cent to 2.5 per cent) as a result of a settlement in the NAFTA trucking dispute. These retaliatory tariffs are scheduled to be removed completely in the near future, which should help US pork regain momentum in Mexico.

Mr Seng explained: "Our pork results in Mexico are still solid but I will be very pleased when these retaliatory tariffs are completely behind us. Canada is our chief competitor in this market, and these tariffs severely reduced our advantage in terms of transportation costs."

Lamb export growth led by Mexico, Canada, Caribbean
US lamb exports grew by 59 per cent in volume (9,395 metric tons) and 31 per cent in value ($15.5 million) in the first half of 2011. Exports to the mainstay markets of Mexico, Canada and the Caribbean led the way, with strong growth also in Costa Rica, Guatemala and the United Arab Emirates.

Complete 2011 export statistics for US beef, pork and lamb are available online.