Wednesday, June 22, 2011
CME: Estimate of Breeding Herd to Play Major Role
US - One number that will get plenty of attention in this Friday’s Quarterly Hogs and Pigs report from USDA will be the estimate of the number of animals kept for breeding, commonly refered to as “the breeding herd," write Steve Meyer and Len Steiner.


That number is the best estimate of the production capacity or potential of the US pork industry for the coming 6-12 months. It should drive the number of litters farrowed over that time horizon and the number of litters, combined with the average litter size (or "pigs saved per litter" in USDA parlance) tells us the US pig crop for a given quarter. That number, in turn, drives barrow and gilts slaughter two quarters hence — with some adjustment for seasonality, of course. However you compute it, the breeding herd is the engine that drive the train forward.

There are three major components to changes in the sow herd: Sow slaughter, sow death loss and the number of gilts retained. The only one of those for which we have hard and fast data is sow slaughter. Even the University of Missouri’s data on gilt slaughter as a per centage of total barrow and gilt slaughter (which should be negatively related to gilt retention) is pretty noisy and not near 100 per cent accurate in predicting gilt retention. (The Mizzou data is available weekly in a "per cent change from one year ago" here. Most analysts handle the two unknown factors with a "need to balance" number in their sow herd vs. sow slaughter calculations. The “need to balance” figure is based on historic seasonal relationships for the quarter in question.

There is a natural rate of sow replacement simply based on the life cycle of sows as breeding animals. Replacements occur as sows either die or are shipped to slaughter due to poor reproductive performance (small litters, poor milking ability, the inability to breed back in a given period of time, etc.) or physical challenges such as lameness, injury or teat/udder problems. Sow death loss was once a major challenge in the US but more attention to sows’ welfare and selection for longevity traits has reduced the number to, we believe, somewhere near 6-8 per cent per year in recent years. Some death loss is unavoidable.

Deviations from this natural replacement rate are based on economic conditions and expectations. The primary drivers of these changes are, of course, the actual and expected prices of market hogs. Higher prices generate profits which will attract new entrants and be used by current producers to grow their businesses. Producers know full well that good times will not last forever but if they want to expand their businesses they must do so when times are good. On the other hand, lower prices generate lower profits causing some producers to reduce output and some producers to exit the business entirely.

Prior to 2007, feed costs had very small and very fleeting impacts on sow herd expansion or contraction decisions. The reason was that feed costs were low and relatively stable. A 20 per cent swing in the price of corn amounted to about 50 cents/bushel and changed average output costs by $5 to $6 per head or roughly 5-6 per cent. Today, the same 20 per cent swing in corn prices (half of which we witnessed just last week!), changes the corn price by $1.20-$1.40 per bushel and changes hog production costs by $10 to $12/head. And that does not count the impact that corn prices have on prices of other ingredients such as DDGS and soybean meal.

But even the chart below does not tell the entire story. US sow slaughter includes more than just US cull sows. It also includes 8-10 thousand sows imported from Canada each week — a number that has continued to trend downward as Canada’s breeding herd has shrunk. The top chart on (see below) shows US slaughter of only US-origin sows. Note that these numbers are significantly higher relative to one year ago since mid-April when compared to the total sow slaughter numbers.

 


Finally, there is the issue of the smaller sow herds in both the US and Canada. Canada’s herd on 1 April was 20 per cent smaller than at its January 2005 peak. The US herd on 1 March was 7.1 per cent smaller than at it most recent cyclical peak in January 2008. Other factors held constant, sow slaughter must decline as the available supply of sows declines. So what happens to the percentage of the herd slaughtered each week?

The lower chart (below) shows slaughter of US sows (ie. imported Canadian animals are removed) as a percentage of the US breeding herd at the beginning of each quarter. This number has been relatively stable in the range of 0.8 to 0.9 per cent each week with some seasonal increase in the summer months likely due to seasonal infertility. Note, though that this measure of sow slaughter surged last fall when feed prices began to rise and has increased again since early April relative to one year ago. It will be interesting to see if the surge shows up in Friday’s report as a slightly smaller US breeding herd.

 

Food Outlook – Global Market Analysis – June 2011
High feed prices and disease outbreaks in Asia limit global pig meat production prospects, according to the latest Food Outlook report from the UN Food and Agriculture Organization (FAO).

Meat and Meat Products Market Summary
High feed prices, disease outbreaks and depleted animal inventories are forecast to limit the expansion of global meat production to only one per cent in 2011, to 294 million tonnes. The increase is anticipated to be driven by gains in the poultry and pig meat sectors, while world bovine and ovine meat outputs are expected to be constrained by a retention of animals for herd rebuilding.

Strong demand for imports, especially in Asia where a number of countries are facing tight supplies and high domestic prices, is expected to foster a 2.4 per cent growth in world meat trade, bringing it to 26.8 million tonnes. Much of the expansion would stem from increased flows of pig meat, and to a lower extent, poultry and bovine meats. On the other hand, trade in ovine meat may stagnate, limited by short availabilities in traditional exporting countries.

Relatively high retail prices are foreseen to keep per capita meat consumption in 2011 stalling around 41.9kg. In the developing countries, steady economic growth may foster a minimal increase to 32.0kg, while per capita consumption in the developed countries is expected to remain at 78.4kg.

International meat prices have maintained steady increases since January 2011, progressing by five per cent over the first quarter, mainly sustained by a 10 per cent increase in pig meat prices. In the near term, the combination of strong world import demand and limited export availabilities points toward a further firming of world meat prices in the next few months.

World meat markets at a glance
  2009 2010
est. 2011
f'cast Change 2011
over 2010
  million tonnes %
WORLD BALANCE
Production 283.2 290.6 294.0 1.1
Bovine meat 64.9  64.9 65.0 0.2
Poultry meat 93.6 98.0 100.2 2.3
Pig meat 106.3 109.2 110.0 0.7
Ovine meat 12.9 13.0 13.1 0.5
Trade 25.2 26.2 26.8 2.4
Bovine meat 7.2 7.5 7.7 1.9
Poultry 11.1 11.5 11.7 1.6
Pig meat 5.8 6.1 6.4 5.0
Ovine meat 0.9 0.8 0.8 0.8
SUPPLY AND DEMAND INDICATORS
Per capita food consumption (kg/year):
World 41.3 41.9 41.9 0.1
Developed 78.0 78.4 78.4 0.0
Developing 31.1 31.8 32.0 0.5
FAO MEAT PRICE INDEX
(2002-2004=100) 2009 2010 2011
Jan-May Change:
Jan-May 2011
over Jan-May 2010
(%)
  133 152 175 19.9






FAO international meat price indices
(2002-2004 = 100)
Pig Meat
Pig meat output in 2011 is forecast at 110 million tonnes, less than one per cent more than last year. In China, which holds nearly 50 per cent of global pig inventories, an elimination of sow subsidies as well as outbreaks of foot and mouth disease (FMD) and swine blue ear disease (PRRS), are limiting output growth to two per cent.

Nearby in the region, the Republic of Korea, Asia's fourth largest economy is expected to witness a severe output contraction after FMD outbreaks in late 2010 and in April 2011 led to the slaughter of nearly one-third of the national pig herd at an estimated cost of US$2.7 billion.

High feed prices are limiting expansion of production in the Philippines. In Japan, the five north-east provinces that were affected by the 'triple disaster' hosted 40 per cent of the country's pig population. Animal deaths and the slaughtering at lower weights are expected to depress pig meat production by seven per cent this year. In Thailand, high and rising pig prices prompted the Government to freeze both farm-gate hog prices and retail prices, contributing to a seven per cent production fall.

Little change in pig meat output is currently forecast for the developed countries, as high feed prices continue eroding producer returns. In the United States, poor margins will limit production gains. In Canada, where a hog farm transition programme encourages producers to exit the industry, output is expected to decrease by 1.5 per cent.

In the EU-27, industry restructuring, prompted by high feed prices and the approaching 2013 implementation of new environmental and animal welfare requirements portends a one per cent drop in production. Meanwhile, sliding EU pig prices, due to a late 2010 dioxin crisis in Germany, led to the short-term opening of a private storage aid in early 2011. Despite investments made in the Russian Federation sector, high feed prices and continuing outbreaks of African swine fever in 2011 will limit production gains.



Evolution of pig meat/feed index prices (2002-2004=1)
Trade in pig meat is forecast to hover around 6.4 million tones in 2011, five per cent above last year. Much of the increase is expected to be spurred by double digit growth in imports into Asia, which account for more than half of world trade. In the Republic of Korea, FMD-depleted supplies and the issuance of a new tariff rate quota (TRQ), which allows import of 130,000 tonnes of duty-free product through mid-year, will push up imports to the country by close to 60 percent. Japan is also expected to step up its purchases to compensate for the anticipated production shortfall. In China, recent food scares, related to reported illegal use of chemicals in pig production, may also translate into higher imports.

Pork deliveries to the Russian Federation, the second largest market, are expected to remain in the order of 800,000 tonnes, reflecting sluggish domestic consumption growth and rising production.

In Mexico, pig meat imports for 2011 are forecast to grow moderately but the expansion could be stronger if a recent agreement to solve a long-standing dispute with the United States over the cross-border use of trucking services results in the lifting of import duties on certain pork cuts from NAFTA.


--------------------------------------------------------------------------------
*
"Reduced supplies in Asia to prompt record pig meat imports" 

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Strong import demand and limited export availability in competing countries is forecast to propel exports by the United States to a record. Sales from Canada are expected to benefit from a trucking dispute between Mexico and the United States in 2010. Rising import demand in traditional markets, in particular Hong Kong and Japan, is also expected to boost deliveries from China.

With continuing high feed prices, pork exports by the European Union are forecast to increase only marginally from last year's record.

Likewise, increasing internal demand and high domestic prices are limiting to two per cent the recovery of exports in Brazil from last year's double-digit fall. However, the recent opening of the Chinese market to Brazilian pork will offer an opportunity for further expansion of trade between the two countries.

Pig meat statistics (thousand tonnes, carcass weight equivalent)
  Production Imports Exports Utilisation
  2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast
ASIA 61,926 62,572 2,665 2,993 504 563 64,131 65,000
China 52,019 53,061 769 817 436 489 52,352 53,390
- of which Hong Kong, SAR 122 124 513 532 150 150 485 506
India 485 490 1 1 2 2 484 489
Indonesia 670 680 3 2 1 – 672 682
Japan 1,291 1,200 1,141 1,200     2,429 2,402
Korea, D.P.R. 190 195         190 195
Korea, Rep. 1,110 760 358 562     1,515 1,322
Malaysia 205 208 12 10 5 55 212 213
Philippines 1,731 1,737 70 75 2 2 1,799 1,810
Thailand 700 650 1   17 18 684 633
Viet Nam 2,578 2,620 42 42 33 38 2,578 2,620
AFRICA 1,173 1,187 197 204 9 9 1,362 1,382
Madagascar 55 55     – – 55 55
Nigeria 225 227         225 227
South Africa 320 325 35 35 4 4 351 356
Uganda 110 115         110 115
CENTRAL AMERICA 1,671 1,709 721 739 97 105 2,295 2,344
Cuba 182 185 30 30 – – 212 215
Mexico 1,165 1,195 568 575 80 88 1,653 1,682
SOUTH AMERICA 5,023 5,143 93 101 747 769 4,370 4,476
Argentina 245 250 36 40 2 2 279 288
Brazil 3,226 3,307 1 1 625 636 2,602 2,672
Chile 518 522 10 10 120 130 408 402
Colombia 190 200 7 9 – – 197 209
Venezuela 174 178 15 16 – – 189 194
NORTH AMERICA 12,115 12,167 624 673 2,839 3,047 9,900 9,788
Canada 1,928 1,899 189 220 1,049 1,067 1,068 1,052
USA 10,187 10,268 430 448 1,790 1,980 8,827 8,731
EUROPE 26,832 26,739 1,185 1,185 1,852 1,855 26,165 26,069
Belarus 385 390 40 39 50 59 375 370
European Union 22,544 22,341 32 32 1,754 1,750 20,822 20,623
Russian Fed. 2,260 2,298 785 786 23 23 3,022 3,061
Serbia 500 480 42 44 6 6 536 518
Ukraine 650 730 122 126     772 856
OCEANIA 475 483 219 226 35 37 659 671
Australia 335 342 170 177 35 37 470 482
Papua New Guinea 68 68 4 4     72 72
WORLD 109,216 110,001 5,705 6,123 6,083 6,385 108,881 109,731
Developing
countries 67,983 68,886 2,420 2,718 1,352 1,441 69,099 70,159
Developed
countries 41,233 41,115 3,285 3,404 4,731 4,944 39,783 39,572
LIFDCs 55,767 56,841 635 676 347 409 56,055 57,108
LDCs 1,191 1,217 138 145 – – 1,329 1,363
LIFDCs = Low-Income, Food-Deficit Countries
LDCs = Less Developed Countries

The question you have to ask yourself is this.Should you wish to enter the business of meat goats,will it be a hobby or a business?A hobby is a hobby and it does not matter how much money you spend or pump into your hobby,you will never expect to make a profit.Should your meat goat venture be a business,you expect to make a profit and also interest on your monies that you have funded yourself or borrowed from a bank or private lender.All businesses must have a sound business plan and time frame and some very basic business skills in order to help you reach your expections.Meat goat ventures have on average  a high failure rate due to many factors.People do not plan to fail,they fail to plan.In my experience it will take somewhere between 3-5 years to realize your dream of turning a profit.A producer must produce his/her goats at a low enough cost and have market conditions well enough to turn a profit.Having outside income will go along ways to help the producer realize success or failure.All businessess have cycles,the introduction phase,the growth phase,the maturity phase and the decline phase.Businesses do their very best to hold for as long as possible at the maturity phase,after that it can turn downwards and out.Many meat goat ventures decline and fail somewhere between the introduction and growth phase.The reasons why for failures between the 2 are many and varies because of many factors from no or poor planning,lack of capital or just lack of interest to continue with the business.Manager stress and longer than expected return on monies spent.One should never enter any business for the wrong reasons.Just because you see someone else doing it,does not mean it might be a good business venture for you.Meat goat production is an exciting business,but one should carefully consider everything before jumping into it blindly.One should also have an exit plan in case things turn for the worse and one can salvage something out of the failed venture.

Tuesday, June 21, 2011

Poultry Demand Grows in Visayas

PHILIPPINES - The shift to chicken and other poultry products as a result of the high prices for fish and other fishery goods led to strong demand for poultry products in Central Visayas last year.




The National Economic and Development Authority in Region 7 (NEDA 7) revealed that livestock production and poultry product in general increased by 3.4 per cent and 4.1 per cent, respectively in 2010, according to Manila Bulletin.

In 2009, both sectors registered higher increases in production, at four per cent for the livestock sector and seven per cent for the poultry sector.

Demand for livestock products grew especially during the first semester of the year because of election-related activities and this was sustained until the last quarter of the year when consumers opted to buy chicken and other poultry products due to the increase in prices for fish.

NEDA 7 added that the region's livestock producers also benefited from higher demand for beef and pork meat in Metro Manila and in other regions.

The NEDA 7 report likewise revealed that the higher demand for chicken meat from food chains and local consumers spurred production of chicken in 2010.

Manila Bulletin adds that duck production jumped by 4.3 per cent since many backyard farms disposed and slaughtered stocks in the first semester of 2010 to avoid losses.

Meat Can be Produced Without Animals

If we are to produce sustainable and healthy food for the global population of nine billion people that is projected in 2050, then we must think along completely new lines.
 


Imagine this: With a clear conscience you sink your teeth into a juicy and tasty hamburger. No animal has been slaughtered to deliver the meat, no new forest felled to make way for animal feed, no bovine methane burps have affected the climate and no slurry has been released into the environment. The hamburger also has a satisfyingly low fat content and the fat consists only of fatty acids that are good for you.

Does this sound like something from Utopia’s kitchen? It does not need to be the case, according to senior scientist Niels Oksbjerg from the Department of Food Science at Aarhus University. He and his colleagues have the expertise to create muscle (meat) cells in the laboratory and are itching to develop the technique to make it possible to produce meat with the ultimate sustainability for the world’s growing population.

- If you have one embryonic stem cell from, for example, a calf, then you can produce an infinite number of new cells. Theoretically, you can produce meat for the whole world from one stem cell, says Niels Oksbjerg.


From research to red meat
 
Theory is one thing while practice is another. Before farming moves into the laboratory a lot of research and development must be carried out – but the senior scientist is not starting from scratch.

- For years we have grown muscle cells in the laboratory to be used as a model for muscle in various studies so we know that it is possible to get them to grow. One of the challenges lies in getting the cells to grow in more than one cell layer so we can produce a three-dimensional mass, says Niels Oksbjerg.

- If the cells grow in one layer, then we need approximately one square metre to produce 2.5 g of meat. We need to develop edible scaffolds that the muscle cells can grow on, says Niels Oksbjerg.

Stem cells for lab meat can come from either farm animal embryos (embryonic stem cells) or from farm animals after birth (adult muscle stem cells). Until now, the scientists have worked with cells from pigs, calves and chicks. The cells divide, find each other and form muscle fibres.


Designed meat
 
Embryonic stem cells can become all types of cells whereas the adult stem cells in muscle fibres can become muscle, fat, bone or connective tissue, depending on which conditions they are offered. It is also possible to grow muscle cells in combination with fat cells. In this way scientists can design meat so it has a taste and nutritional content that satisfies consumer demands.

To begin with, the laboratory product will not be able to replace traditional meat but can act as a healthy and sustainable supplement in pizza fillings, meatballs and sausages.

- It is not the ultimate solution to the world’s food problems but all efforts that contribute to the food supply for the nine billion people that are expected to live on this earth in 2050 are welcome, says Niels Oksbjerg.

His colleague at Aarhus University, research professor Jørgen E. Olesen from the Department of Agroecolgy and Environment, agrees.

- There are definitely promising perspectives in a meat production system that does not involve animals. The perspectives are in regard to animal welfare, climate and the environment. With regard to climate, several more things must be developed, though. Even stem cell production requires a supply of carbohydrates, proteins and minerals. They have to come from somewhere. There will also be waste materials that need to be managed. So, even with meat production based on stem cells there will be environmental and climate challenges that must be dealt with, says Jørgen E. Olesen.


May 2011

Tuesday, June 21, 2011
Pork Commentary: Lower Corn Plus Higher Hogs
CANADA - This week's North American Pork Commentary from Jim Long.


Jim Long is President &
CEO of Genesus Genetics.
This past week hog producers caught several breaks. It’s about time! The list of breaks follows.

A week ago last Friday US lean hogs 53 – 54 per cent averaged $91.27 a lb. A week later they were $94.87. That is a bump up of $7.00 per head.


July corn hit $7.99 a bushel on 10 July a week later 17 June, last Friday July corn closed at $7.00 per bushel. That is a $1.00 a bushel decline which is about an $8.00 per head saving on cost of production. Higher hogs lower corn all good news for hog producers.


The latest Iowa – S. Minnesota market hog weights are 268.6 pounds live weight down 2.1 pounds from the week before and 2.4 pounds (271) from a year ago. This is real positive news. For months Iowa – S. Minnesota weights had been 5 pounds higher year over year. Now 2.4 pounds lower means hogs are more current, market hog inventory is down and packers will have to bid up to get hogs – which they are.


Last week’s US hog marketing’s were 1.973 million head down about 30,000 from the same week a year ago. Lower hog numbers and lower hog weights mean less pork.


Chicken producers are blinking after expanding with egg sets and production running 3 per cent higher than a year ago. The chicken coop boys are now down 3 per cent on egg sets. They deserve their red ink. Corn has doubled in price and they expanded. With 12 city chicken broilers 83.36 cents per pound versus 86.80 cents per pound a year ago. Allen Family Foods who produces 2 million birds a week filed chapter 11 bankruptcy on June 11. What do you expect in an industry that expanded in the face of high feed prices and no price increase for chicken? Red ink!


Big move in the cattle market last week with June live cattle up 7.03 or about $80 per head. Every dollar cattle go up in price there is more support for higher hog prices.


We expect cash early weans at a $17.77 average and 40 pound cash feeder pigs at $41.51 average are at a seasonal low. Over the coming weeks we expect lower feed prices and higher lean hog futures will pull prices higher.


Pork exports are going to stay strong. China’s live hog prices hit record highs last week reaching $1.22 US live weight a pound ($2.69 kilo). Prices that high mean China’s supply of pork is down and demand is strong. We expect greater pork exports to China and Hong Kong (gateway to China) in the next few months. High feed prices will dampen any Chinese expansion plans.


South Korean demand for imported pork should stay strong for the next year. Market hogs are over $500 US per head. Foot and Mouth Disease eliminated 350,000 sows and their production. It will take a couple of years for South Korea’s industry to recover.


Global demand for pork has pushed US prices to record levels. We expect in the coming week’s further price increases as the supply chain of hogs gets even more current.
Corn Ethanol Loses Key Senate Vote
Last Thursday the US senate voted 73 – 27 to immediately end the 45 cent Volumetric Ethanol Excise Tax Credit and the 54 cent import tariff. Further votes by the House of Representatives are needed to get this finished.

To say corn ethanol as a favoured child of politicians and environmentalists is over is not an exaggeration. Soon they will have their mandated usage under assault. The whole moral, social, and economic foolishness of corn ethanol will continue to erode corn ethanol support. As livestock producers having a level playing field with ethanol producers is imperative. 73 – 27 was the Senate vote, that’s a big difference. Probably Corn Ethanol plant shares have seen their historical highs.


Author: Jim Long, President & CEO, Genesus Genetics

Allen
I am not the right person to ask about the 45 day meat chicken.I cannot answer your question.Maybe someone who raises this type of chicken will be able to answer your question.

Monday, June 20, 2011

Larger, Modern Farms Contribute to Output Growth

PHILIPPINES - Chicken meat and egg production are showing strong volume growth, according to the latest statistics.



Poultry production grew in the first quarter from a year ago, driven mainly by high demand for chicken meat and larger broiler farm capacity, according to Business World.

The sector's output, which accounted for 13.34 per cent of total agricultural production, increased by 3.92 per cent to more than 462,000 metric tons (MT) from about 445,000MT, data from the Bureau of Agricultural Statistics (BAS) showed.

However, earnings went down by 4.35 per cent to 39.04 billion pesos (PHP) from PHP40.82 billion due to price depreciation.

Volume was boosted by a 3.77 per cent increase in the production of chicken to 344,620MT from 332,090MT. Chicken products comprised nearly three-quarters of total poultry output.

The BAS reported increased production in broiler farms in Cagayan Valley, Western Visayas, Central Visayas and Soccsksargen. 'There were also reports of more ventilated-type farms put up in the top-producing regions, which resulted in higher stocking capacity,' according to the report.

Amelia V. Marcelo, senior agriculturist at the Department of Agriculture’s Livestock Development Council, commented: "Recently, we have been receiving calls from people planning to raise new broiler farms in various regions due to the quick and high return incentive of running a chicken farm."

According to BAS, 'The high demand for chicken meat for household consumption and fast-food chains also boosted chicken production.'

Production of chicken eggs grew by 4.94 per cent to 99,23 MT in the first quarter from 94,560MT a year ago. This was attributed to good weather conditions for egg-laying, and the increase in number of laying flocks in Central Luzon, Calabarzon, Western Visayas, Northern Mindanao and Davao region.

Meanwhile, duck meat and duck egg output grew slightly, by 0.85 per cent to 9,510MT and 0.87 per cent to 9,230MT, respectively.

'This was explained by the increasing demand and and better market prices of balut, which gave encouragement to raisers to increase their duck egg production,' reported BAS. A balut is a fertilised duck (or chicken) egg with a nearly-developed embryo inside that is boiled and eaten in the shell.

According to Business World, Ms Marcelo said she expects poultry production and prices to fluctuate in the coming months. "But we also expect the rates to go back up again later this year as soon as holiday season begins," she added.
 



Poultry production in Q1 2011(thousand metric tons)
Source: Bureau of Agricultural Statistics



 

Q1 2010

Q1 2011

Growth rate (%)



Chicken

332.09

344.62

3.77



Duck

9.43

9.51

0.85



Chicken eggs

94.56

99.23

4.94



Duck eggs

9.15

9.23

0.87

 

World Agricultural Supply and Demand Estimates – June 2011
With many important crop-growing regions affected by flooding or drought, the projections are 'highly tentative', according to the latest USDA World Agricultural Supply and Demand Estimates.

Note: Because spring planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative. National Agricultural Statistics Service (NASS) forecasts are used for US winter wheat area, yield and production. For other US crops, methods used to project planted acreage, harvested acreage and yield are noted on each table.

Livestock, Poultry and Dairy
The forecast for 2011 total meat production is raised from last month, reflecting higher beef production. Large cattle placements and larger cow slaughter, due in part to drought in the Southern Plains, is reflected in an increase in the beef production forecast. However, forecasts for pork and poultry are reduced from last month as higher forecast grain prices are expected to trim hog weight gains and put additional pressure on broiler producers. USDA’s Quarterly Hogs and Pigs report to be released on 24 June will provide an indication of producer farrowing intentions for the remainder of the year. For 2012, meat production forecasts are reduced as higher forecast feed costs pressure hog weights and slow the expected recovery of the poultry sector. Higher feed prices are expected to slow feedlot placements as producers keep cattle on forage longer. The egg production forecast for 2011 is raised on stronger second half production but the forecast for 2012 is reduced on higher feed prices and less demand for hatching eggs.

Export forecasts for red meat and poultry are raised from last month. Beef exports for 2011 are forecast higher on strength in a number of markets and expected improvements in exports to Mexico. Pork, broiler, and turkey exports were larger than expected in the first quarter and the forecasts for the remainder of 2011 are raised. Beef and turkey exports are raised for 2012, but no changes are made to pork or broiler exports.

Cattle and broiler prices for 2011 are lowered from last month on weaker-than-expected demand but hog prices are unchanged. Broiler prices are lowered for 2012.

The milk production forecast for 2011 is raised. Producers are expected to continue to expand herds through the middle of the year and although herds may begin to decline toward the end of the year, cow numbers are expected to be above 2010. However, higher feed costs will impact profitability and the dairy cow inventory is expected to decline in 2012. Tighter feed supplies will also likely impact the rate of increase of milk per cow. As a result, the milk production forecast for 2012 is reduced from last month. Commercial exports are forecast higher for 2011 largely due to stronger expected cheese exports. However, imports of cheese and milk proteins have been stronger than expected and the import forecast for both 2011 and 2012 is raised.

Dairy product price forecasts are raised from last month. Butter supplies are tight and demand for cheese, non-fat dry milk (NDM) and whey are expected to support product prices. Class III and Class IV price forecasts are raised from last month in line with the increased product prices. The all milk price is forecast at $19.65 to $20.05 per cwt for 2011. Price forecasts for 2012 are also raised as the smaller production increase is expected to support higher product and Class prices. The all-milk price is forecast at $17.75 to $18.05 per cwt for 2012.

Wheat
US wheat supplies for 2011/12 are lowered this month as reduced carry-in more than offsets an increase in expected production. Beginning stocks are lowered 30 million bushels with a 10-million-bushel reduction in imports and a 20-million-bushel increase in exports for 2010/11, both based on the pace of shipments to date. All wheat production for 2011/12 is forecast at 2,058 million bushels, 15 million higher than last month. The winter wheat production forecast is raised 26 million bushels with higher forecast yields for Hard Red Winter, Soft Red Winter, and Soft White Winter wheat. Partly offsetting is a projected 11-million-bushel reduction for durum and other spring wheat production as seedings are projected 290,000 acres lower. Flooding and persistent wet soils have delayed planting in North Dakota and Montana well beyond the normal planting window.

US wheat usage for 2011/12 is unchanged. Ending stocks are projected 15 million bushels lower at 687 million bushels but remain above the 10-year average. The 2011/12 season-average farm price for all wheat is projected at a record $7.00 to $8.40 per bushel, up 20 cents on both ends of the range, reflecting both tighter domestic supplies and higher expected corn prices. The forecast 2010/11 wheat farm price is also raised this month, up five cents per bushel to $5.70 per bushel.

Global wheat supplies for 2011/12 are projected slightly lower this month as an increase in beginning stocks is more than offset by lower production. Global beginning stocks are projected 4.9 million tons higher mostly reflecting increased stocks in Russia as feeding is reduced 2.0 million tons and 3.0 million tons, respectively, for 2009/10 and 2010/11. Beginning stocks for 2011/12 are also raised 0.5 million tons each for Argentina and Canada with the same size reductions in 2010/11 exports for each country. Partly offsetting is a 1.5-million-ton decrease for 2011/12 beginning stocks for Australia with higher 2010/11 exports.

World wheat production is projected 5.2 million tons lower for 2011/12. At 664.3 million tons, production would be the third highest on record and up 16.1 million from 2010/11. This month’s reduction for 2011/12 mostly reflects a 7.1-million-ton decrease for EU-27 wheat output. Persistent dryness, particularly in France but also in Germany, the United Kingdom and western Poland, has reduced yield prospects for EU-27. Production is also reduced 1.0 million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding. Production is increased 1.5 million tons for Argentina and 0.5 million tons for Australia, both reflecting favourable planting conditions and strong producer price incentives to expand area. Production is also raised 0.5 million tons for Pakistan as increased use of higher quality seed and adequate water supplies resulted in higher-than-expected yields.

Global wheat trade for 2011/12 is projected slightly higher reflecting a 0.5-million-ton increase in expected imports by EU-27. Exports are lowered 3.0 million tons for EU-27. Export increases of 2.0 million tons and 1.0 million tons, respectively, for Australia and Argentina offset the EU-27 reduction. Exports are raised 0.3 million tons for Pakistan with the larger crop. Global wheat consumption is projected down 3.3 million tons, mostly reflecting a 2.5-million-ton reduction in EU-27 domestic use. Wheat feeding is lowered 0.5 million tons for Canada. Global ending stocks for 2011/12 are projected 3.0 million tons higher as decreased wheat feeding in earlier years raise projected stocks in Russia, more than offsetting declines in Australia and EU-27.

Coarse Grains
Projected US feed grain supplies for 2011/12 are sharply lower with reduced prospects for corn acreage. Corn planted area for 2011/12 is lowered 1.5 million acres from March intentions to 90.7 million acres. Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May. Harvested area is lowered 1.9 million acres, to 83.2 million with the additional 400,000-acre reduction reflecting early information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley. Production is projected at 13.2 billion bushels, down 305 million from last month, but still a record, and up 753 million from 2010/11.

US feed grain usage changes for 2011/12 include a 100-million-bushel projected decline in corn feed and residual use and a five-million-bushel increase in sorghum exports. Feed grain ending stocks are sharply lower with expected corn ending stocks down 205 million bushels to 695 million. Corn ending stocks are projected 35 million bushels lower than beginning stocks indicating a stocks-to-use ratio of 5.2 percent compared with the 2010/11 forecast ratio of 5.4 percent. The 2011/12 season-average farm price for corn is projected at a record $6.00 to $7.00 per bushel, up 50 cents on both ends of the range. Projected farm prices are also raised for the other feed grains.

Global coarse grain supplies for 2011/12 are projected down 7.8 million tons this month with lower beginning stocks and production. Reduced US corn production, lower EU-27 barley production and reduced corn beginning stocks in China, more than offset increases in China corn production. EU-27 barley production is lowered 2.2 million tons as prolonged dryness across western and northern Europe has sharply reduced yield prospects in the major producing countries. China corn area is raised for 2010/11 in line with the most recent official government area estimates with the year-to-year percentage increase for 2011/12 largely maintained.

China corn production increases 5.0 million and 6.0 million tons, respectively, for 2010/11 and 2011/12 with yields unchanged month-to-month. More than offsetting the higher production levels is higher estimated corn consumption for both feeding and industrial use. China corn consumption is raised 8.0 million tons and 13.0 million tons, respectively, for 2010/11 and 2011/12. Together these changes leave projected 2011/12 corn ending stocks down 12.0 million tons for China. At the projected 51.0 million tons, China’s stocks would be down 2.7 million tons from 2010/11 and just below the levels of the preceding two years, better reflecting the continuing rise in domestic corn prices as production struggles to keep pace with rising usage. Although China’s stocks represent 46 percent of the world total for 2011/12, China is not expected to be a significant exporter.

Global 2011/12 corn trade is raised slightly this month with higher imports for EU-27 and higher exports for Ukraine. Ukraine exports are raised 1.0 million tons with higher production and stronger expected demand from EU-27. Russia exports are lowered 0.5 million tons with lower production. Other important trade changes this month include a 0.2-million-ton increase in sorghum imports by Mexico, driving the US export increase, and a 1.5-million-ton reduction in EU-27 barley exports with lower production and tighter supplies. Barley imports are lowered for Saudi Arabia and China. Global corn ending stocks for 2011/12 are projected down sharply this month, falling 17.3 million tons mostly reflecting the usage revisions in China. The projected 5.2-million-ton drop in US ending stocks accounts for most of the rest of the decline. Global corn stocks are projected at 111.9 million tons, the lowest since 2006/07.

Oilseeds
This month’s US oilseed supply and use projections for 2011/12 include higher beginning and ending stocks and reduced exports. Although adverse weather has slowed soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season. Higher beginning stocks reflect a lower export projection for 2010/11. Soybean exports for 2010/11 are reduced 10 million bushels to 1.54 billion bushels reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China. Soybean ending stocks for 2010/11 are projected at 180 million bushels, up 10 million. US soybean exports for 2011/12 are reduced 20 million bushels to 1.52 billion, reflecting increased competition from South America resulting from an increase in the recently harvested Brazilian soybean crop. With larger supplies and reduced exports, ending stocks for 2011/12 are increased 30 million bushels to 190 million. Other changes for 2010/11 include reduced soybean oil used for biodiesel production, reduced projected food use of soybean oil, and lower soybean oil exports, all resulting in increased ending stocks for 2010/11 and 2011/12.

Soybean, meal and oil prices are all raised this month. Led by higher corn prices, the US season-average soybean price for 2011/12 is projected at $13.00 to $15.00 per bushel, up $1.00 on both ends of the range. Soybean meal prices for 2011/12 are projected at $375 to $405 per short ton, up $25 on both ends of the range. Soybean oil prices are projected at 58 to 62 cents per pound, up two cents on both ends of the range.

Global oilseed production for 2011/12 is projected at 456.9 million tons, down 2.3 million from last month, mainly due to lower rapeseed production. EU-27 rapeseed production is reduced 1.2 million tons to 18.8 million mainly due to lower yields resulting from dry conditions in April and May in major producing areas of France and Germany. Rapeseed production for Canada is lowered 0.5 million tons to 13.0 million due to reduced area planted resulting from excessive moisture this spring. China soybean production is reduced 0.5 million tons to 14.3 million reflecting lower area as producers shifted to corn. Other changes include increased sunflower seed production for Russia and reduced cottonseed production for Australia, Pakistan and the United States. Brazil’s 2010/11 soybean production is increased 1.5 million tons to a record 74.5 million, reflecting yield and production increases reported in the most recent government survey.

Feed Outlook – June 2011
US corn production is still expected to be a record this year but the current forecast is for historically tight global coarse grain stocks, according to the latest report from the USDA Economic Research Service.
 

US corn production for 2011/12 is projected 305 million bushels lower this month at 13,200 million as delayed planting this spring are expected to reduce plantings 1.5 million acres from producer intentions. Flooding on the Mississippi and Missouri Rivers is also expected to reduce harvested area.

Production is still expected to be a record but ending stocks are reduced this month by 205 million bushels, resulting in a year-to-year decline of 35 million bushels. Tight supplies are reflected in higher price projections for all feed grains. Revisions to several years of China’s corn supply and demand increase use more than production, tightening stocks.

Global coarse grain ending stocks projected for 2011/12 are reduced 11 per cent this month. The global stocks-to-use ratio for coarse grains is projected at 12.6 per cent, the lowest since 1973/74 when it fell to 12.2 per cent. Near-term trade implications, however, are limited with 70 per cent of this month’s global stock decline in China.


DOMESTIC OUTLOOK

US Feed Grain Supplies Projected Sharply Lower this Month
Reduced prospects for corn acreage lowered projected US feed grain production for 2011/12 by 7.7 million metric tons. Production for 2011/12 is projected at 348.3 million tons. Total use is 2.5 million tons below last month’s projection as higher prices reduce prospects for feed and residual use. Ending stocks are projected sharply at 20.7 million tons, a 5.3-million-tons decrease of lower than last month from May’s estimate and the lowest level since the 1995/96 crop year.

Feed and residual use for the four feed grains plus wheat, on a September-August marketing year basis, is lowered 3.7 million tons to 138.0 million. Grain-consuming animal units (GCAUs) for 2011/12 are projected unchanged from last month at 94.2 million compared with 92.7 million in 2010/11.

Projected 2011/12 feed grain exports are increased slightly to 49.4 million tons, compared with 49.3 million last month, on higher projected sorghum shipments.

Planting Delays and Flooding Reduce Projected Harvested Area and Production for Corn
Planting delays in the eastern Corn Belt, especially Ohio and Indiana, and in the Northern Plains are expected to reduce planted area, offsetting potential gains in the western Corn Belt and central Plains. Planted area is reduced 1.5 million acres as some of this land is expected to remain too wet to plant to corn. Harvested area is lowered 1.9 million acres to 83.2 million, reflecting early assessments of May flooding in the Mississippi and Ohio River valleys, and June flooding along the Missouri River valley. Production is projected 305 million bushels lower at 13,200 million, but is still a record. This month’s yield projection is unchanged at 158.7 bushels per acre because the crucial July and August weather that will determine yields remains unknown.

Feed and residual use for 2011/12 is projected 100 million bushels lower this month. Higher prices for corn are expected to ration demand for feed use. Feed use is projected at 5,000 million bushels for the marketing year, compared with 5,150 for 2010/11. Projected food, seed and industrial use for 2011/12 is unchanged at 6,455 million bushels, 55 million higher than 2010/11. Ethanol production, mostly using corn as a feedstock, continues to advance, according to weekly Energy Information Agency data. As the share of corn that is not forward contracted at favorable price declines, margins will decrease, although higher petroleum prices may be an offsetting factor.

The lower feed and residual projection reduces projected corn use for 2011/12 to 13,255 million bushels, 195 million bushels below 2010/11.

The sorghum export projection for 2011/12 is increased from 130 million bushels to 135 million. Shipments to Mexico are expected higher due to tight corn supplies.

Feed and Residual Use Down in 2011/12
The 2011/12 US feed and residual use for the four feed grains plus feed wheat on a (September-August) projected at 138.0 million tons, down 3.7 million tons from the previous year. Feed and residual use per grain-consuming animal unit (GCAU) is projected at 1.48 tons in 2011/12, compared with 1.53 tons in 2010/11. Total GCAUs are projected up 1.6 per cent on the year to 94.2 million. GCAUs are expected to be up for the year because of increased poultry and pork production as demand begins to strengthen offset by lower cattle numbers. Feed and residual use per animal unit is reduced this month to 1.48 tons as lower expected feed use more than offsets the decline in GCAUs.

Projected Ending Stocks Slip on Production Decline
Lower projected feed grain production in 2011/12 more than offsets the decline in feed use, reducing projected ending stocks to 695 million bushels, the lowest since 1995/96. The projected stocks-to-use ratio falls to 5.2 per cent, compared with 5.4 per cent forecast for 2010/11. The stocks-to-use ratio at the end of 1995/96 was 5.0 per cent. A stocks-to-use ratio at 5.0 per cent may represent minimal ‘pipeline’ stocks, however, significant changes in grain storage, handling and transportation have occurred since 1995/96. Among the most important have been changes associated with expansion of corn processing to produce ethanol.

Higher Feed Grain Prices Projected
The season-average corn farm price for 2011/12 is projected at a record $6.00 to $7.00 per bushel, up $0.50 on both ends of the range from last month. Tight supplies caused by reduced acreage and lower carry-in prompted the increase. The projected corn price for 2010/11 is boosted $0.10 on each end of the range to $5.20- $5.50 per bushel.



Projected 2011/12 sorghum prices are expected to be record high. This month’s forecast is increased by $0.60 on both ends of the range to $5.60 to $6.60 per bushel. Projected barley prices are raised $0.20 on both ends of the range to $5.95- $7.05 per bushel. The increase in the oats projected price is larger, up $0.30 on both ends of the range to $3.60-$4.20 per bushel.

Weekly Crop Progress Report Shows Gains
The Crop Progress report issued by USDA’s National Agricultural Statistics Service for the week ended 5 June 2011, showed further progress in the major corn States as farmers sowed eight per cent of the crop in newly-dried fields over the preceding week. As of 5 June, 94 per cent of the crop was planted compared with the 2006-2010 average of 98 per cent. Indiana and Ohio remained significantly behind normal at 82 and 58 per cent, respectively, compared to five-year averages of 94 and 99 per cent. Producers in Illinois, Iowa, Kansas, Missouri and Nebraska have planted 98 per cent or more of their corn crops by 5 June.


INTERNATIONAL OUTLOOK

Global Coarse Grain Production Cut as US Drop Bigger than China Increase
World coarse grain production in 2011/12 is projected to reach 1,143.9 million tons, down 3.0 million this month. US corn production, down 7.7 million tons, has the largest drop, but a 6.0-million-ton increase for China’s corn, and a few adjustments to other countries, leave global corn production down 1.6 million tons this month to 866.2 million. World barley production is reduced 1.2 million tons to 130.3 million as EU prospects deteriorate.

China’s corn production increase for 2011/12, up 6.0 million tons to 178.0 million, is based on an increase in area reported by China’s National Bureau of Statistics (NBS) for 2010/11. The 2010/11 production is increased 5.0 million tons to 173.0 million, adopting the NBS corn area but remains below the NBS production estimate because USDA analysis indicates that since 2009/10 NBS has overestimated China’s corn yields. The projection for China’s 2011/12 corn crop assumes an increase in corn area of two per cent, down from the four per cent growth reported for the previous year. USDA’s corn yield for China is not changed this month for 2010/11 or 2011/12.

Coarse grain production prospects increased this month for Ukraine, up 0.6 million tons to 24.9 million tons. Spring weather has had enough rain to maintain adequate soil moisture in most regions, without excessive rains to disrupt fieldwork. Planting reports indicate more corn area seeded than expected, boosting corn production prospects 0.5 million tons. There is also a small increase in millet area based on plantings.


Russia’s coarse grain production is increased slightly this month to 28.9 million tons, reflecting variable planting conditions. In the Southern District and the Caucasus, spring plantings have gone well but in the Volga, cold temperatures and spotty dryness delayed plantings. Barley area planted is larger than expected, boosting production prospects 1.0 million tons to 14.5 million. However, the pace of corn seedings appears to be too slow to reach the previously expected area, so corn area is cut this month, trimming production prospects 0.5 million tons to 6.0 million. Rye area is also reduced this month, cutting expected output 0.3 million tons to 3.0 million.

Zambia reports expanded corn area, boosting production 0.5 million tons to 3.0 million. Argentina is expanding area planted for winter barley, increasing production prospects 0.3 million tons to 2.5 million.

European Union (EU) coarse grain production prospects are down 2.2 million tons this month to 143.0 million. The entire decline is based on barley yields. A few EU countries reported slightly increased barley area this month. Severe spring dryness centered in northern France extended into Germany, parts of the UK and western Poland. Harsh winter conditions in parts of Germany and Poland may also have reduced crop potential.

Canada’s barley production expected in 2011/12 is reduced 0.3 million tons to 8.2 million as southeastern Saskatchewan and southwestern Manitoba have been too wet for planting, reducing barley area.

Moldova reported corn area plantings down compared to the previous year, trimming production prospects 0.3 million tons to 1.2 million. Kyrgyzstan reported a slight dip in barley area and production prospects.


Reduced China Corn Beginning Stocks Trim 2011/12 Supplies
Estimated corn use for China for 2007/08 through 2010/11 is increased this month, enough to more than offset the five million ton increase in 2010/11 production, and leave 2011/12 beginning stocks down 5.0 million tons to 53.7 million. Numerous small adjustments to 2011/12 beginning stocks for other countries are mostly offsetting, leaving global coarse grain stocks down 4.9 million tons at 153.5 million. With world coarse grain production down 3.0 million tons this month, global supplies are down 7.8 million.

Global Coarse Grain Demand Prospects for 2011/12 Boosted This Month
World coarse grain use projected for 2011/12 is up 9.3 million tons this month to 1,152.1 million tons. Corn total use is up 11.0 million tons to 871.7 million, while barley is down 1.4 million to 132.8 million. Projected use of rye and sorghum are down fractionally as well.

Corn use in China for 2011/12 is raised 13.0 million tons this month to 181 million. Feed and residual use is projected to reach 126.0 million tons, up 10.0 million this month, but only five per cent higher than the revised forecast for 2010/11. Corn feed use growth is faster in recent years than the reported growth in some key livestock indicators such as pig meat production but remains slower than the apparent growth in use of soybean meal. Food, seed and industrial use in China is up 3.0 million tons this month to 55.0 million. That represents six per cent growth compared to the revised forecast for 2010/11 but is much slower growth than estimated between 2009/10 and 2010/11. China’s Government has announced several measures to slow the growth in use of corn for industrial use. China’s barley use (beer) is reduced 0.2 million tons this month, reflecting high prices and lower projected imports.

Russia’s 2011/12 coarse grain use is boosted 0.7 million tons this month. Barley feed use is up 1.0 million and rye use cut 0.3 million reflecting production changes.

Saudi Arabia’s barley feed use is cut 0.5 million tons this month as satellite imagery confirms exceptionally good winter and spring pastures, and the pace of imports has slowed. There are smaller changes to coarse grain use this month for Moldova (reduced corn production), Jordan, Canada, Ukraine and Uruguay.

EU total coarse grain use is projected unchanged this month but feed use is up 0.5 million tons. Corn imports and feed use are raised 1.0 million tons each, but with reduced barley production, the feed use and food use are each cut 0.5 million tons.

World Coarse Grain Ending Stocks Cut Dramatically This Month
Global coarse grain ending stocks for 2011/12 are slashed 17.1 million tons this month to 145.3 million. Foreign stocks are projected down 11.8 million tons, with the China reduction of 12.0 million tons dominating. The revisions to China’s use over several years are much greater than the increases in production, drawing down stocks prospects considerably. These tighter stocks reflect corn price developments in China. While corn stocks are not dropping significantly year-to-year, the rapid increase in use implies an important tightening in the stocks-to-use ratio, supporting corn prices.

Changes in projected 2011/12 ending coarse grain stocks for other countries are mostly small and offsetting. Increased corn production boosts Zambia’s ending stocks 0.3 million tons, and the EU, Philippines and Australia are each up 0.2 million. Ukraine’s corn stocks are reduced 0.5 million tons due to strong export prospects, and Saudi Arabia’s ending stocks are reduced 0.3 million due to the slow pace of barley imports. There are several smaller, mostly offsetting revisions to projected ending stocks.

The world coarse grain ending stocks forecast for 2011/12, at 145.3 million tons, are similar to the 141.2 estimated for 2006/07 and 143.3 for 2003/04. These are the lowest in recent decades. However, because of increased use, the 2011/12 stocks represent only 12.6 per cent of use, while in 2006/07 they were 13.9 per cent and in 2003/04, 15.2 per cent. So the current forecast is for historically tight global coarse grain stocks; however, 70 per cent of this month’s reduction in global stocks is projected for China where stocks remain at 27.3 per cent of use limiting broader near-term trade implications.


Corn Trade Projected Slightly Higher, US Export Prospects Unchanged
Global corn trade for 2011/12 is projected to reach 92.5 million tons, up 0.7 million this month. The EU, with reduced wheat and barley production, is expected to import more corn to maintain meat production. EU corn imports are forecast up 1.0 million tons this month to 5.0 million.

With increased production prospects and strong demand from EU, Ukraine’s corn export prospects are boosted 1.0 million tons to 7.5 million. Zambia, with increased production, is expected to export to neighbouring countries, boosting exports 0.2 million tons. However, reduced production prospects are expected to limit Russia’s corn exports, down 0.5 million tons this month to 0.5 million.

World corn trade forecast for 2010/11 is unchanged this month at 92.9 million tons. Mexico’s corn imports are reduced 1.0 million tons to 8.0 million as the pace of purchases has been slower than expected, especially given the reduced production. This is partly offset by increased corn imports for the EU, up 0.5 million tons to 7.0 million, as the pace of purchases has been strong.


US sorghum export prospects for 2011/12 are increased 0.2 million tons to 3.5 million – up 5 million bushels to 140 million for the local marketing year. Mexico’s import prospects are increased the same amount as tight corn and sorghum supplies in Mexico are expected to encourage purchases of US sorghum.

World barley trade for 2010/11 and 2011/12 is forecast down significantly this month and is the lowest in 14 years. The 2011/12 global barley trade (October-September) is projected down 1.1 million tons this month to 13.2 million. Tight supplies in the EU and Canada are expected to limit trade. EU export prospects are down 1.0 million tons this month to 1.5 million. The pace of EU shipments in 2010/11 has been slower than expected, trimming the export forecast 0.6 million tons to 4.0 million. Barley imports by Saudi Arabia are forecast sharply lower at 5.4 million tons for 2010/11 and 5.2 million for 2011/12. Saudi Arabia appears content to reduce its stocks instead of increasing import subsidies.

US Pork Outlook – June 2011
Lower dressed weights are forecast for this year and next, while the estimate for pork exports in 2011 has been increased to 15 per cent above last year's level, according to the latest Livestock, Dairy, and Poultry Outlook from the USDA's Economic Research Service.
 

Summary
Pork exports for 2011 were revised upward to 4.872 billion pounds, up almost 15.3 per cent over 2010, due mostly to a greater-than-expected demand in the first quarter of 2011 from Asian markets like South Korea and China. Tighter-than-anticipated corn supplies are expected to translate to higher feed costs for producers for the rest of 2011 and into 2012, decreasing the expected dressed weights of hogs. Lighter weights are expected to marginally lower commercial production to 22,615 million pounds in 2011 and 22,910 million pounds in 2012.

Higher Feed Prices Expected to Pressure Hog Weights
Tight feed supplies are expected to put upward pressure on feed prices through the 2011/12 crop year. Producers may see their profitability slip because of high corn and soybean meal prices. It is expected that these high costs likely will encourage producers to remain as current as possible in marketing their animals to limit the time on feed. As a result, forecast average hog weights for 2011 and 2012 were reduced from May.

Given the reduction in hog weights, the forecast for pork production was reduced slightly for both 2011 and 2012. Commercial pork production estimates for 2011 were reduced by 10 million pounds from May to 22.615 billion pounds, and the forecast for 2012 was lowered by 40 million pounds to 22.91 billion pounds.

Strong Pork Exports Continue in April
April US pork exports were over 421 million pounds, up about 19.5 per cent from year earlier. Second-quarter pork exports are forecast to be almost 1.27 billion pounds, up about 17 per cent from the same period a year ago. Annual US pork exports for 2011 were revised upward from May forecasts to 4.872 billion pounds, about 15.3 per cent higher than a year ago and are expected to account for 21.5 per cent of US commercial pork production.

Larger-than-expected pork exports are due mostly to the continued low US dollar exchange value vis-à-vis the rest of the world, coupled with Foot and Mouth Disease issues in South Korea and a lack of Asian production capacity to meet demand. Year to date, the five largest destinations of US pork exports continue to be Japan, Mexico, South Korea, Canada and China. The year-over-year pork export growth in April was due mainly to increases in sales to South Korea, China and Russia.

April US imports of pork were more than 68 million pounds, up 5.8 per cent from a year ago. Second-quarter imports are expected to be 220 million pounds. Year-over-year, April imports from Canada, Denmark and Italy were higher, while imports from Poland and Mexico were lower. Canada accounted for 76.5 per cent of US imports versus 78.7 per cent in April 2010.

Live swine imports were 437,000 head in April, down 12.5 per cent from last year. Annual live hog imports to the US were revised down slightly to 5,842,000 head. Live swine exports totalled 1,846 head for April, 112 per cent higher than a year ago.

Friday, June 17, 2011
Australian Pork Favoured in Singapore
AUSTRALIA - Pork from Australia is the top choice in Singapore.

Beef, lamb and chicken might be the most popular meats on the menu in Australia, but Stock Journal reports that for the country's near neighbours in Asia, it is pork and chicken – and in Singapore, the pork is Aussie pork.

Australia's gold-plated reputation as a clean food production source, our strict quarantine standards and our relatively close proximity to Singapore have provided local pig producers with valuable credibility and an important market outlet across the Java Sea.

Fresh, chilled Australian product represents about two-thirds of all supermarket pork sales in Singapore.

The figures were as high as 98 per cent five years ago but according to Australian Pork Limited's marketing general manager, Peter Haydon, current volumes – about 15,400 tonnes a year, worth A$63.5 million – are a more sustainable amount for Australia to supply profitably.

Australian sales into Asian had generally been growing quickly in recent years but from a smaller base than Singapore.

Hong Kong (worth $6 million a year) and Japan ($2 million) were significant while Korea and the Philippines were smaller export opportunities making notable growth spurts.

Mr Haydon said increasing volumes of competitively-priced frozen pork (from Brazil and North America) were creating more competition in Singapore, but the market had a clear preference for Australian product, even though it was more expensive.

He explained: "Singapore is very diligent about food health issues, and Australia is considered a supplier that fits well with their standards.

"They don't produce any food themselves so they tend to be particularly careful about maintaining tough standards on whatever comes in from outside."

Mr Haydon said apart from valuing Australia's biosecurity restrictions and clean, green production image, Australian pork also tasted best according to Singaporean consumer feedback.

He added: "Taste is a core reason for its popularity, although I can't explain exactly what it is about the taste that people prefer."

According to Stock Journal, alternative product choices, such as frozen meat or fresh pork from Indonesia do not rate as well as Australia exports, about 40 per cent of which are sourced from Western Australia, 25 per cent from Queensland and 20 per cent from New South Wales.

Thursday, June 16, 2011
Erysipelas Outbreak in Catanduanes
PHILIPPINES - At least 17 pigs have been killed and 172 more are sick in three villages in Pandan town in Catanduanes due to erysipelas.


A 'pig kill' in three barangays of Pandan, Catanduanes caused by an infectious disease recently stirred hog raisers and veterinary experts in the island province of Catanduanes into a near pandemonium, reports Phil Star. The outbreak was later blamed on poor sanitation.

Governor Joseph Cua received a report from Pandan town Mayor, Restituto de Quiroz, that at least 15 pigs died and 172 others got sick over a three-day period in the villages of Del Sur, Libod and Napo, in the coastal town located at the northern section of the province.

The governor said he promptly dispatched a five-man team from the Provincial Veterinary Office (PVO) headed by provincial veterinarian, Peter Aldin Azanza, to assist the Municipal Agriculture Office (MAO) in looking into the problem.

Following visual inspections on the site of the disease outbreak and necropsy performed on affected animals, Mr Azanza reported that the culprit was a swine pathogen called erysipelas. He said the virus developed at the water, soil, decaying organic matter, slime on the bodies of fish and on carcasses as well as in carrier pigs causing the spread of the disease.

The symptoms of infections, according to Azanza include the purple discoloration of the ears, snout and abdomen of the pigs, diamond-shaped skin lesions, high body temperature, poor appetite and restlessness.

Don't eat pig victims, warns vet
Mr Azanza said that the affected animals is hazardous to human health. "The affected animals are no longer fit for human consumption," he stressed.

The infected hogs were supposed to be injected with amoxicillin but De Quiroz said the lack of medicines in the municipality prevented them from doing so. Governor Cua then instructed the PVO to provide the medicines at the expense of the provincial government.

The visual inspection conducted by the team also found out that majority of the backyard hog raisers have not provided proper waste disposal facilities for animal manure while some homes do not even have toilets.

The situation, Mr Azanza said, left no choice for the hog raisers and household members but to dispose animal and human wastes in public canals and along the shorelines that result to pollution of the nearby swamp whose water circulates with the sea tides.

The PVO team recommended that a temporary quarantine be implemented in the three villages affected by the outbreak to prevent the spread of the disease. The Phil Star report adds that the team also recommended to the local government the strict implementation of the ordinance on the proper waste disposal to prevent serious health problems.

Tuesday, June 14, 2011
Pork Commentary: World Pork Expo 2011
US - "This past week we attended the world Pork Expo in Des Moines, Iowa," writes Jim Long.

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

The World Pork Expo was well planned and well attended. The organizers of the NPPC did a good job.


World Pork Expo main theme – PRICE OF CORN – The price shock of plus $7.00 bushel corn, was the major discussion point. It’s ugly with pork cost of production continuing to move up.


There appears to be some sow herd liquidation with one major sow buyer reporting ten herds pulling the plug in the last two weeks.


The reality of high corn prices and the fear of the future is the trigger for such liquidation.


The industry is getting weary of living on the knifes edge. Producers are wondering why indeed they are in the business. Mostly it’s like being on Gilligan’s Island, marooned with no options. Exit strategies are profit potential limiting. Mostly you quit... you’re dead.


Part of this less than euphoric attitude is the reality of current cash 90 cent plus lean market hogs hovering around record high prices while current feed prices create only breakevens for producers. It's like "what do we have to do to get a break!"


Last Friday Iowa – Southern Minnesota closed $91.41 lean a lb. while USDA cut-outs were $90.23. The world is upside down with packer margin negative. A few weeks ago Packers were making mucho money with margin well over $20 per head. Everyone has their turn in the barrel.


We would not be surprised if US lean hogs reach $1.00 in the next four to six weeks. Not saying it will happen but with what we believe is tightening hog supplies, it just might.


At the World Pork Expo, our industries dismay over the corn ethanol industry was also discussed continually. Most people hope the US congress will pull all subsidies for corn ethanol in the next budget to put hog producers on a level playing field with the food business. This week’s vote in the US senate on a motion by Senator Coburn to stop Corn Ethanol subsidies and tariffs could be helpful.


At the Expo, building and equipment sales people were mostly focused on renovations and equipment replacements. There are few, if any, new sow units being built, some new finishers.


Seemed like there were several groups from Mexico and South America, appears that their profitability is better. There will be some new sow barns built is this region.
Our last commentary on vaccine castration, received several comments at the Expo. Appears it will be more than a simple dilemma for producers and packers. As one packer said: "two shots will it get done?" "Who’s going to pay for missed vaccine shots and what’s the cost to our industry of boar taint from missed vaccine shots." Stay tuned this could become interesting.
Summary
Corn Prices and lack of profitability dominated the World Pork Expo conversations. It appears there is some sow herd liquidation. No surprise with a 12 to 1 hog to corn ratio. Every time we historically see lower than 15 to 1 there has been liquidation. We expect pork exports will stay strong in the coming months and with any sort of break US cash lean hogs could get to $1.00 lean a lb.

Thursday, June 16, 2011
Higher Pork Prices Fuel Inflation
CHINA - Rising pork prices since May are fuelling concerns about consumer price inflation.


Since early May, pork prices in China have kept rising mainly due to the cyclical live-pig supply shortage and higher costs for pig feed caused by rising grain prices, according to official sources.

"My family has to add around 130 yuan (CNY; US$20) extra to the monthly budget due to rising food prices, especially pork," said Zhang Liang, a resident in Jinan, capital of east Shangdong Province.

All across the country, pork prices have soared in recent months.

Pork is the most widely consumed and affordable meat in China, and its price weighs heavily on the consumer prices index (CPI).

Statistics from the China Animal Agriculture Association (CAAA) show that in 2009, pork accounted for 65 per cent of the meat consumed by Chinese.

China still faces upward pressure on prices in the near future, said Sheng Laiyun, a spokesperson for the National Bureau of Statistics (NBS), at a press conference earlier this week.

According to the new figures published by the NBS, China's CPI, the main gauge of inflation, rose 5.5 per cent year-on-year in May, 0.2 percentage points higher than in April and hitting a 34-month high.

Sheng said that the rising CPI is due to the rises in food prices – pork and egg prices in particular.

"The price of live pigs was CNY18.8 per kilogram recently, surpassing the historical high in 2008," said Zhang Jianming, a farmer with 4,000 pigs in the city of Dongying in Shangdong.

A string of upsurges has been seen in China's pork market since early June 2010. During the past four weeks, pork prices have been surging to their highest level since 2008, according to Xinhua's statistical data.

Analysts with the Shandong provincial livestock information centre suggest that high pig feed prices caused by rising grain prices are partly to blame.

Feng Yonghui, an expert with ZhongKeYiHeng, an institute of agriculture information and technology in Beijing, said the recent price of live pigs is about CNY17.52 per kilogram with an year-on-year increase of about 87 per cent, while average pork prices have reached CNY26.97 per kilogram, an increase of around 79 per cent.

However, pig farmers say they are hesitant about increasing their pig numbers.

"Although we can gain about CNY600 from a live pig, no one wants to take the risk of raising more pigs since the market is unstable," said Wang Shoujing, a pig farmer from Tancheng County in the city of Linyi in Shangdong. "Besides, the cost of the piglets is also high," he added.

Last year's pig epidemics are also partly to blame for the inefficient supply of live pigs.

"A total of 1,000 pigs died from swine fever on my farm," Wang said.

A shortage of pigs and rising feed prices will remain as problems in the short term, and pork prices will probably remain high for sometime, Feng said.

The entire live pigs supply cycle needs about 12 months, thus the supply shortage will linger for a while, Feng explained.

Yao Minpu, director of the Swine Industry Association of the CAAA, believes that corn prices will keep rising, which may also boost pork prices since corn is the main feed for pigs.

Li Tiegang, a professor with School of Economics of Shandong University, said: "Pork prices account for a large proportion of China's food prices, which take up to 30 per cent of the CPI, so high pork prices will definitely lift the CPI."

Li Mingliang, an analyst at Haitong Securities, added: "An increase of 20 per cent in pork prices will drive up the CPI by 0.6 percentage points."