Soybean Fundamentals Remain Strong
26 June 2012


US - US soybean market fundamentals have been strong for an extended period of time, says University of Illinois agricultural economist Darrel Good.

"The strong fundamental factors have included record large exports in 2009-10 and 2010-11 as Chinese demand expanded, a reduction in US soybean acreage in 2011, a relatively low US average yield in 2011, intentions to reduce US acreage again in 2012, and a very small soybean harvest in South America this year," Professor Good said. "These strong market fundamentals continue in the form of a rapid pace of consumption and concerns about the size of the 2012 US crop."

Good reported that soybean prices began moving higher in July 2010, starting from about $9.50. July 2012 soybean futures reached a high of about $14.70 in late August 2011, declined to a low near $11.25 in mid-December 2011, and reached a high of $15.12 in early May 2012.



Prices have been very choppy the past two months, but the July futures contract is now trading within about .30 cents of the early May high. November 2012 futures prices have been lower than July futures but have followed a similar pattern and are now trading at a contract high near $14.30.

"The pace of the domestic soybean crush started slowly this year," Professor Good said. "The National Oilseed Processors Association reported that its members crushed 7.7 per cent fewer soybeans in the first quarter of the 2011-12 marketing year than in the same quarter the previous year."

 Crush during the second quarter, however, was 2.3 per cent larger and crush during the third quarter was 7.2 per cent larger than in the respective quarters last year. Crush during the first three quarters of the year was 0.3 per cent larger than the crush last year. For the year, the USDA projects the crush to be 0.7 per cent larger than during the 2010-11 marketing year, he said.

"It now appears that the crush may exceed that projection for several reasons. First, crush was relatively small in the fourth quarter of the 2010-11 marketing year. Second, the pace of domestic soybean meal consumption has been expanding. Third, the small South American crop may support US soybean meal exports above the current projection. The crush may be about 10 million bushels larger than the current projection of 1.66 billion bushels," Professor Good said.

At the beginning of the marketing year, the USDA projected US exports at 1.415 billion bushels, said Professor Good. The projection was reduced as the year progressed and was at 1.275 billion bushels by January 2012.

"The forecast, however, increased beginning in April and now stands at 1.335 billion bushels," he said. "Total export sales already exceed that projection, which is common, and exports will need to average about 13 million bushels per week during the last 10 weeks of the year to reach the projection."



The current pace of exports is a little slower than the needed pace, but exports are still likely to reach the projected level. While the pace of exports has slowed in a typical seasonal pattern, sales for export during the 2012-13 marketing year are record large, underscoring the strength in Chinese demand.

"The USDA will update the projections of consumption and ending stocks for both marketing years on July 11. The estimate of June 1 stocks, to be released on June 29, will provide some confirmation about the pace of consumption and likely year-ending stocks," Professor Good said.

With prospects for relatively small year-ending soybean stocks, the focus is quickly turning to the prospective size of the 2012 US crop. An estimate of planted and harvested acreage will be available with the USDA's 29 June Acreage report.

"With the soybean price rally that occurred this spring, it would not be surprising if acreage exceeded intentions reported in March," Professor Good said. "While acreage estimates will influence production prospects, the major focus will be on yield prospects."

In the June WASDE report, the USDA projected a US average yield of 43.9 bushels and 2012-13 marketing year-ending stocks at what is generally considered to be a minimum level of 140 million bushels. Good said that the trend yield for 2012 is 43.4 bushels, 1.9 bushels above the 2011 average yield.

"Continuation of stressful weather in the central and eastern growing areas along with declining crop condition ratings suggest that the 2012 yield could be below trend again in 2012," Professor Good said. "A shortfall in production would require that consumption during the year ahead be reduced from the current USDA projection of 3.255 billion bushels. The recent price rally is in recognition of the rationing that may be required.

"Unless weather and crop conditions improve soon, which does not appear likely, additional price strength is expected," Professor Good said. "Talk of the 2008 futures price peak near $16.60 has surfaced. While prices at that level are not yet justified, they are within the range that we have projected for the 'new era' of prices that began in 2007."

Soybean Farmers Committed to Feeding the World Sustainably
06 July 2012


US - US soybean farmers are well aware of the United Nations projection that global food production will have to rise by 50 per cent by the year 2030 to meet the demands of a growing population. Soybeans are emerging as a critical crop of a healthy and abundant food to feed the world. Soy products provide healthful food in the form of tofu, edamame, soy milk, and other vegetarian options.

Most soybean meal, however, is used in animal feed to create valuable protein, such as poultry, pork and fish. The Soy Aquaculture Alliance, an organization that coordinates research and support for soy use in aquaculture, states that the most efficient use of soy in animal feed is in fish feed, with one to 1.5 lbs. of feed producing one pound of fish. In comparison, it takes up to 1.9 lbs. of feed to produce one pound of poultry and 2.5 lbs. of feed to produce one pound of pork.
 
Aquaculture presents a huge opportunity to feed the world one of the healthiest foods on the planet – fish and seafood rich in heart-healthy Omega-3s. In 2011, the United Nations' Food and Agriculture Organization reported that, worldwide, more fish for human consumption is being produced by aquaculture than is being wild-caught, and that the wild harvest is unlikely to ever increase again due to over-fishing.
 
Also in 2011, Conservation International published a study that showed how aquaculture has the least environmental impact than any other means of protein production globally. In the last 10 years, it has been proven that, when done correctly, ocean aquaculture has no significant impact on the ocean environment, while producing high quality, healthful marine fish that are in high demand from chefs and consumers.
 
Soybean farmers continue to help the aquaculture industry develop environmentally-sound practices, whether fish are farmed in the sea or on land in tanks. The sustainability of global aquaculture depends on renewable and efficient sources of fish feed ingredients, such as US soybeans. Soybean meal and soy oil can replace half to nearly all of the fishmeal and fish oil in feeds for many species, easing pressure on capture fishery resources.
 
Soybean meal has the best amino acid complex of all of the plant protein ingredients and is highly digestible to most cultured fish and shrimp species. Every fish species has different nutritional requirements, and obviously, there will not be one feed ingredient that meets the needs of all farmed fish. The aim of the soy industry is to provide viable, affordable alternatives to the limited resource of fishmeal and fish oil, which can scale up for a growing aquaculture industry. Continuing research and development of soy-based feeds is yielding very promising results, as well as research in other alternative proteins.
 
The US soy industry is made up of hundreds of thousands of family farmers who are working land that has been in their families for many generations. Soybean farmers take their stewardship of the land seriously, and have a long history of increasing production while decreasing environmental impacts. Soybeans have always been an environmentally beneficial crop to rotate after harvest of other crops, such as corn, as they fix nitrates in the soil. With advances in biotechnology in the last decade, soybean farmers have been able to greatly increase the environmental sustainability of their farms.
 
The biggest environmental impact has been the adoption of no-till farming, with herbicide-tolerant crops that allow farmers to completely eliminate plowing on their fields. No-till farming results in better soil health and conservation, improved water retention, decreased soil erosion and decreased herbicide runoff. In fact, no-till farming has led to a global reduction of carbon dioxide, which, in one year, is the equivalent of removing almost seven million cars from the road. Thanks to biotechnology, global pesticide applications have decreased 379 million pounds in the last decade, improving water quality both through less pesticide and herbicide application and less runoff through fields. Studies have shown that this encourages the growth of habitats that support different varieties of wildlife.
 
US soybean farmers remain committed to environmental stewardship of land resources, conservation of ocean resources, and providing consumers with safe, healthy and abundant food.

Poor Growing Conditions Affect Grain Supply and Demand
12 July 2012


US - Dry weather continued to influence the crop outlook in the World Agricultural Supply and Demand Estimates released today by the Agriculture Department, according to the American Farm Bureau Federation.

The WASDE report showed smaller projected yields from June estimates across the board for US soybean and corn crops, despite increased planting acreage from last year. It also showed a decrease in projected ending stocks and feed use. According to AFBF economist Todd Davis, these trends will likely continue through the year.
 
“The reductions in the July report reflect the World Agricultural Outlook Board belief that the drought has greatly reduced the production potential for corn and soybeans,” said Dr Davis.
 
Corn yield was estimated at 146 bushels per acre, reduced by 20 bushels per acre from the June projections. The 2012-13 corn production estimate was subsequently affected, dropping to 12.97 billion bushels, a 1.82 billion bushel decrease.
 
The projected decreases in corn production will also have consequences on feed use. Ethanol use is also projected down 100 million bushels from June and export demand in corn has been reduced 300 million bushels.
 
The average projected soybean yield fell by 3.4 bushels per acre from June to 40.5 in July. Despite an increase in projected plantings, the substantial yield reduction pulled down this month’s estimate of production by 155 million bushels from June to 3.05 billion bushels. This number is slightly lower than the 2011 crop.
 
“Expect a lot of volatility in the coming year,” said Dr Davis. “As the crop size declines, USDA will make further cuts to projected use while prices climb to both curb demand and encourage production in 2013.”
 
The report projected increased corn prices of $1.30 per bushel from the June estimate to $5.90 per bushel for the 2012-13 marketing year.
 
According to Dr Davis, tighter projected stocks are to blame for the increase in prices. The 2012-13 ending stocks for corn are projected to decline 698 million bushels from June’s estimate to 1.183 billion bushels in July’s report. Soybean ending stocks don’t look any better, down 10 million bushels from June estimates to a current projection of 130 million bushels.
 
A report due out in August will have the first survey-based measure of crop yield potential. USDA will conduct producer surveys and field analysis throughout the fall and will then have a better idea of the damage done to the 2012 corn and soybean crop, according to Dr Davis.
 

Feed Grain Prices Surge Throughout July
27 July 2012
 
AUSTRALIA - Australian feed grain prices increased dramatically in July, underpinned by developments in international markets, reports Meat and Livestock Australia.

Feed wheat prices delivered Sydney averaged $286/tonne during July, increasing 18 per cent on the same time last year and surpassing the A$300/tonne mark in the final week of July for the first time since the middle of October 2010 (The Land).
 
In what is being described as the worst drought in 50 years, the ongoing hot conditions across the US corn belt continues to drive the rise in grain prices, while dry weather in Russia and wet conditions throughout the UK is also placing pressure on feed grain supplies.
 
Feed barley ($248/tonne) and triticale ($272/tonne) prices also rose during July, increasing 11 per cent and 18 per cent, respectively, on the same month last year. While the surging grain prices are great news for grain producers, the rising prices will challenge those livestock producers reliant on supplementary feed, particularly those in the lotfeeding industry.

CME: Corn Futures Closed Lower Tuesday
01 August 2012






US - September Corn finished down 13 1/4 at 806 3/4, 18 1/4 off the high and 1 1/2 up from the low. December Corn closed down 8 at 806. This was 4 1/2 up from the low and 14 1/2 off the high.

December corn traded slightly lower into the closing bell and managed to hold the 800 level on the day. The lower trade reflects profit taking following yesterday's sharply higher trade.

The Midwest weather forecast remains unfavorable for fall crops, with 90-100 degree temperatures expected for growing areas in the Southwestern Corn Belt this week and part of next week.
 
Scattered showers are also expected in the Midwest to finish out the week but soil conditions are so poor that the light rainfall will provide limited relief. Most of the corn crop is beyond repair at this point, but cooler temperatures may be able to stabilize yield loss for some areas.
 
Taiwan reportedly bought 60,800 tonnes of Brazilian corn overnight, which may be adding pressure to the corn complex today.

Argentina also announced that they would enact a new export policy that grants farmers permission to sell their whole corn harvest as they set single year export quotas, instead of the incremental quota system currently in place.

The market is still trying to gauge yield and production expectations for this year's corn crop ahead of the USDA report next week. Current market conditions suggest a corn yield near 129 bushels/acre with some estimates coming in near 120-122.
 
Outside markets were mixed today with the US Dollar trading lower and crude oil sharply lower on the day. September Rice finished down 0.22 at 15.615, 0.135 off the high and equal to the low.

Soybean Futures Closed Lower

August Soybeans finished down 4 3/4 at 1721, 21 off the high and 9 1/2 up from the low. November Soybeans closed down 2 1/2 at 1641. This was 11 1/4 up from the low and 22 1/4 off the high.

August Soymeal closed down 1.4 at 544.9. This was 3.5 up from the low and 9.3 off the high. August Soybean Oil finished down 0.02 at 52.55, 0.51 off the high and 0.4 up from the low. November soybeans traded slightly lower into the close but traded both sides of the unchanged today.

Early pressure was seen just prior to the start of pit trading, but the market found good support near the lows of the day. A late day sell off was linked to spillover pressure from a sharply lower wheat market and profit taking in corn.

The Midwest weather outlook for the next 2 weeks is offering support. Scattered showers are expected in the northern plains, parts of the central Midwest, and the eastern Corn Belt over the next week. Accumulation is expected to be light and be of very little benefit to soybean crops.
 
Blistering temperatures will move into the Southwestern Corn Belt today and tomorrow. Cooler temperatures are expected early next week, which may provide some relief to crops. Another round of above normal temperatures is forecasted for later next week.
 
Current price levels and crop reports suggest the market is trading a yield between 38-39 bushel/acre. Without cooler and wetter conditions in the next two weeks, soybean crops are susceptible to further yield deterioration. Outside markets were mixed today with the US Dollar trading lower and crude oil sharply lower on the day.

Wheat Futures Closed Lower

September Wheat finished down 26 1/4 at 888 1/4, 31 1/4 off the high and 2 1/4 up from the low. December Wheat closed down 24 3/4 at 902 1/2.

This was 2 up from the low and 29 off the high. September Chicago wheat traded sharply lower into the close of today's session as traders took profits following gains this week.

The wheat market began the day weaker, but losses were accelerated after corn began to tumble from it's record highs.

Russia's Agriculture Ministry may cut it's 2012 grain crop production forecast to 75 million tonnes from it's current estimate of 80 million tonnes but traders brushed off the news after the Prime Minister of Russia said he did not expect a domestic deficit for grain despite the lower production estimates.

Jordan announced a purchase of 100,000 tonnes of wheat from their tender issued last week. The official origin is unknown, but traders believe the seller likely came from the Black Sea region.
 
Outside markets were mixed with the US Dollar trading lower and crude oil trade sharply lower on the day. September Oats closed down 4 at 380 1/4. This was 2 1/4 up from the low and 5 off the high.

USDA WASDE

Reports» USDA WASDE» USDA WASDE - August 2012

10 August 2012
USDA WASDE - August 2012



 

WHEAT: U.S. wheat supplies for 2012/13 are raised 54 million bushels with higher forecast production and an increase in projected imports. Production is forecast 44 million bushels higher with increased yields for winter wheat, durum, and other spring wheat. Feed and residual use is projected 20 million bushels higher, reflecting the tighter supply situation for corn. Ending stocks for 2012/13 are projected 34 million bushels higher. The projected range for the 2012/13 seasonaverage farm price is raised substantially to $7.60 to $9.00 per bushel, compared with $6.20 to $7.40 per bushel last month, as tighter foreign wheat supplies and sharply higher corn prices raise price prospects for the remainder of the marketing year.

Global wheat supplies for 2012/13 are projected 2.1 million tons lower mostly reflecting a 3.7- million-ton reduction in foreign production. A small increase in 2012/13 world beginning stocks is partly offsetting with 2011/12 updates to trade and use for a number of countries. Lower expected production in the FSU-12 accounts for most of this month’s decline in world output. Production is lowered 6.0 million tons for Russia on reduced area and yield prospects due to July heat and dryness across most of the spring wheat growing areas. Spring wheat in adjoining areas of Kazakhstan was also affected by the same adverse weather reducing production prospects 2.0 million tons. Other reductions this month include a 0.8-million-ton reduction for Turkey based on lower reported yields, a 0.5-million-ton reduction for Argentina reflecting lower expected area, a 0.3- million-ton reduction for Syria, and a 0.2-million-ton reduction for EU-27. Production is raised 2.9 million tons for India, 2.0 million tons for Ukraine, and 0.4 million tons each for Canada and Uzbekistan.

Global wheat consumption for 2012/13 is raised 3.2 million tons as a number of countries are expected to shift some of their livestock and poultry feeding from corn to wheat. Wheat feeding is raised 1.0 million tons each for EU-27 and Ukraine, 0.5 million tons each for South Korea and Vietnam, 0.3 million tons for Israel, and 0.2 million tons each for India and Thailand. Partly offsetting is a 0.5-million-ton reduction for Russia with lower expected production.

Global wheat imports for 2012/13 are raised with increases for several countries, in part, to support higher wheat feeding. Imports are raised 0.5 million tons each for EU-27, South Korea, and Vietnam, and raised 0.3 million tons for Israel. Imports are also raised 0.3 million tons for Brazil. Global 2012/13 exports are raised, but much of the shift among countries also reflects reduced export prospects for Russia, which is lowered 4.0 million tons. Exports are raised 2.0 million tons for Ukraine, 1.0 million tons each for Canada and EU-27, 0.5 million tons each for Australia, Brazil, and Pakistan. Exports are lowered 0.7 million tons for Argentina, 0.5 million tons for Turkey, and 0.2 million tons for Uruguay. World ending stocks for 2012/13 are projected 5.3 million tons lower at 177.2 million.

COARSE GRAINS: U.S. feed grain supplies for 2012/13 are projected sharply lower again this month with corn production forecast 2.2 billion bushels lower and sorghum production forecast 92 million bushels lower. The forecast U.S. corn yield is reduced 22.6 bushels per acre to 123.4 bushels as extreme heat and dryness continued, and in many areas worsened, during July across the Plains and Corn Belt. As forecast, the 2012/13 corn yield would be the lowest since 1995/96. Corn area harvested for grain is also lowered, down 1.5 million acres from the last month’s forecast that was based on the June Acreage report. The U.S. sorghum yield is forecast 16.3 bushels per acre lower at 48.6 bushels as drought stressed sorghum from the Central Plains to the Corn Belt. Sorghum harvested area is also lowered slightly.

U.S. corn production for 2012/13 is forecast at 10.8 billion bushels, the lowest since 2006/07. Relatively small increases in carryin and imports only partly offset this month’s substantial reduction in crop size. Ending stocks for 2011/12 are projected 118 million bushels higher with lower expected exports, reduced corn use for ethanol, and a small increase in imports. Imports for 2012/13 are also raised, up 45 million bushels to 75 million, reflecting strong domestic corn prices and competitively priced foreign supplies. Total U.S. corn supplies for 2012/13 are projected down 2.0 billion bushels and at a 9-year low.

This month’s large reduction in U.S. corn supplies and the sharply higher price outlook are expected to further reduce 2012/13 corn usage. Total use is projected 1.5 billion bushels lower and at 11.2 billion would be a 6-year low. The biggest reduction again this month is for feed and residual disappearance, projected down 725 million bushels. Food, seed, and industrial (FSI) use is also projected lower, down 470 million bushels, mostly reflecting a 400-million-bushel reduction in corn used to produce ethanol. Reductions in other food and industrial uses account for the remainder of the FSI decline. Ending stocks for 2012/13 are projected at 650 million bushels, 533 million lower and the smallest carryout since 1995/96. The 2012/13 season-average farm price for corn is projected at a record $7.50 to $8.90 per bushel, up sharply from the $5.40 to $6.40 per bushel projected in July. Projected farm prices for the other feed grains are also raised.

Global coarse grain supplies for 2012/13 are reduced 56.5 million tons mostly reflecting the forecast 55.7-million-ton reduction in the U.S. corn crop. Larger 2012/13 corn beginning stocks in the United States and Brazil partly offset lower U.S. and foreign coarse grain production. Brazil corn beginning stocks are raised 2.8 million tons based on higher reported production for 2011/12.

Foreign corn production for 2012/13 is mostly unchanged with increases for China, Argentina, Brazil, Mexico, and South Africa mostly offset by reductions for EU-27, Ukraine, India, Serbia, Russia, Croatia, Moldova, and Canada. Foreign sorghum production is lowered 0.3 million tons with a reduction for India. Reductions in barley production in FSU-12, EU-27, and Turkey lower global barley production 1.1 million tons. A 2.5-million-ton reduction in India millet output also lowers world coarse grain supplies.

Global 2012/13 corn trade is projected sharply lower this month in response to tighter U.S. supplies and higher prices. Corn imports are lowered for China, EU-27, Indonesia, Japan, South Korea, Mexico, Vietnam, Israel, Colombia, Peru, and Syria. In addition to the United States, corn exports are reduced for Ukraine, EU-27, and Serbia. Partly offsetting are export increases for Argentina, Brazil, South Africa, and Canada. Global corn consumption is projected 38.9 million tons lower with the United States accounting for more than three-fourths of the reduction. Foreign corn feeding drops 8.8 million tons with only part of the decline offset by higher wheat feeding. Corn feeding is lowered for EU-27, India, Canada, Japan, South Korea, Russia, Ukraine, Vietnam, Israel, and Indonesia. Global corn ending stocks are projected 10.8 million tons lower with increases for China, Brazil, and Argentina only partly making up for the large reduction in the United States and smaller reductions in a number of other countries.

RICE: U.S. total rice supplies for 2012/13 are projected at 244.4 million cwt, down 2.5 million from last month. Projected beginning stocks, imports, and production are each lowered from a month ago. USDA's first survey-based forecast of the 2012/13 U.S. rice crop is 190.0 million cwt, down 1.0 million from last month's projection, but up nearly 3 percent from the previous year. Average all rice yield is forecast at 7,196 pounds per acre, down 39 pounds per acre from last month’s projection, but up nearly 2 percent from last year. Long-grain production is forecast at 132.1 million cwt, down 1 percent from last month, while combined medium- and short-grain production is forecast at 57.9 million, up less than 1 percent from a month ago. The all rice import projection is lowered 0.5 million cwt to 21.0 million due in part to an expected slower pace of long-grain imports from South and Southeast Asia, a continuation of the trend observed in 2011/12. All rice beginning stocks for 2012/13 are lowered 1.0 million cwt to 33.5 million because of an increase in the 2011/12 export estimate to 102.0 million.

U.S. total rice use for 2012/13 is projected at 216.0 million cwt, down 2.0 million cwt from last month. All rice domestic and residual use is lowered 2.0 million cwt to 124.0 million, all in longgrain. The all rice export projection is unchanged at 92.0 million cwt, however, the rough rice component is raised 1.0 million and offset by a 1.0 million reduction in combined milled- and brownexports (rough-equivalent basis). The long-grain and combined medium- and short-grain export projections are unchanged at 60.0 million cwt and 32.0 million, respectively. U.S. all rice ending stocks for 2012/13 are projected at 28.4 million cwt, down 0.5 million from last month, and 15 percent below the previous year.

The 2012/13 long-grain U.S. season-average farm price is projected at $13.50 to $14.50 per cwt, up 50 cents per cwt on each end of the range. The combined medium- and short-grain price is projected at $15.50 to $16.50 per cwt, unchanged from a month ago. The 2012/13 all rice price is projected at $14.10 to $15.10 per cwt, up 30 cents per cwt on each end of the range. A smaller crop and tighter supplies, particularly for long-grain rice, are expected to support prices. The all rice stocks-to-use ratio at 13.2 percent in 2012/13 is the lowest since 2007/08, and the long-grain rice stocks-to-use ratio at 10.6 percent is the lowest since 2003/04.

Lower projected global 2012/13 total supply more than offsets a slight decrease in total use resulting in an expected decrease in ending stocks. Global production is lowered 1.9 million tons to 463.2 million, due primarily to forecast reductions for India, Brazil, and North Korea, which are partially offset by increases for China and South Korea. Beginning stocks are increased 0.8 million tons due to a 1.0-million-ton increase for India, which is partially offset by reductions for Brazil and Indonesia. World consumption is reduced 0.4 million tons. A 1.0-million-ton increase in China offsets an identical reduction for India. Consumption forecasts are also lowered for Brazil, North Korea, and the United States, partially offset by an increase for Indonesia. Global trade is changed little from a month ago. Global ending stocks for 2012/13 are projected at 101.8 million tons, down 0.7 million from last month, and a decrease of 3.2 million from the previous year. The largest stocks reductions for 2012/13 are for Brazil and Indonesia, each just over 0.3 million tons.

OILSEEDS: U.S. oilseed production for 2012/13 is projected at 83.4 million tons, down 9.4 million from last month, as a lower soybean production estimate is only partly offset by higher crops of peanuts and cottonseed. Soybean production for 2012/13 is projected at 2.7 billion bushels, down 358 million due to lower harvested area and yields. Harvested area is projected at 74.6 million acres, down 0.7 million from the July projection. The first survey-based soybean yield forecast of 36.1 bushels per acre is 4.4 bushels below last month’s projection and 5.4 bushels below last year’s yield. Soybean supplies for 2012/13 are projected 12 percent below last month to a 9-year low on lower production and reduced beginning stocks. Soybean exports are reduced 260 million bushels to 1.11 billion bushels. Soybean crush is also reduced as higher prices reduce domestic use and prospective exports for both soybean meal and oil. Soybean ending stocks are projected at 115 million bushels, down 15 million.

U.S. changes for 2011/12 include increased soybean crush and exports and reduced ending stocks. Crush is increased 15 million bushels to 1.69 billion reflecting increased exports and domestic use of soybean meal. Soybean exports are increased 10 million to 1.35 billion bushels reflecting strong shipments in recent weeks. Soybean ending stocks are projected at 145 million bushels, down 25 million.

Soybean and product prices for 2012/13 are all raised to record levels this month, reflecting the impact of sharply reduced soybean and corn production. The U.S. season-average soybean price is projected at $15.00 to $17.00 per bushel, up $2.00 on both ends. Soybean meal prices are projected at $460 to $490 per short ton compared with $365 to $395 last month. Soybean oil prices are projected at 53 to 57 cents per pound, up 0.5 cents on both ends.

Global oilseed production for 2012/13 is projected at 457.3 million tons, down 8.5 million tons from last month. Reductions for soybeans, sunflowerseed, peanuts, and cottonseed are only partly offset by increased rapeseed production. Lower soybean production is projected for the United States, Canada, and EU-27 due to lower yields resulting from hot, dry weather. Soybean production is raised for Brazil and Paraguay as producers are expected to respond to sharply higher prices with increased plantings. Brazil’s soybean production is projected up 3 million tons at a record 81 million. Sunflowerseed production is reduced for EU-27, Ukraine, and Moldova due to the effects of hot, dry weather during the reproductive stage of the crops. Other changes include higher rapeseed production for EU-27 and Ukraine, lower rapeseed production for China and Australia, lower peanut production for India and Indonesia, and lower cottonseed production for India.

Global oilseed and meal production, trade, and consumption for 2012/13 are all reduced this month reflecting the impact of reduced oilseed supplies and higher prices. Projected soybean imports for China are reduced 1.5 million tons to 59.5 million as domestic soybean stocks contribute a larger component of soybean meal consumption. Soybean exports for Brazil and Argentina are forecast higher but only partly offset a reduction for the United States.

SUGAR: Projected U.S. sugar supply for fiscal year 2012/13 is decreased 251,000 short tons, raw value, compared with last month. Carry-in stocks are reduced mainly due to data revisions in Sweetener Market Data, which lower 2011/12 ending stocks. Imports from Mexico are decreased due to higher sugar consumption and carryout stocks in Mexico. Total use is unchanged.

COTTON: The U.S. 2012/13 cotton supply and demand estimates include larger production and ending stocks compared with last month. Production is raised 651,000 bales to 17.7 million, up nearly 4 percent, based on USDA’s first crop survey. Domestic mill use is unchanged. Exports remain forecast at 12.1 million bales, despite the larger supply, due to reduced import demand by China. Ending stocks are now forecast at 5.5 million bales, equal to 35 percent of total use. The range for the marketing year average price received by producers is narrowed 1 cent on each end to 61 to 79 cents per pound.

This month’s world 2012/13 cotton estimates also show larger supplies and ending stocks. Beginning stocks are raised nearly 2.0 million bales in China as a result of adjustments to 2011/12 which both increase imports and reduce consumption. The higher China stocks are partially offset by lower beginning stocks in Australia, Malaysia, Pakistan, and others, resulting in a net global increase of 1.1 million bales. World production is raised 300,000 bales, as increases for the United States, China, Burkina Faso, and Mali are partially offset by lower production for India, Brazil, Argentina, and others. World consumption is reduced 820,000 bales, due mainly to reductions for China and Pakistan. World trade is reduced slightly, as lower imports by China are partially offset by small increases for several countries. World stocks are raised to 74.7 million bales, including an increase of nearly 2.4 million bales in stocks held by China; lesser increases for the United States, Pakistan, and Uzbekistan are about offset by decreases for India, Australia, and Brazil. Projected China stocks of 34.2 million bales account for 46 percent of the world stocks forecast, and assume a net increase in China’s national cotton reserve of about 20 percent during 2012/13.

LIVESTOCK, POULTRY, AND DAIRY: The forecast for 2012 total red meat and poultry production is raised from last month but the forecast for 2013 is reduced as higher feed prices are expected to pressure producer returns. Beef production is raised from last month for both 2012 and 2013 due to higher expected placements in feedlots and increased dairy cow slaughter in late 2012 and during 2013. Carcass weights are forecast higher based on recent weight trends, but higher feed prices are expected to temper the increase and carcass weights are expected to be lower in 2013 compared to 2012. Pork production is reduced from last month for both 2012 and 2013. The reduction for 2012 reflects lower slaughter in the third quarter and lighter expected carcass weights through the year. As a result of high feed prices and recent hot weather, forecast pig crops are lowered in the second half of 2012 with declines continuing into 2013. Pork production is forecast lower in 2013 due to a combination of smaller hog supplies and lower expected carcass weights. Broiler production is raised in 2012 as production in the second quarter was higher than forecast last month and hatchery data points to higher than previously forecast levels of production in the third quarter. However, high feed costs are expected to result in lower broiler production in 2013. Turkey production is forecast lower in 2012 on lower second-quarter production. The production forecast for 2013 is reduced as feed prices squeeze producer returns. The egg production forecast is lowered for both 2012 and 2013.

Beef imports are reduced for 2012 based in part on weaker second-quarter data but are unchanged for 2013. Beef exports are reduced for both 2012 and 2013 as exports have slowed and tight supplies of pork and poultry are expected to support domestic beef demand. Pork and poultry exports are reduced for both 2012 and 2013.

Cattle prices are reduced from last month with the expectation of larger fed cattle marketings in both 2012 and 2013. However, prices are likely to remain strong in 2013 as total meat supplies are tight. Hog prices are raised in both years due to smaller hog supplies. Broiler prices are reduced in 2012 due to larger expected supplies and somewhat weaker demand, but for 2013, tighter supplies are expected to help support higher prices. Turkey and egg price forecasts are raised on lower production.

Milk production forecasts for 2012 and 2013 are reduced from last month as higher forecast feed prices are expected to pressure producer returns and encourage a more rapid decline in the cow herd. Milk per cow is also reduced due to tighter feed supplies. Imports for 2012 are raised on both a fat and skim-solids basis and are raised on a fat basis for 2013. Exports are raised for 2012 but exports for 2013 are reduced from last month on tighter supplies. Ending stocks are reduced. Product prices are forecast higher for 2012 and 2013 as tighter supplies support prices. With higher product prices, both Class III and Class IV price forecasts are raised. The all milk price is forecast at $17.55 to $17.75 per cwt for 2012 and $17.80 to $18.80 per cwt for 2013.

US Grains Council: Global Analysis of Grain Supply
15 August 2012

GLOBAL - In its monthly agricultural supply and demand update, the US Department of Agriculture again lowered the outlook for US corn production, reflecting the continued deterioration of this year's crop due to the once-in-a-lifetime drought that affects most of the US Corn Belt.

The latest USDA projection lowers US corn production to 274 million metric tons (10.8 billion bushels), down almost 40 million tons (1.6 billion bushels) from last year, and the lowest since 2006, according to the US Grains Council.

 World corn production is estimated at 849 million tons (33.4 billion bushels), down 27 million tons (1.1 billion bushels) from last year, but 19 million tons (748 million bushels) higher than 2010/2011 due to higher production from China, Brazil and Argentina.




With this large reduction in US corn supplies, higher prices are expected to ration demand during the coming year. USDA projects that total world corn use will decline about seven million tons (275.6 million bushels) from last year, while US total use will drop 25 million tons (984.2 million bushels):
 •Feed use down 12 million tons (472.4 million bushels)
 •Corn use for ethanol down 12.7 million tons (500 million bushels)
 •Exports down 6.3 million tons (248 million bushels)

USDA expects world corn imports to decline by almost seven million tons (275.6 million bushels), while non-US feed use will continue to grow, up 13 million tons (511.8 million bushels) from last year to 405 million tons (15.9 billion bushels).
 




Global Implications
 
From a broader perspective, world coarse grain feed use (including mainly corn, sorghum and barley) will be essentially unchanged from last year at 660 million tons, compared with 658.5 million tons in 2011/12.

 Countries will respond to the tight corn supplies and higher prices in the coming year in different ways according the USDA estimate. For example, Japan and South Korea imports are projected to be unchanged from 2011 to 2012.

 China's corn imports likely will decrease by three million tons (118.1 million bushels) due partly to a record domestic corn harvest of 200 million tons (7.9 billion bushels), which is up seven million tons (275.6 million bushels) from last year.
 

Globally, all corn users will face the challenge of higher prices and the need for increased efficiency, careful risk management and creative marketing strategies during the coming year.

As the projections for US corn use demonstrate, the high prices will ration demand in all markets and in all sectors (feed, food and fuel). Also, the relatively smaller decline in US exports compared to domestic use reflects the resilience of global feed demand.

Alan Brugler Market Commentary
 
Market Commentary - August 17, 2012

 




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Corn
 

Corn futures are trading slightly higher to slightly lower at midday. Trade activity seems to be light ahead of the weekend. Cooler Midwest temperatures prevail giving us all a break for now. We are hearing harvest reports with the corn season advanced because of this year’s high temps and drought conditions. The energy went to the corn ear vs. the stock and so farmers are pressed to harvest wetter corn to get it out rather than risk adverse weather. The weekly crop progress report should be interesting Monday. We expect it could begin posting harvested numbers. The Pro Farmer Midwest Crop Tour will start next week from Ohio to Minnesota. Other groups will tour S. Dakota, NE, IA and Minnesota.

Sep 12 Corn is at $7.99 1/4, up 1 1/2 cents,

Dec 12 Corn is at $8.07, down 1/2 cent,

Mar 13 Corn is at $8.07 1/4, unch ,

Jul 13 Corn is at $8.00 3/4, down 1/2 cent





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Soybeans
 

Soybeans are currently trading higher with the range relatively narrow today. Higher prices are expected to encourage increased soybean planting in South America for the coming season. U.S. soybean supplies are approaching dangerously low levels if the weather doesn’t change soon. The eastern growing areas have seen some improvement in conditions which should help but IA and NE that were number one and number three in production last year still need rain. Temperatures in those areas are cooler with normal rainfall predicted but normal rainfall in August has not normally been abundant. According to NOAA, the month of August is about #5 in terms of annual precipitation. USDA is already putting bean yields at a 10 year low. There is some discussion about planted acres this year being different between USDA and FSA. FSA does monthly totals. The two will come together in September and we will get a revision in October. China sold 402,375 MT of state reserve soybeans at auction which is what was offered. The selling price was about 8% lower than imported beans.

Sep 12 Soybeans are at $16.63 1/4, up 7 cents,

Nov 12 Soybeans are at $16.36 3/4, up 11 1/2 cents,

Jan 13 Soybeans are at $16.27 1/2, up 12 3/4 cents,

Mar 13 Soybeans are at $15.46, up 11 1/2 cents,

Sep 12 Soybean Meal is at $518.20, up $1.70,

Sep 12 Soybean Oil is at $53.23, up $0.19





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Wheat
 

Wheat futures are trading higher for the third day in a row. South Korea bought 49,000 MT of wheat from Columbia Grain. U.S. wheat is priced higher than other world supplies which could limit exports. However with production issues in the Black Sea and reduced wheat acres in South America next year importers may still choose to come to the U.S. India does have some reserves and Australia got some needed rains in the west with conditions favorable in eastern Australia for winter wheat. The Argentine wheat crop is thought to be in good shape for 2012/13 and was 95% planted as of August 8th. The Argentine Ag minister said 85% of the crop is in good to very good shape.

Sep 12 CBOT Wheat is at $8.69, up 7 1/4 cents,

Sep 12 KCBT Wheat is at $8.77 3/4, up 5 1/4 cents,

Sep 12 MGEX Wheat is at $9.28, up 6 1/2 cents

Dec 12 MGEX Wheat is at $9.39 1/2, up 7 1/2 cents





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Cattle
 

Cattle futures are trading mixed. Cash sales so far have only been reported for Nebraska at $120 in the live and $190 in the dressed. That is steady to $2 higher than last week.  USDA will issue their monthly Cattle on Feed report this afternoon. The trade average guess for August 1 On Feed is 100.7% of year ago. The average placement estimate is at 91.4% and Marketings during July are thought to have been around 101.6%. Wholesale beef prices are higher at midday. Choice boxes are $1.53 higher and Select boxes were up $0.38. The spread is at $8.23. Estimated week to date cattle slaughter is at 505,000 head, down from 517,000 last year.

 

Aug 12 Cattle are at $121.350, up $0.500,

Oct 12 Cattle are at $125.675, up $0.125,

Dec 12 Cattle are at $128.400, up $0.325,

Aug 12 Feeder Cattle are at $140.450, up $0.625

Sep 12 Feeder Cattle are at $142.450, up $0.200





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Lean Hogs
 

Lean Hogs are trading higher recovering a small portion of this week’s sell off as the weekend approaches. The CME Index is at 91.58, down $0.26 from the previous day. It still has a huge premium to October futures which has been the case the last couple of years.  Cash hogs were reported $1.63 lower in IA/MN. The Carcass cutout was lower yesterday and pork trade is very slow today with light demand and light to moderate offerings.  Estimated week to date slaughter was 1.671 million head compared to 1.651 million a year ago. 

 

Oct 12 Hogs are at $76.075, up $0.450,

Dec 12 Hogs are at $73.550, up $0.650

Feb 13 Hogs are at $80.800, up $0.300





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Cotton
 

Cotton futures are trading higher and have been holding an uptrend line since late June on the daily chart. US Certified stocks for August 16th were 25,440 unchanged from the previous day. Crude oil is now higher and the dollar is still up on the day. Last week’s pre report price rally did not curb export sales but sales under 100,000 bales are nothing to write home about as we head into harvest with the crop looking good and China stockpiles considered substantial. The Cotlook A index is down 0.50 at 82.75.

 

Oct 12 Cotton is at 73.43, up 106 points,

Dec 12 Cotton is at 73.91, up 132 points

Mar 13 Cotton is at 74.52, up 132 points

USGC: Growers Deal with Poor Corn Results
24 August 2012

GLOBAL - With the US corn crop expected to be short following the drought this year, global grain buyers are looking for options to help contain costs. At the same time, farmers in exporting countries around the globe are looking to take advantage of current prices by growing and shipping more corn and coarse grains to willing buyers.
 
Argentina is the world's second-largest corn exporter, and some farmers there are looking to plant their 2012-13 crop early in hopes of taking advantage of recent rains and the run-up in prices due to the drought in the United States.
 
A US Grains Council (USGC) consultant said corn exports for the country's marketing year are approximately 13.5 million tons. However, traders in the region are expecting the government to approve export licenses for another 1.5 million to 2.0 million tons in September. That would bring exports from the country close to the 16.0 million in exports projected by the US Department of Agriculture in its August global supply and demand report.
 
The consultant said Argentina corn exports are ahead of last year and about half of the ountry's exports go to Colombia, South Korea, Malaysia and Peru. While USDA lowered its estimate of Chinese corn imports for the year, the former director of the China's State Administration of Grain said China could look to buy some of its corn needs from Argentina or other exporters, as US corn is priced out of the local market. USDA estimates 2012-13 average US corn prices to be in the $7.50-8.90 per bushel ($295-350 per ton) range.
 
USDA estimates China's corn production at 200 million tons for the year, although officials in the country are saying the crop may be around 197 million tons. The US Grains Council's Beijing office conducted a north China crop tour in July and found a large crop, but the Council will conduct its fall China harvest tour in September to help global grain traders get a better understanding of the country's 2012-13 crop.
 
Corn production in and exports from the Former Soviet Union (FSU) and Ukraine were lowered this month, as were total coarse grains in the two Black Sea exporting regions, due to warm and dry conditions. Wheat exports were lowered by 4 million tons to 8 million tons in Russia but were increased by 2 million tons to 6 million tons in exports for Ukraine. Wheat's importance grows as a feed source as corn prices rise.
 
As for corn, Ukraine's exports were lowered 1.5 million tons to 12.5 million, while FSU exports were lowered 1.5 million tons to 14.4 million.
 
Bill Tierney, chief economist with Chicago-based AgResource Co., told a news service that buyers will not be taken by surprise should Russia and Ukraine move to curtail exports as they did in 2010. While governments of both countries have moved to assure buyers there will be no export ban – or de facto ban – the concern still exists. Some traders said they expect exports in the region to end late this year.
 
Russia enters the World Trade Organization this week, but analysts have said that would not prevent the country from imposing quotes, taxes or embargoes to protect its own supply.
 
"Whether Ukraine or Russia moves to halt or slow exports remains to be seen. Certainly buyers are leery, which makes an important point that is difficult to rebuild trust and reliability once you shut the door," said Cary Sifferath, who operates the US Grains Council's office in Tunis, Tunisia.
 
USDA estimated Brazil's corn exports at 14.0 million tons for 2012-13, on par with last year.
 
South Africa lowered corn production forecast marginally to 10.8 million tons. This may tighten the country's balance sheet for 2012-13. The country has exported more than 290,000 tons of white corn to Mexico this year.
 
Dry conditions are impacting crops in several regions of India and will likely reduce production figures. USDA, however, still anticipates the country will still export wheat, rice, cotton and soybean meal this year.

Alan Brugler Market Commentary
 
Market Commentary - October 06, 2012

 




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Corn
 

Corn futures closed lower on the day and were down 8 cents for the week. The weekly CFTC report showed Managed Money increased their net corn long by 671 contracts as of Tuesday the reporting period leaving them with a net long of 272,726 contracts.  Trade estimates for US corn production on next Thursday’s report vary from yields of 119 to 124 or 125 bpa. Private analyst Informa raised their corn yield estimate to 127 bpa and the 2012 corn crop to 11.194 billion bushels which weighed on prices. We have been hearing yield reports on both ends of the spectrum from clients with many happily surprised considering the growing conditions this year. Trade estimates for US corn production vary from yields of 119 to 124 or 125 bpa. Merchants report a need for clean, low aflatoxin corn to blend in states where that is permitted. Producers have been aggressive sellers of corn with aflatoxin due to crop insurance policy requirements.

Dec 12 Corn closed at $7.48, down 9 cents,

Mar 13 Corn closed at $7.48 1/2, down 8 3/4 cents,

May 13 Corn closed at $7.43 3/4, down 9 1/2 cents

Jul 13 Corn closed at $7.37 3/4, down 8 1/2 cents
 




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Soybeans
 

Soybeans closed unchanged on the day and were down 50 cents for the week. The weekly CFTC report showed Managed Money had decreased their net long by 16,660 contracts from the previous week to 178,742 contracts. Private forecaster Informa anticipates USDA will raise their soybean estimate to 37.8 bpa with a production number of 2.86 billion bushels. Most of the yield reports we are hearing from producers is better than they expected but expectations may have been lowered because of the weather this year. The USDA should adjust planted and harvested acres in this report. China was back in the market purchasing 180,000 MT of soybeans for 2012/13 delivery according to private exporters reporting to the USD during their week long holiday week. We are noting an increase in the spread in favor of nearby soybeans compared to the Brazil and Argentine harvest months.

 

Nov 12 Soybeans closed at $15.51 1/2, unch ,

Jan 13 Soybeans closed at $15.51, unch ,

Mar 13 Soybeans closed at $15.13, down 5 1/2 cents,

May 13 Soybeans closed at $14.60 1/2, unch ,

Oct 12 Soybean Meal closed at $474.70, up $3.90,

Oct 12 Soybean Oil closed at $50.76, down $0.24
 




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Wheat
 

Wheat futures closed lower on the day and down 40 to 49 cents for the week. The weekly CFTC report showed Managed Money had decreased their net long in CBT wheat by 7,111 contracts and in KC by 4,197 contracts leaving a net long of 58,197 and 45,431 respectively. As a general trend wheat prices have basically traded sideways for several weeks trading in a 80 to 90 cent range from highs to lows. Export sales are behind the average pace needed to hit the USDA forecast for the year. The U.S. needs rain to help germinate planted winter wheat. The forecast for Oklahoma, Southern KS and much of Texas for the week of October 11-17 is calling for a welcome above normal precipitation with very minimal chances of precipitation before that.  Australian Commonwealth Bank projects Australian wheat exports could fall to 17.8 MMT, down from 24.9 MMT last year. The Australian Bureau of Ag has forecast a 22.5 MMT crop with total supplies of 27.8 MMT.  The September USDA WASDE report listed total supplies at 33.72 MMT with Australian exports at 21 MMT.

 

Dec 12 CBOT Wheat closed at $8.57 1/2, down 11 3/4 cents,

Dec 12 KCBT Wheat closed at $8.78 3/4, down 8 cents,

Dec 12 MGEX Wheat closed at $9.19 1/2, down 6 3/4 cents
 




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Cattle
 

Cattle futures rallied into the close to finish higher on the day and were up 97 cents for the week. The weekly CFTC report showed Managed Money decreased their net long by 14,312 contracts, or over 33% of the previous week’s position. Cash cattle business was active in the Southern Plains yesterday with prices mostly at $124 to $124.50 in the live and $190 to $192 in the dressed. Wholesale prices ended the week lower. Choice boxed beef is down $1.36/cwt and select boxes are quoted $1.45 lower by USDA.  Estimated week to date slaughter is 607,000 compared to 646,000 a year ago. The lack of numbers provides some underlying support to the futures. 

Oct 12 Cattle closed at $123.100, up $0.775,

Dec 12 Cattle closed at $126.300, up $0.600,

Feb 13 Cattle closed at $129.850, up $0.400,

Oct 12 Feeder Cattle closed at $145.075, up $0.600

Nov 12 Feeder Cattle closed at $146.425, up $0.600

Jan 13 Feeder Cattle closed at $149.100, up $0.600
 




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Lean Hogs
 

Lean Hogs ended the session mixed with the spot contract lower. Hogs were up $4.15 for the week.  Managed Money added 1,404 contracts to their net hog long from the previous week. The CME Lean Hog Index was $78.68 up 0.92 as of the 3rd continuing to go up nearly every day. The futures premium to cash remains, with the spread needing to reach convergence at expiration October 12th. Week to date slaughter is estimated at 2.161 million head, 32,000 head more than a year ago. Saturday’s slaughter is estimated at 194 thousand head with packers showing an increased buying interest. Pork trading was slow to moderate with light to moderate demand and mostly light offerings.  The cutout was lower on 63.5 loads. 

Oct 12 Hogs closed at $81.325, down $0.475,

Dec 12 Hogs closed at $76.550, up $0.500

Feb 13 Hogs closed at $82.100, up $0.425
 




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Cotton
 

Cotton futures ended the session lower but were up 65 points for the week.  Sufficient stocks and soft demand have kept prices at the lower end of the past years trading range. Cert stocks at the ICE were 9,595 bales, with 523 new certs and 270 bales awaiting review. Delivery interest has been next to non-existent, with most players already out of the October contract.  Total cotton open interest was 328,330 contracts as of October 4th showing a slight increase over the last couple of weeks with Managed Money adding 13,321 contracts to their net cotton short position.  The Cotlook A index is at 81.30 cents a pound, down 0.05. 

Oct 12 Cotton closed at 69.8, down 60 points,

Dec 12 Cotton closed at 71.49, down 60 points

Mar 13 Cotton closed at 72.3, down 79 points
 


Market Commentary Provided By:


Brugler Marketing & Management LLC

USDA Feed Outlook

Reports» USDA Feed Outlook» USDA Feed Outlook - October 2012

16 October 2012
USDA Feed Outlook - October 2012
U.S. corn production for 2012/13 is lowered 21 million bushels as lower yield more than offsets higher area in this month’s forecasts.


 

Smaller Carryin and Forecast Production Tighten Corn Ending Stocks for 2012/13
 
The yield slips 0.8 bushels per acre to 122.0 bushels, and harvested area advances 0.4 million acres to 87.7 million. Corn supplies for 2012/13 are projected 214 million bushels lower, mostly reflecting lower carryin based on September 1 stocks. Projected exports are reduced 100 million bushels. Corn ending stocks for 2012/13 are projected 114 million bushels lower at 619 million. The projected average price received by growers is reduced 10 cents on each end of the range to $7.10-$8.50 per bushel due to lower-than-expected early season cash and futures prices.
 
Reduced production and beginning stocks leave world coarse grain supplies for 2012/13 projected down 11.0 million tons this month to the lowest level since 2007/08. However, foreign corn supplies in 2012/13 are projected to be record high at 673.5 million tons. Brazil’s corn exports for trade year 2012/13 are raised over 30 percent this month to a record 19.0 million tons, supporting an increase in forecast corn trade and a sharp reduction in U.S. exports to the lowest level in almost 40 years.
 


Domestic Outlook

Forecast Corn Carryout Stocks for 2012/13 Slip
 
The September 28 Grain Stocks report indicates September 1, 2012, U.S. corn stocks of 988 million bushels, the lowest carryout since 1995/96, and 193 million bushels below September’s WASDE forecast. The stocks data and nearly final data for other domestic use imply a fourth-quarter feed and residual use of 335 million bushels, 115 million below estimates from the fourth quarter of 2010/11.
 
U.S. feed grain production for 2012/13 is forecast at 284.1 million metric tons, down from last month’s forecast of 284.5 million. The month-to-month decrease reflects reduced forecast production for corn and smaller production estimates for barley and oats from the Small Grains 2012 Summary report. Planted area for the four feed grains is increased 542,000 acres, and harvested-for-grain acres are increased 208,000 acres this month. Yields per harvested acre for the four grains combined are down slightly at 2.93 tons per acre. Beginning stocks in 2012/13 are lowered to 27.8 million tons, based on the recent Grain Stocks report. Total 2012/13 feed grain supply is forecast at 315.8 million tons, down 5.6 million from last month and down relative to the 2011/12 estimate of 358.5 million tons.
 
Total 2012/13 feed grain utilization is projected at 297.0 million tons, down from the September forecast of 300.1 million and down from the 2011/12 estimate of 330.7 million tons. The month-to-month decline is attributed to lower corn exports. Total projected feed grain ending stocks for 2012/13 are lowered 2.5 million tons to 18.8 million, mainly reflecting reduced carryin from the 2011/12 marketing year.
 


Feed Use
 
On a September-August marketing year basis for 2012/13, U.S. feed and residual use for the four feed grains plus wheat is projected to total 114.0 million tons, down 17.2 million from the revised total of 131.2 million tons in 2011. Corn is estimated to account for 92 percent of feed and residual use in 2012/13, down from 93 percent in 2011/12. The projected index of grain-consuming animal units (GCAU) in 2012/13 is 91.6 million units, down slightly from 92.6 million in 2011/12. Feed and residual per GCAU in 2012/13 is estimated at 1.24 tons, down from 1.42 tons in 2011/12. In the index components, GCAUs are decreased for beef, dairy, pork, and poultry.
 
USDA’s September 19 Milk Production report indicates that milk production in the 23 major producing States during August totaled 15.3 billion pounds, down 0.2 percent from August 2011. Production per cow averaged 1,803 pounds for August, 10 pounds below last year, primarily due to higher temperatures. The 2012 milk production forecast is reduced from last month, as slower growth in milk per cow more than offsets a slower expected decline in cow numbers. Higher forecast milk prices in late 2012 and into 2013 are expected to slow the rate of decline in cow numbers and help support higher growth in milk per cow in 2013.
 
U.S. inventory of all hogs and pigs on September 1, 2012, was 67.5 million head. This is up slightly from September 1, 2011, and up 3 percent from June 1, 2012. U.S. hog breeding inventory in the third quarter of 2012 is estimated at 5.79 million head, down slightly from both last year and the previous month, according to the September 28 Quarterly Hogs and Pigs report. Market hog inventory, at 61.7 million head, is up slightly from last year and up 3 percent from last quarter. The June-August 2012 pig crop, at 29.3 million head, was down slightly from 2011. Sows farrowing during this period totaled 2.89 million head, down 1 percent from 2011. The sows farrowed during this quarter represented 49 percent of the breeding herd. The average pigs saved per litter was a record high of 10.13 for the June- August period, compared to 10.03 last year. Pigs saved per litter by size of operation ranged from 7.60 for operations with 1-99 hogs and pigs to 10.20 for operations with more than 5,000 hogs and pigs. The recent Quarterly Hogs and Pigs report estimated a small decline in the June-August pig crop and indicates that producers intend to reduce farrowings through early 2013, but continued growth in pigs per litter is expected to mitigate much of the decline in farrowings.
 
The forecast for 2013 poultry production is raised slightly. USDA’s October 3 Broiler Hatchery report indicates that broiler-type egg sets have increased from a year earlier. Broiler-type chicks placed are up slightly to 154 million chicks for meat production. Cumulative placements from January 1, 2012, through September 29, 2012, are 6.37 billion, down 2 percent from the same period a year earlier.
 
According to the September 21, 2012, Chickens and Eggs report, broiler-type chicks hatched during August 2012 totaled 758 million and were down slightly from August 2011. Eggs in incubators totaled 596 million on September 1, 2012, down 1 percent from a year earlier. Leading breeders placed 7.05 million broiler- type pullet chicks for future domestic hatchery supply flocks during August 2012, down 3 percent from August 2011. Egg-type chicks hatched and pullet chicks for future hatchery supply have been increasing.
 
USDA’s September 14 Turkey Hatchery report indicates that turkey eggs in incubators on September 1, 2012, in the United States totaled 26.3 million, down 6 percent from September 1, 2011. Eggs in incubators were down 9 percent from the August 1, 2012, total of 28.9 million eggs. Turkey poults hatched during August 2012 in the United States totaled 23.8 million, down slightly from August 2011. Poults hatched were down 9 percent from the July 2012 total of 26.2 million poults.
 
USDA’s September 23 Cattle on Feed report indicated that cattle and calves on feed for slaughter market in the United States (feedlots with capacity of 1,000 or more head) totaled 10.6 million head on September 1, 2012. The inventory was 1 percent below the September 1, 2011, estimate. Placements in feedlots during August totaled 2 million, 11 percent below 2011. This is the second lowest cattle placement for the month of August since the series began in 1996. Net placements were 1.94 million head. During August, placements of cattle and calves weighing less than 600 pounds were 482,000, 600-699 pounds were 385,000, 700-799 pounds were 475,000, and 800 pounds and greater were 660,000.
 
Marketings of fed cattle during August totaled 1.96 million, 5 percent below 2011. Other disappearance totaled 61,000 during August, 15 percent below 2011.
 
Changes Made for the 2011/12 Marketing Year
 
The following changes were made in the 2011/12 balance sheets:

Corn: Feed and residual use is increased by 161.7 million bushels on lower ending stocks based on the September 1 stock estimates. Food, seed, and industrial use is increased by 31.0 million bushels on higher high-fructose corn syrup, starch, and glucose and dextrose production and adjustments in seed use.
 
Sorghum: Feed and residual use advanced by 5.6 million bushels on a 4.1-million- bushel reduction in ending stocks. Imports are raised slightly and exports are reduced.
 
Barley: A June 1 stock revision from the September 28 Grain Stocks report reduces ending stocks 78,000 bushels, resulting in an offsetting increase in feed and residual to an estimated 37.6 million bushels.
 
Oats: Feed and residual use is increased slightly to 81.9 based on revised June 1 stocks. Ending stocks are decreased 13,000 bushels.
 
2012/13 Corn Crop Slips on Lower Yield as Harvested Acreage Edges Up
 
U.S. corn production is forecast at 10,706 million bushels for 2012/13, down 22 million bushels from last month. From the previous month’s forecast, yield slips 0.8 bushels per acre to 122.0 bushels. The October 1 corn objective yield data indicate reduced ears per acre compared with last year’s record high for the combined 10 objective yield States: Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin. Forecast harvested acreage is boosted by 360,000 acres to 87.7 million. If the forecast production is realized, it would be the eighth largest on record.
 




Beginning stocks are lowered to 988 million bushels, 193 million lower than last month based on reported September 1 stocks. Exports are projected 100 million bushels lower at 1,150 million as a result of tight supplies and increased export competition, especially from Brazil. Corn used for ethanol production in 2012/13 is unchanged this month at 4,500 million bushels, based on anticipated fuel demand, tight corn supplies, and prospects for ethanol imports. Total utilization is projected at 11,150 million bushels, down 100 million from last month and 1,376 million below 2011/12.
 
Ending stocks are reduced sharply this month by 114 million bushels. At a projected 619 million bushels, 2012/13 ending stocks would be the lowest since 1995/96, when ending stocks were estimated at just 426 million bushels. The 2012/13 forecast price is reduced 10 cents on both ends of the range to $7.10-$8.50 per bushel, primarily due to declining early-season cash and futures prices. These price forecasts are still far above the record 2011/12 final price estimate of $6.22 per bushel.
 
Sorghum Production Nearly Unchanged
 
An increase in the forecast sorghum yield resulted in a production forecast of 252.0 million bushels, up 6.0 million bushels from last month. Forecast production is 37.5 million bushels higher than last season’s harvest of 214.4 million bushels. After a record-low harvest last year, 2012/13 harvest is still below-average and the second lowest since 2006 when 276.8 million bushels were harvested.
 




Based on October 1 conditions, the sorghum yield estimate were decreased 1.9 bushels per acre to 50.2 bushels per acre. Yields are expected to be 4.4 bushels per acre lower than last season due to the persistent drought in many southern sorghum growing areas, including Missouri, Kansas, Nebraska , and Texas.
 
Sorghum use is unchanged from last month’s forecast. The increase in production results in a 1.9-million-bushel increase in projected ending stocks.
 
Average U.S. sorghum farm price is lowered $0.10 on each end of the range to $6.70-$8.10 per bushel, in line with this month’s reduction in the projected corn farm price. This compares with a final estimated price of $5.99 per bushel for sorghum in 2011/12.
 
Barley Imports and Feed and Residual Reduced
 
U.S. barley production for 2012/13 is forecast at 220.3 million bushels, reflecting a slight downward revision of 735,000 bushels based on the final production estimate from the September 28 Small Grains 2012 Summary. Production is up 64.5 million bushels from 2011/12. Significant production increases from North Dakota, Idaho, and Montana all contribute to the 41-percent increase in production. Average yield per acre is down slightly to 67.9 bushels per acre, compared to the 2011/12 yield of 69.6. Approximately 3.64 million acres were planted for 2012/13, up 42 percent from 2011/12. Similarly, harvested acres for the 2012/13 marketing year are forecast to be up 45 percent to 3.24 million acres.
 




Total barley supply is projected at 300.3 million bushels, a decline of 5.8 million bushels from the September forecast but an increase of 38.9 million bushels over the 2011/12 supply estimate. Barley imports are down 5 million bushels from last month’s projection of 25 million bushels and are attributable, in part, to a decline in Canadian barley production.
 
Estimated barley feed and residual use is lowered to 55.0 million bushels, a cut of 25 million bushels, relative to last month, due to sluggish use revealed by the September 1 stocks. Export prospects remain unchanged. Projected ending stocks for 2012/13 are increased 19.2 million bushels to 80.3 million. Sustained demand for malting barley supports a slight increase in the farm price projection for all barley to $6.00-$7.00 per bushel. This compares to an average farm price of $5.35 per bushel in 2011/12.
 
Oats Production up 19 Percent in 2012/13
 
U.S. production of oats for 2012/13 is up 19 percent to 64.0 million bushels following a record-low harvest of 53.6 million bushels in 2011/12. Production gains are attributable to improved yields, with the 2012/13 yield estimated at 61.3 bushels per acre relative to 57.1 bushels in 2011/12. Planted and harvested acres are both up 11 percent over the previous year. Area planted to oats is estimated at 2.76 million acres, up slightly from last month and up 264,000 acres on the year. The largest gains in harvested area are attributed to Minnesota and North Dakota where, collectively, an additional 50,000 acres of oats are expected to be harvested. Harvested acre estimates were lowered slightly this month to 1.045 million acres, down 46,000 acres from the previous forecast.
 




No changes to projected import and export levels were made. Ending stocks for both 2011/12 and 2012/13 were revised downward slightly to 55.0 and 50.01 million bushels, respectively. The projected 2012/13 farm price range is unchanged at $3.40-$4.20 per bushel, a slight increase over the final 2011/12 farm price of $3.49 per bushel.
 
Slight Increase in Alfalfa and Other Hay Production Estimates
 
U.S. all-hay production in 2012/13 is forecast at 121.97 million short tons, down from 131.14 million tons in 2011/12. Total harvested area for 2012/13, at 57.6 million acres, is up 3.5 percent from the 2011/12 estimate of 55.6 million acres. The increase in harvested acres is more than offset by declines in yields for other hay and alfalfa hay and mixtures. Roughage-consuming animal units (RCAU) are projected to be 67.07 in 2012/13, down from 67.91 in 2011/12. Despite reductions in RCAUs, the all-hay production decline results in a net drop in hay supply per RCAU of 0.12 tons to 2.14 tons per RCAU, compared to 2.26 tons per RCAU in 2011/12. In recognition of the need for additional hay, Conservation Reserve Program land will be open to grazing through November 2012.
 
Production of alfalfa hay and alfalfa mixtures is forecast at 55.57 million tons, up 1 percent from the August forecast but down 15 percent from last year. Based on October 1 conditions, the estimated yield is adjusted upward by a modest 0.03 tons per acre relative to the August forecast. The 2012/13 alfalfa hay and mixtures yield is forecast to be 2.95 tons per acre, a 0.45-ton-per-acre reduction in yield relative to the 2011/12 estimate of 3.40 tons per acre. If realized, the forecast yield will be the lowest since 1988. Harvested area is down 2 percent from the previous year at 18.8 million acres, with major declines attributed to Montana, Wisconsin, and Wyoming.
 
Other hay production is forecast at 66.4 million tons, an increase of 1 percent from both the August forecast and the previous year. Based on October 1 conditions, yields are expected to average 1.71 tons per acre, up 0.02 tons from August but down 0.10 tons from the previous year. Harvested area, at 38.8 million acres, is up more than 6 percent over the 2011/12 estimate of 36.4 million acres.
 

International Outlook
 


Increased U.S. Coarse Grain Production Offsets Foreign Decline
 
Global coarse grain production in 2012/13 is forecast down 3.2 million tons this month to 1,110.1 million, with U.S. production down a relatively small 0.5 million tons and foreign barley and corn down by a larger amount. Foreign barley production is projected down 1.8 million tons to 126.0 million, with significant reductions for Australia and Canada. Foreign corn production prospects are cut 1.5 million tons to 567.1 million due to drought effects in the EU and Serbia. Foreign oats production is projected down 0.5 million tons to 20.5 million, mostly because of below-normal rains in Australia. Mixed grain production is trimmed 0.2 million tons to 14.9 million (and down 0.3 million to 14.4 for 2011/12) due to several EU harvest reports, and the largest declines are in Poland and France. However, 2012/13 foreign production prospects are boosted this month for sorghum (up 0.6 million tons to 53.1 million), rye (up 0.6 million to 13.7 million), and millet (up slightly to 30.7 million).
 
Australia had a dry winter across most grain areas, so September rainfall was crucial for spring grains entering reproduction. In Western Australia, good rains arrived in late September, but yield prospects had already been hurt. In Eastern Australia, September rainfall was spotty, with some areas receiving ample rains while others remained much drier than normal. Lower projected barley yields in Australia more than offset increased reported area, cutting forecast production 1.0 million tons to 7.0 million. Reduced oats area and lower yield prospects cut 2012/13 production 0.4 million tons to 1.2 million. However, increased area is expected for summer crops, boosting sorghum production 0.2 million tons to 2.7 million and corn production slightly to 0.4 million.
 
Canada suffered from dryness across much of the Prairies during August and September and high winds that damaged windrowed crops. Rainfall for corn in Ontario was uneven, with dryness to the north and East. Statistics Canada reported reduced yields, with barley production cut 0.9 million tons to 8.6 million, corn trimmed 0.1 million to 11.6 million, and oats reduced slightly to less than 3.0 million.
 
EU 2012/13 coarse grain production is forecast down 0.9 million tons this month to 141.0 million. Winter grain harvest is complete, and summer crop harvests are accelerated by hot dry summer growing conditions, especially across southern parts of the EU. Most countries are publishing harvest reports that verify production problems. EU corn production is forecast down 1.5 million tons to 55.6 million, with declines for Romania, Hungary, France, Bulgaria, Slovakia, and Greece and increases for Spain and Poland. EU mixed grain is forecast down 0.2 million tons to 14.5 million, with most of the reduction due to reduced area in Poland, and sorghum production is reduced slightly for France. Some of the northern EU countries had more rain this summer, and harvest reports indicate higher production of rye (up 0.6 million tons, mostly for Germany, Poland, and Denmark), barley (up 0.4 million, with increases for Spain, France, Poland, and Sweden more than offsetting reductions for several other countries), and oats (up slightly, with an increase for Sweden more than offsetting a decline for France). Serbia suffered from the same drought as its EU neighbors, with corn production forecast down 0.4 million tons to 3.9 million, and small reductions forecast for oats and barley.
 
Coarse grain production in Sub-Saharan Africa is up 1.0 million tons this month to 101.7 million as a review of production prospects across several countries revealed generally favorable rains, especially across the Sahel. There are increases in forecast 2012/13 production for Ethiopia, Malawi, Ghana, Chad, Mali, Angola, Zimbabwe, South Africa, Tanzania, Uganda, and Congo Brazzaville, but reductions for Madagascar, Kenya, Zambia, Sudan, Lesotho, Botswana, and Burundi.
 
There are small reductions to 2012/13 barley production this month reported for Algeria and Kyrgyzstan.
 
Reduced Beginning Stocks Tighten 2012/13 Supplies
 
World coarse grain beginning stocks for 2012/13 are forecast down 7.9 million tons this month to 164.8 million. While much of the decline is for U.S. corn stocks, foreign coarse grain stocks are down 2.9 million tons to 137.0 million.
 
Brazil’s corn beginning stocks for 2012/13 are reduced 4.5 million tons to 10.8 million as the record pace of exports in August and September, and strong sales for shipment in coming months, indicate that stocks on March 1, 2013 (the beginning of the 2012/13 local marketing year for corn) will be less than previously forecast. Other reductions to corn beginning stocks are much smaller, with declines for Malawi, the EU, Malaysia, and Zambia. Beginning stocks are forecast up 0.4 million tons each for Egypt (strong 2011/12 imports) and Zimbabwe (increased 2011/12 production and imports) and 0.2 million each for Angola, Tanzania, China, Venezuela, and Kenya.
 
Global sorghum 2012/13 beginning stocks are reduced 0.6 million tons to 3.7 million, with reductions of 0.1 million tons or more for Argentina, Australia, the United States, and Tanzania.
 
World barley beginning stocks are up 0.7 million tons to 22.6 million, mostly due to a 0.6-million-ton increase for Saudi Arabia caused by strong 2011/12 imports. China’s barley beginning stocks are also boosted by 2011/12 imports. World oats beginning stocks are down 0.3 million tons, mostly due to reductions for the EU and Australia, but rye stocks are up 0.4 million due to increases for the EU.
 
Reduced production and beginning stocks leave world coarse grain supplies for 2012/13 projected down 11.0 million tons this month to 1,274.9 million, the lowest level since 2007/08. However, foreign corn supplies in 2012/13 are projected to be record high at 673.5 million tons.
 
Tight Supplies and High Prices Reduce Projected Use
 
Global 2012/13 coarse grain use is projected down 4.4 million tons this month to 1,128.6 million, with most of the reduction, 3.9 million, in foreign countries. Global corn use is forecast down 3.4 million tons, with no U.S. consumption change. World barley use is projected down 1.5 million tons, with U.S. consumption reduced 0.5 million. World oats and mixed grain use are trimmed this month, but sorghum and millet are up slightly.
 
Coarse grain domestic consumption in Sub-Saharan Africa for 2012/13 is increased 1.0 million tons this month to 101.5 million, mostly due to increased production prospects in several countries. For many countries in the region, good domestic production will limit local price increases and support food use.
 
Australia’s coarse grain use is cut 0.75 million tons to 6.6 million, with most of the decline in barley feed use caused by reduced crop prospects. Canada faces a similar situation with coarse grain use reduced 0.6 million tons (to 20.6 million) due mostly to less expected barley feed use.
 
India’s forecast 2012/13 corn feed use is reduced 0.5 million tons to 9.0 million as recent data indicate more corn exports and less domestic feed use for both 2011/12 and 2012/13. Serbia’s 2012/13 corn domestic feed use is reduced 0.3 million tons to 3.6 million as trade data for 2011/12 indicate more exports. Increased exports will reduce domestic use with Serbia’s 2012 crop devastated by drought. While total 2012/13 coarse grain domestic use for Tanzania is trimmed 0.2 million tons this month, revisions to several years of consumption lower feed use but increase food use, projected up 0.6 million tons this month to 4.7 million for 2012/13. There are small reductions to expected 2012/13 coarse grain use this month for Argentina, Kenya, Malaysia, Sudan, Ukraine, and Zambia.
 
Barley consumption in Saudi Arabia for 2012/13 is expected up 0.5 million tons this month as strong imports at the end of 2011/12 boost supplies. Other non-Sub-Saharan African countries with smaller increases in projected 2012/13 coarse grain use include Venezuela, the EU, and Egypt.
 


Projected Global Ending Coarse Grain Stocks Cut This Month
 
World coarse grain ending stocks projected for 2012/13 are down 6.6 million tons this month to 146.3 million. This is the lowest in 6 years and the 3rd lowest in recent decades. Much of this month’s decline, 4.2 million tons, is in foreign countries, with foreign corn stocks down 3.8 million.
 
Brazil’s 2012/13 corn ending stocks are slashed 5.5 million tons to 9.6 million as attractive prices for exports are an incentive to ship instead of hold stocks. Moreover, Brazil harvests significant amounts of corn across nearly half the year (March to July), so it has flexibility when high prices overcome transportation costs.
 
Australia, with reduced barley production, is expected to hold 0.4 million tons less coarse grains (1.0 million). There are smaller reductions in forecast 2012/13 ending stocks for Zambia, Argentina, Malaysia, Russia, Algeria, Canada, and South Africa.
 
EU 2012/13 coarse grain ending stocks are projected up 0.6 million tons to 10.7 million, partly due to increased forecast corn imports. There are also increased ending stocks projected this month for Tanzania, Angola, Egypt, Zimbabwe, and some other countries.
 
U.S. Corn Export Prospects Cut, World Trade Boosted
 
Global corn trade projected for 2012/13 is increased 2.5 million tons this month to 93.3 million. Trade data for the recently completed (October-September) 2011/12 trade year are not nearly complete, but preliminary trade statistics indicate record-high corn trade at 102.8 million tons, up 2.5 million from last month’s forecast. Corn trade appears robust despite high prices.
 


EU corn imports are raised 2.0 million tons this month to 5.0 million as EU corn and UK wheat crops are reduced. A large part of the UK wheat crop is normally used for feed.
 
Venezuela’s 2012/13 corn imports are projected up 0.3 million tons to 2.0 million as large imports the previous year indicate strong demand. Zimbabwe’s 2012/13 corn imports are raised 0.1 million to 0.4 million because of strong demand and imports for 2011/12. However, Malaysia’s 2012/13 corn imports are trimmed 0.1 million tons to 3.0 million as 2011/12 imports were smaller than previously forecast. Serbia’s 2012/13 imports are raised slightly due to tight supplies caused by drought.
 
Brazil’s corn exports are boosted 4.5 million tons to a record 19.0 million, and Brazil is expected to be the world’s second largest corn exporter in 2012/13. Brazil reportedly shipped a record pace of corn exports in September 2012 of over 3 million tons, boosting estimated 2011/12 exports 0.7 million this month to 12.7 million. Brazil has demonstrated that without soybeans and products taking priority for ports and other transportation infrastructure, it can ship very large volumes of corn if prices are attractive. From October 2012 to February 2013, Brazil is expected to ship large volumes of corn, with a secondary increase in August and September 2013 if soybean shipments tail off or transportation bottlenecks are reduced.
 
India’s 2012/13 corn exports are forecast up 0.5 million tons this month to 3.0 million. The pace of recent shipments indicates India will export corn if foreign prices are attractive (2011/12 corn exports are raised 0.6 million tons this month to 4.4 million).
 
Facing strong competition from Brazil and other exporters, U.S. corn export prospects for 2012/13 are weakening. At the end of September 2012, outstanding sales of corn were 8.3 million tons, down 6.0 million from the previous year, when corn exports were sluggish. U.S. 2012/13 corn exports are projected down 2.5 million tons this month to 31.0 million, the lowest in almost 40 years (the September-August local marketing year is cut 100 million bushels to 1.15 billion bushels).
 October 2012

USDA Feed Outlook

Reports» USDA Feed Outlook» USDA Feed Outlook - October 2012

16 October 2012
USDA Feed Outlook - October 2012
U.S. corn production for 2012/13 is lowered 21 million bushels as lower yield more than offsets higher area in this month’s forecasts.


 

Smaller Carryin and Forecast Production Tighten Corn Ending Stocks for 2012/13
 
The yield slips 0.8 bushels per acre to 122.0 bushels, and harvested area advances 0.4 million acres to 87.7 million. Corn supplies for 2012/13 are projected 214 million bushels lower, mostly reflecting lower carryin based on September 1 stocks. Projected exports are reduced 100 million bushels. Corn ending stocks for 2012/13 are projected 114 million bushels lower at 619 million. The projected average price received by growers is reduced 10 cents on each end of the range to $7.10-$8.50 per bushel due to lower-than-expected early season cash and futures prices.
 
Reduced production and beginning stocks leave world coarse grain supplies for 2012/13 projected down 11.0 million tons this month to the lowest level since 2007/08. However, foreign corn supplies in 2012/13 are projected to be record high at 673.5 million tons. Brazil’s corn exports for trade year 2012/13 are raised over 30 percent this month to a record 19.0 million tons, supporting an increase in forecast corn trade and a sharp reduction in U.S. exports to the lowest level in almost 40 years.
 


Domestic Outlook

Forecast Corn Carryout Stocks for 2012/13 Slip
 
The September 28 Grain Stocks report indicates September 1, 2012, U.S. corn stocks of 988 million bushels, the lowest carryout since 1995/96, and 193 million bushels below September’s WASDE forecast. The stocks data and nearly final data for other domestic use imply a fourth-quarter feed and residual use of 335 million bushels, 115 million below estimates from the fourth quarter of 2010/11.
 
U.S. feed grain production for 2012/13 is forecast at 284.1 million metric tons, down from last month’s forecast of 284.5 million. The month-to-month decrease reflects reduced forecast production for corn and smaller production estimates for barley and oats from the Small Grains 2012 Summary report. Planted area for the four feed grains is increased 542,000 acres, and harvested-for-grain acres are increased 208,000 acres this month. Yields per harvested acre for the four grains combined are down slightly at 2.93 tons per acre. Beginning stocks in 2012/13 are lowered to 27.8 million tons, based on the recent Grain Stocks report. Total 2012/13 feed grain supply is forecast at 315.8 million tons, down 5.6 million from last month and down relative to the 2011/12 estimate of 358.5 million tons.
 
Total 2012/13 feed grain utilization is projected at 297.0 million tons, down from the September forecast of 300.1 million and down from the 2011/12 estimate of 330.7 million tons. The month-to-month decline is attributed to lower corn exports. Total projected feed grain ending stocks for 2012/13 are lowered 2.5 million tons to 18.8 million, mainly reflecting reduced carryin from the 2011/12 marketing year.
 


Feed Use
 
On a September-August marketing year basis for 2012/13, U.S. feed and residual use for the four feed grains plus wheat is projected to total 114.0 million tons, down 17.2 million from the revised total of 131.2 million tons in 2011. Corn is estimated to account for 92 percent of feed and residual use in 2012/13, down from 93 percent in 2011/12. The projected index of grain-consuming animal units (GCAU) in 2012/13 is 91.6 million units, down slightly from 92.6 million in 2011/12. Feed and residual per GCAU in 2012/13 is estimated at 1.24 tons, down from 1.42 tons in 2011/12. In the index components, GCAUs are decreased for beef, dairy, pork, and poultry.
 
USDA’s September 19 Milk Production report indicates that milk production in the 23 major producing States during August totaled 15.3 billion pounds, down 0.2 percent from August 2011. Production per cow averaged 1,803 pounds for August, 10 pounds below last year, primarily due to higher temperatures. The 2012 milk production forecast is reduced from last month, as slower growth in milk per cow more than offsets a slower expected decline in cow numbers. Higher forecast milk prices in late 2012 and into 2013 are expected to slow the rate of decline in cow numbers and help support higher growth in milk per cow in 2013.
 
U.S. inventory of all hogs and pigs on September 1, 2012, was 67.5 million head. This is up slightly from September 1, 2011, and up 3 percent from June 1, 2012. U.S. hog breeding inventory in the third quarter of 2012 is estimated at 5.79 million head, down slightly from both last year and the previous month, according to the September 28 Quarterly Hogs and Pigs report. Market hog inventory, at 61.7 million head, is up slightly from last year and up 3 percent from last quarter. The June-August 2012 pig crop, at 29.3 million head, was down slightly from 2011. Sows farrowing during this period totaled 2.89 million head, down 1 percent from 2011. The sows farrowed during this quarter represented 49 percent of the breeding herd. The average pigs saved per litter was a record high of 10.13 for the June- August period, compared to 10.03 last year. Pigs saved per litter by size of operation ranged from 7.60 for operations with 1-99 hogs and pigs to 10.20 for operations with more than 5,000 hogs and pigs. The recent Quarterly Hogs and Pigs report estimated a small decline in the June-August pig crop and indicates that producers intend to reduce farrowings through early 2013, but continued growth in pigs per litter is expected to mitigate much of the decline in farrowings.
 
The forecast for 2013 poultry production is raised slightly. USDA’s October 3 Broiler Hatchery report indicates that broiler-type egg sets have increased from a year earlier. Broiler-type chicks placed are up slightly to 154 million chicks for meat production. Cumulative placements from January 1, 2012, through September 29, 2012, are 6.37 billion, down 2 percent from the same period a year earlier.
 
According to the September 21, 2012, Chickens and Eggs report, broiler-type chicks hatched during August 2012 totaled 758 million and were down slightly from August 2011. Eggs in incubators totaled 596 million on September 1, 2012, down 1 percent from a year earlier. Leading breeders placed 7.05 million broiler- type pullet chicks for future domestic hatchery supply flocks during August 2012, down 3 percent from August 2011. Egg-type chicks hatched and pullet chicks for future hatchery supply have been increasing.
 
USDA’s September 14 Turkey Hatchery report indicates that turkey eggs in incubators on September 1, 2012, in the United States totaled 26.3 million, down 6 percent from September 1, 2011. Eggs in incubators were down 9 percent from the August 1, 2012, total of 28.9 million eggs. Turkey poults hatched during August 2012 in the United States totaled 23.8 million, down slightly from August 2011. Poults hatched were down 9 percent from the July 2012 total of 26.2 million poults.
 
USDA’s September 23 Cattle on Feed report indicated that cattle and calves on feed for slaughter market in the United States (feedlots with capacity of 1,000 or more head) totaled 10.6 million head on September 1, 2012. The inventory was 1 percent below the September 1, 2011, estimate. Placements in feedlots during August totaled 2 million, 11 percent below 2011. This is the second lowest cattle placement for the month of August since the series began in 1996. Net placements were 1.94 million head. During August, placements of cattle and calves weighing less than 600 pounds were 482,000, 600-699 pounds were 385,000, 700-799 pounds were 475,000, and 800 pounds and greater were 660,000.
 
Marketings of fed cattle during August totaled 1.96 million, 5 percent below 2011. Other disappearance totaled 61,000 during August, 15 percent below 2011.
 
Changes Made for the 2011/12 Marketing Year
 
The following changes were made in the 2011/12 balance sheets:

Corn: Feed and residual use is increased by 161.7 million bushels on lower ending stocks based on the September 1 stock estimates. Food, seed, and industrial use is increased by 31.0 million bushels on higher high-fructose corn syrup, starch, and glucose and dextrose production and adjustments in seed use.
 
Sorghum: Feed and residual use advanced by 5.6 million bushels on a 4.1-million- bushel reduction in ending stocks. Imports are raised slightly and exports are reduced.
 
Barley: A June 1 stock revision from the September 28 Grain Stocks report reduces ending stocks 78,000 bushels, resulting in an offsetting increase in feed and residual to an estimated 37.6 million bushels.
 
Oats: Feed and residual use is increased slightly to 81.9 based on revised June 1 stocks. Ending stocks are decreased 13,000 bushels.
 
2012/13 Corn Crop Slips on Lower Yield as Harvested Acreage Edges Up
 
U.S. corn production is forecast at 10,706 million bushels for 2012/13, down 22 million bushels from last month. From the previous month’s forecast, yield slips 0.8 bushels per acre to 122.0 bushels. The October 1 corn objective yield data indicate reduced ears per acre compared with last year’s record high for the combined 10 objective yield States: Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin. Forecast harvested acreage is boosted by 360,000 acres to 87.7 million. If the forecast production is realized, it would be the eighth largest on record.
 




Beginning stocks are lowered to 988 million bushels, 193 million lower than last month based on reported September 1 stocks. Exports are projected 100 million bushels lower at 1,150 million as a result of tight supplies and increased export competition, especially from Brazil. Corn used for ethanol production in 2012/13 is unchanged this month at 4,500 million bushels, based on anticipated fuel demand, tight corn supplies, and prospects for ethanol imports. Total utilization is projected at 11,150 million bushels, down 100 million from last month and 1,376 million below 2011/12.
 
Ending stocks are reduced sharply this month by 114 million bushels. At a projected 619 million bushels, 2012/13 ending stocks would be the lowest since 1995/96, when ending stocks were estimated at just 426 million bushels. The 2012/13 forecast price is reduced 10 cents on both ends of the range to $7.10-$8.50 per bushel, primarily due to declining early-season cash and futures prices. These price forecasts are still far above the record 2011/12 final price estimate of $6.22 per bushel.
 
Sorghum Production Nearly Unchanged
 
An increase in the forecast sorghum yield resulted in a production forecast of 252.0 million bushels, up 6.0 million bushels from last month. Forecast production is 37.5 million bushels higher than last season’s harvest of 214.4 million bushels. After a record-low harvest last year, 2012/13 harvest is still below-average and the second lowest since 2006 when 276.8 million bushels were harvested.
 




Based on October 1 conditions, the sorghum yield estimate were decreased 1.9 bushels per acre to 50.2 bushels per acre. Yields are expected to be 4.4 bushels per acre lower than last season due to the persistent drought in many southern sorghum growing areas, including Missouri, Kansas, Nebraska , and Texas.
 
Sorghum use is unchanged from last month’s forecast. The increase in production results in a 1.9-million-bushel increase in projected ending stocks.
 
Average U.S. sorghum farm price is lowered $0.10 on each end of the range to $6.70-$8.10 per bushel, in line with this month’s reduction in the projected corn farm price. This compares with a final estimated price of $5.99 per bushel for sorghum in 2011/12.
 
Barley Imports and Feed and Residual Reduced
 
U.S. barley production for 2012/13 is forecast at 220.3 million bushels, reflecting a slight downward revision of 735,000 bushels based on the final production estimate from the September 28 Small Grains 2012 Summary. Production is up 64.5 million bushels from 2011/12. Significant production increases from North Dakota, Idaho, and Montana all contribute to the 41-percent increase in production. Average yield per acre is down slightly to 67.9 bushels per acre, compared to the 2011/12 yield of 69.6. Approximately 3.64 million acres were planted for 2012/13, up 42 percent from 2011/12. Similarly, harvested acres for the 2012/13 marketing year are forecast to be up 45 percent to 3.24 million acres.
 




Total barley supply is projected at 300.3 million bushels, a decline of 5.8 million bushels from the September forecast but an increase of 38.9 million bushels over the 2011/12 supply estimate. Barley imports are down 5 million bushels from last month’s projection of 25 million bushels and are attributable, in part, to a decline in Canadian barley production.
 
Estimated barley feed and residual use is lowered to 55.0 million bushels, a cut of 25 million bushels, relative to last month, due to sluggish use revealed by the September 1 stocks. Export prospects remain unchanged. Projected ending stocks for 2012/13 are increased 19.2 million bushels to 80.3 million. Sustained demand for malting barley supports a slight increase in the farm price projection for all barley to $6.00-$7.00 per bushel. This compares to an average farm price of $5.35 per bushel in 2011/12.
 
Oats Production up 19 Percent in 2012/13
 
U.S. production of oats for 2012/13 is up 19 percent to 64.0 million bushels following a record-low harvest of 53.6 million bushels in 2011/12. Production gains are attributable to improved yields, with the 2012/13 yield estimated at 61.3 bushels per acre relative to 57.1 bushels in 2011/12. Planted and harvested acres are both up 11 percent over the previous year. Area planted to oats is estimated at 2.76 million acres, up slightly from last month and up 264,000 acres on the year. The largest gains in harvested area are attributed to Minnesota and North Dakota where, collectively, an additional 50,000 acres of oats are expected to be harvested. Harvested acre estimates were lowered slightly this month to 1.045 million acres, down 46,000 acres from the previous forecast.
 




No changes to projected import and export levels were made. Ending stocks for both 2011/12 and 2012/13 were revised downward slightly to 55.0 and 50.01 million bushels, respectively. The projected 2012/13 farm price range is unchanged at $3.40-$4.20 per bushel, a slight increase over the final 2011/12 farm price of $3.49 per bushel.
 

Slight Increase in Alfalfa and Other Hay Production Estimates
 
U.S. all-hay production in 2012/13 is forecast at 121.97 million short tons, down from 131.14 million tons in 2011/12. Total harvested area for 2012/13, at 57.6 million acres, is up 3.5 percent from the 2011/12 estimate of 55.6 million acres. The increase in harvested acres is more than offset by declines in yields for other hay and alfalfa hay and mixtures. Roughage-consuming animal units (RCAU) are projected to be 67.07 in 2012/13, down from 67.91 in 2011/12. Despite reductions in RCAUs, the all-hay production decline results in a net drop in hay supply per RCAU of 0.12 tons to 2.14 tons per RCAU, compared to 2.26 tons per RCAU in 2011/12. In recognition of the need for additional hay, Conservation Reserve Program land will be open to grazing through November 2012.
 
Production of alfalfa hay and alfalfa mixtures is forecast at 55.57 million tons, up 1 percent from the August forecast but down 15 percent from last year. Based on October 1 conditions, the estimated yield is adjusted upward by a modest 0.03 tons per acre relative to the August forecast. The 2012/13 alfalfa hay and mixtures yield is forecast to be 2.95 tons per acre, a 0.45-ton-per-acre reduction in yield relative to the 2011/12 estimate of 3.40 tons per acre. If realized, the forecast yield will be the lowest since 1988. Harvested area is down 2 percent from the previous year at 18.8 million acres, with major declines attributed to Montana, Wisconsin, and Wyoming.
 
Other hay production is forecast at 66.4 million tons, an increase of 1 percent from both the August forecast and the previous year. Based on October 1 conditions, yields are expected to average 1.71 tons per acre, up 0.02 tons from August but down 0.10 tons from the previous year. Harvested area, at 38.8 million acres, is up more than 6 percent over the 2011/12 estimate of 36.4 million acres.
 


International Outlook
 


Increased U.S. Coarse Grain Production Offsets Foreign Decline
 
Global coarse grain production in 2012/13 is forecast down 3.2 million tons this month to 1,110.1 million, with U.S. production down a relatively small 0.5 million tons and foreign barley and corn down by a larger amount. Foreign barley production is projected down 1.8 million tons to 126.0 million, with significant reductions for Australia and Canada. Foreign corn production prospects are cut 1.5 million tons to 567.1 million due to drought effects in the EU and Serbia. Foreign oats production is projected down 0.5 million tons to 20.5 million, mostly because of below-normal rains in Australia. Mixed grain production is trimmed 0.2 million tons to 14.9 million (and down 0.3 million to 14.4 for 2011/12) due to several EU harvest reports, and the largest declines are in Poland and France. However, 2012/13 foreign production prospects are boosted this month for sorghum (up 0.6 million tons to 53.1 million), rye (up 0.6 million to 13.7 million), and millet (up slightly to 30.7 million).
 
Australia had a dry winter across most grain areas, so September rainfall was crucial for spring grains entering reproduction. In Western Australia, good rains arrived in late September, but yield prospects had already been hurt. In Eastern Australia, September rainfall was spotty, with some areas receiving ample rains while others remained much drier than normal. Lower projected barley yields in Australia more than offset increased reported area, cutting forecast production 1.0 million tons to 7.0 million. Reduced oats area and lower yield prospects cut 2012/13 production 0.4 million tons to 1.2 million. However, increased area is expected for summer crops, boosting sorghum production 0.2 million tons to 2.7 million and corn production slightly to 0.4 million.
 
Canada suffered from dryness across much of the Prairies during August and September and high winds that damaged windrowed crops. Rainfall for corn in Ontario was uneven, with dryness to the north and East. Statistics Canada reported reduced yields, with barley production cut 0.9 million tons to 8.6 million, corn trimmed 0.1 million to 11.6 million, and oats reduced slightly to less than 3.0 million.
 
EU 2012/13 coarse grain production is forecast down 0.9 million tons this month to 141.0 million. Winter grain harvest is complete, and summer crop harvests are accelerated by hot dry summer growing conditions, especially across southern parts of the EU. Most countries are publishing harvest reports that verify production problems. EU corn production is forecast down 1.5 million tons to 55.6 million, with declines for Romania, Hungary, France, Bulgaria, Slovakia, and Greece and increases for Spain and Poland. EU mixed grain is forecast down 0.2 million tons to 14.5 million, with most of the reduction due to reduced area in Poland, and sorghum production is reduced slightly for France. Some of the northern EU countries had more rain this summer, and harvest reports indicate higher production of rye (up 0.6 million tons, mostly for Germany, Poland, and Denmark), barley (up 0.4 million, with increases for Spain, France, Poland, and Sweden more than offsetting reductions for several other countries), and oats (up slightly, with an increase for Sweden more than offsetting a decline for France). Serbia suffered from the same drought as its EU neighbors, with corn production forecast down 0.4 million tons to 3.9 million, and small reductions forecast for oats and barley.
 
Coarse grain production in Sub-Saharan Africa is up 1.0 million tons this month to 101.7 million as a review of production prospects across several countries revealed generally favorable rains, especially across the Sahel. There are increases in forecast 2012/13 production for Ethiopia, Malawi, Ghana, Chad, Mali, Angola, Zimbabwe, South Africa, Tanzania, Uganda, and Congo Brazzaville, but reductions for Madagascar, Kenya, Zambia, Sudan, Lesotho, Botswana, and Burundi.
 
There are small reductions to 2012/13 barley production this month reported for Algeria and Kyrgyzstan.
 
Reduced Beginning Stocks Tighten 2012/13 Supplies
 
World coarse grain beginning stocks for 2012/13 are forecast down 7.9 million tons this month to 164.8 million. While much of the decline is for U.S. corn stocks, foreign coarse grain stocks are down 2.9 million tons to 137.0 million.
 
Brazil’s corn beginning stocks for 2012/13 are reduced 4.5 million tons to 10.8 million as the record pace of exports in August and September, and strong sales for shipment in coming months, indicate that stocks on March 1, 2013 (the beginning of the 2012/13 local marketing year for corn) will be less than previously forecast. Other reductions to corn beginning stocks are much smaller, with declines for Malawi, the EU, Malaysia, and Zambia. Beginning stocks are forecast up 0.4 million tons each for Egypt (strong 2011/12 imports) and Zimbabwe (increased 2011/12 production and imports) and 0.2 million each for Angola, Tanzania, China, Venezuela, and Kenya.
 
Global sorghum 2012/13 beginning stocks are reduced 0.6 million tons to 3.7 million, with reductions of 0.1 million tons or more for Argentina, Australia, the United States, and Tanzania.
 
World barley beginning stocks are up 0.7 million tons to 22.6 million, mostly due to a 0.6-million-ton increase for Saudi Arabia caused by strong 2011/12 imports. China’s barley beginning stocks are also boosted by 2011/12 imports. World oats beginning stocks are down 0.3 million tons, mostly due to reductions for the EU and Australia, but rye stocks are up 0.4 million due to increases for the EU.
 
Reduced production and beginning stocks leave world coarse grain supplies for 2012/13 projected down 11.0 million tons this month to 1,274.9 million, the lowest level since 2007/08. However, foreign corn supplies in 2012/13 are projected to be record high at 673.5 million tons.
 
Tight Supplies and High Prices Reduce Projected Use
 
Global 2012/13 coarse grain use is projected down 4.4 million tons this month to 1,128.6 million, with most of the reduction, 3.9 million, in foreign countries. Global corn use is forecast down 3.4 million tons, with no U.S. consumption change. World barley use is projected down 1.5 million tons, with U.S. consumption reduced 0.5 million. World oats and mixed grain use are trimmed this month, but sorghum and millet are up slightly.
 
Coarse grain domestic consumption in Sub-Saharan Africa for 2012/13 is increased 1.0 million tons this month to 101.5 million, mostly due to increased production prospects in several countries. For many countries in the region, good domestic production will limit local price increases and support food use.
 
Australia’s coarse grain use is cut 0.75 million tons to 6.6 million, with most of the decline in barley feed use caused by reduced crop prospects. Canada faces a similar situation with coarse grain use reduced 0.6 million tons (to 20.6 million) due mostly to less expected barley feed use.
 
India’s forecast 2012/13 corn feed use is reduced 0.5 million tons to 9.0 million as recent data indicate more corn exports and less domestic feed use for both 2011/12 and 2012/13. Serbia’s 2012/13 corn domestic feed use is reduced 0.3 million tons to 3.6 million as trade data for 2011/12 indicate more exports. Increased exports will reduce domestic use with Serbia’s 2012 crop devastated by drought. While total 2012/13 coarse grain domestic use for Tanzania is trimmed 0.2 million tons this month, revisions to several years of consumption lower feed use but increase food use, projected up 0.6 million tons this month to 4.7 million for 2012/13. There are small reductions to expected 2012/13 coarse grain use this month for Argentina, Kenya, Malaysia, Sudan, Ukraine, and Zambia.
 
Barley consumption in Saudi Arabia for 2012/13 is expected up 0.5 million tons this month as strong imports at the end of 2011/12 boost supplies. Other non-Sub-Saharan African countries with smaller increases in projected 2012/13 coarse grain use include Venezuela, the EU, and Egypt.
 


Projected Global Ending Coarse Grain Stocks Cut This Month
 
World coarse grain ending stocks projected for 2012/13 are down 6.6 million tons this month to 146.3 million. This is the lowest in 6 years and the 3rd lowest in recent decades. Much of this month’s decline, 4.2 million tons, is in foreign countries, with foreign corn stocks down 3.8 million.
 
Brazil’s 2012/13 corn ending stocks are slashed 5.5 million tons to 9.6 million as attractive prices for exports are an incentive to ship instead of hold stocks. Moreover, Brazil harvests significant amounts of corn across nearly half the year (March to July), so it has flexibility when high prices overcome transportation costs.
 
Australia, with reduced barley production, is expected to hold 0.4 million tons less coarse grains (1.0 million). There are smaller reductions in forecast 2012/13 ending stocks for Zambia, Argentina, Malaysia, Russia, Algeria, Canada, and South Africa.
 
EU 2012/13 coarse grain ending stocks are projected up 0.6 million tons to 10.7 million, partly due to increased forecast corn imports. There are also increased ending stocks projected this month for Tanzania, Angola, Egypt, Zimbabwe, and some other countries.
 
U.S. Corn Export Prospects Cut, World Trade Boosted
 
Global corn trade projected for 2012/13 is increased 2.5 million tons this month to 93.3 million. Trade data for the recently completed (October-September) 2011/12 trade year are not nearly complete, but preliminary trade statistics indicate record-high corn trade at 102.8 million tons, up 2.5 million from last month’s forecast. Corn trade appears robust despite high prices.
 


EU corn imports are raised 2.0 million tons this month to 5.0 million as EU corn and UK wheat crops are reduced. A large part of the UK wheat crop is normally used for feed.
 
Venezuela’s 2012/13 corn imports are projected up 0.3 million tons to 2.0 million as large imports the previous year indicate strong demand. Zimbabwe’s 2012/13 corn imports are raised 0.1 million to 0.4 million because of strong demand and imports for 2011/12. However, Malaysia’s 2012/13 corn imports are trimmed 0.1 million tons to 3.0 million as 2011/12 imports were smaller than previously forecast. Serbia’s 2012/13 imports are raised slightly due to tight supplies caused by drought.
 
Brazil’s corn exports are boosted 4.5 million tons to a record 19.0 million, and Brazil is expected to be the world’s second largest corn exporter in 2012/13. Brazil reportedly shipped a record pace of corn exports in September 2012 of over 3 million tons, boosting estimated 2011/12 exports 0.7 million this month to 12.7 million. Brazil has demonstrated that without soybeans and products taking priority for ports and other transportation infrastructure, it can ship very large volumes of corn if prices are attractive. From October 2012 to February 2013, Brazil is expected to ship large volumes of corn, with a secondary increase in August and September 2013 if soybean shipments tail off or transportation bottlenecks are reduced.
 
India’s 2012/13 corn exports are forecast up 0.5 million tons this month to 3.0 million. The pace of recent shipments indicates India will export corn if foreign prices are attractive (2011/12 corn exports are raised 0.6 million tons this month to 4.4 million).
 
Facing strong competition from Brazil and other exporters, U.S. corn export prospects for 2012/13 are weakening. At the end of September 2012, outstanding sales of corn were 8.3 million tons, down 6.0 million from the previous year, when corn exports were sluggish. U.S. 2012/13 corn exports are projected down 2.5 million tons this month to 31.0 million, the lowest in almost 40 years (the September-August local marketing year is cut 100 million bushels to 1.15 billion bushels).
 October 2012
 
Published by USDA Economic Research Service

Weekly Roberts Market Report
02 November 2012



 Michael T. Roberts
 Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University


US - CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday. The DEC’12 contract closed at $7.360/bu; down 1.75 ¢ /bu and 25.25 ¢ /bu lower than last week at this time. MAR’13 corn futures closed at $7.380/bu; down 1.75 ¢ /bu and 21.25 ¢ /bu lower than last report, writes Michael T. Roberts.

The DEC’13 contract closed at $6.356/bu; up 0.5 ¢ /bu and 2.5 ¢ /bu higher than a week ago. Hurricane Sandy kept, no fresh news, and weak demand kept traders on the sidelines. Cash prices for all the grains ended lower keeping basis levels firm. The national average basis is -13 ¢ /bu under CBOT December futures. With the harvest nearly complete farmers have slowed selling in anticipating of higher prices on tighter U.S. supplies. Basis in North Carolina ranged from +25 ¢ /bu to +29 ¢ /bu of December futures with cash prices ranging from $7.62/bu to $7.66 ¢ /bu.Exports were supportive in the near-term but should be viewed as bearish. USDA put corninspected-for-export at 15.516 mb vs. estimates for 8-15 mb. Although 5.038 mb more than last week’s report from USDA, this was well below the 22.7 mb needed to stay on pace with USDA’s most recent demand projection of 1.15 bb. Year-to-date inspections total 143.3 mb; 19% behind the 176.9 mb needed to stay on pace year-to-date. Please see chart.
 



SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. NOV’12 futures closed at $15.272/bu; down 34.0 ¢ /bu and 19.25 ¢ /bu lower than last report. The MAR’13 contract closed at $15.056/bu; down 31.25 ¢ /bu and 12.0 ¢ /bu lower than a week ago. NOV’13 futures closed at $13.290/bu; off 10.75 ¢ /bu and 8.0 ¢ /bu lower than last Monday. The November 2012 contract expires Friday. Expect volatility this week providing opportunities for both profit … and … loss. Soybean futures returned to a downtrend wiping out last week’s gains amid light trading volume. Hurricane Sandy kept traders on the sidelines. Rains forecast for Brazil improving the outlook for South American soybean crops pressured prices. Soybeans traded under last week’s low of $15.265 leaving it susceptible to additional noncommercial long-liquidation. The measuring objective is near $14.857/bu with long-term support near $14.52/bu. On the other hand, soybean futures were supported by doubts that South American production will be strong this crop year, tight soybean stocks, and strong technical signals amid long liquidation. Exports are bullish with USDA putting soybeans-inspected-for-export at 63.358 mb vs. estimates for between 40-60 mb. This is well above the 22.7 mb needed to stay on track with the agency’s 1.265 bb demand projection. Please see chart:
 



Soybean basis levels rose on the Mississippi river amid lower barge freight rates. The latest national average soybean basis was placed at -45.0 ¢ /bu under the Chicago November futures contract. Basis in North Carolina was -$1.10/bu to -12.25 ¢ /bu under November 2012 futures with cash prices ranging from $14.09 -$15.17/bu.

 WHEAT futures in Chicago (CBOT) closed down on Monday. DEC’12 wheat futures finished at $8.580/bu; off 5.75 ¢ /bu and 20.25 ¢ /bu lower than a week ago. The JULY’13 contract closed at $8.622/bu; down 2.5 ¢ /bu but 5.75 ¢ /bu higher than last report. Spillover selling from a stronger U.S. dollar and weaker soybean futures pressured wheat prices. Persistently lower production forecasts from Australia and dry conditions in the U.S. Plains amid tightening global supplies were supportive. Exports were bearish with USDA putting wheat inspected for export at 9.7 mb vs. estimates for 10-17 mb. This was below the 23.7 mb needed to stay on pace with USDA’s demand projections. Soft Red Winter Wheat’s national average basis was placed at -37 ¢ /bu under CBOT December futures. Hard Red Winter Wheat was placed at - 54 ¢ /bu under Kansas City December futures. Hard Red Spring Wheat national average basis was placed at -64 ¢ /bu under the Minneapolis December futures contract. New crop wheat in North Carolina ranged from $7.28-$8.02/bu.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed mixed on Monday with nearbys down and deferreds up. The OCT’12DA contract closed even with Friday’s close at $21.03/cwt. This was $0.$0.02/cwt lower than last report. DEC’12DA futures closed at $19.97/cwt; down $0.31/cwt and $0.52/cwt lower than a week ago. The MAR’13DA contract closed at $18.85/cwt; down $0.14/cwt and $0.35/cwt lower than last report. Hurricane Sandy may prove supportive. A significant amount of milk is produced and consumed in the affected areas. Almost 20% of U.S. milk production is located along the East Coast. More than 45% of this milk is consumed via fluid form. Fluid milk sales spiked ahead of the storm. That’s good for sales. However, if electricity is lost and product spoils, a major restocking will be needed. Additionally, areas of milk production hardest hit by damaging winds and floods may struggle to ship milk while power outages could force dairy processors from running plants. Result: a lot of dumped milk and stronger dairy product prices in the near-term. Lower cheese and butter prices are expected in the long-term. Milk components are improving nationally increasing output. Bottling demand is steady. Cream supply is plentiful with some other Class II products requiring more for holiday production. Class III futures were: 3 months out = $20.62/cwt ($0.09/cwt lower than last report); 6 months out = $19.83/cwt ($0.27/cwt lower than a week ago); 9 months out = $19.45/cwt ($0.22/cwt lower than last Monday); and 12 months out = $19.22/cwt ($0.16/cwt under last report). This week variable cost of production for the average. North Carolina conventional 200 cow dairy with a 23,000 lb average is $22.85/cwt; $0.30/cwt higher than last Monday.

 LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed mixed on Monday. The OCT’12LC contract closed at $125.375/cwt; down $0.125/cwt and $1.025/cwt lower than last report. DEC’12LC futures closed at $125.275/cwt; up $0.025/cwt but $2.000/cwt lower than a week ago. APR’13LC futures closed at $133.425/cwt; up $0.025/cwt but $1.525/cwt under this time last week. Thin volume as traders waited on the effects of Hurricane Sandy and light demand were market “non” movers. Choppy trade was marked by managed fund selling. Cash cattle were called steady with little or no activity as both bid and ask prices were poorly defined. Pit sources said after the markets closed that beef shipments and near-term consumer demand are expected to slack off as a result of the severe weather. As the storm approached no one was interested in buying meat for freezers that could be without power. Later this week trade should pick up as buyers limited efforts in collecting new show lists. Analysts 4 across the board on Monday anticipated the storm will weigh on cattle markets for longer than the duration of the storm as retailers prepared to place orders for meat, and shipments may be delayed in the near-term creating a de facto “backlog” of beef and pork supplies. However, as these problems work through the system tightening beef supplies should support prices in the coming weeks as business returns to normal. USDA’s latest boxed-beef prices were placed at $197.50/cwt; up $0.68/cwt but $0.85/cwt lower than last report. According to HedgersEdge.com, the average packer margin was lowered $40.00/hd to a negative $54.30/head based on the average buy of $126.64/cwt vs. the breakeven of $122.32/cwt. Late Monday, October 22, 2012 USDA put the 5-area weekly steer average at $126.60/cwt $0.44/cwt over last week at this time. Please see graph:




FEEDER CATTLE at the CME finished mixed on Monday. NOV’12FC futures closed at $145.925/cwt; up $0.600/cwt but $1.2825/cwt lower than last report. APR’13FC futures closed at $151.300/cwt; even with last Friday’s close but $2.100/cwt lower than a week ago. Light volume and lack of interest for show lists provided no direction for futures. For Monday 10.29.12 estimated receipts at the closely watched Oklahoma City market were put at 9,000 head vs. last week’s 9,324 head and 9,905 head this time last year. Compared to last week feeder steers and heifers were not tested. Stockers opened steady with moderate-to-good demand. Weather remains cool and dry in Oklahoma. Wheat pastures in the U.S. plains to Texas to generally east of the Mississippi where stockers are raised on winter pasture remain dry. Moisture levels for the year in Central Oklahoma are running 4 inches below normal.
 
The CME feeder cattle livestock index was placed at 145.31 up 0.39 and 0.28 higher than last report. Please see chart:




LEAN HOGS on the CME finished down on Monday. The DEC’12LH contract closed at $77.800/cwt; off $1.100/cwt and $0.875/cwt lower than last report. APR’13LH futures closed at $89.500/cwt; down $0.750/cwt and $0.95/cwt lower than this time last week. The JUN’13LH contract closed at $100.000/cwt; down $0.675/cwt and $0.90/cwt lower than a week ago. Storm-related influences and slumping demand pressured prices. Short-term demand will be next-to-nothing on the upper East Coast for this week. Packers aren’t buying. Demand for pork as expressed in orders to meat processing plants cannot be retrieved. It’s a done deal. Seasonal slacking of demand usually occurs this time of year as the Thanksgiving holiday approaches and retailers begin promoting turkey products. On Monday there were reports that at least two pork processing plants east of the Mississippi would not operate on Tuesday due to the uncertainty over the weather, weakened near-term demand, and other circumstances related to Hurricane Sandy. Additionally, heavier supplies will put pressure on prices for several weeks to come. USDA put the lean pork cutout at 85.26 late Monday, up $0.09/cwt but $3.38/cwt under last report. According to HedgersEdge.com, the average packer margin was lowered $5.45/hd to a positive $2.35/head based on the average buy of $60.29/cwt vs. the breakeven of $61.15/cwt. The latest CME Lean Hog index was estimated at 81.89; down 0.37 and 2.77 under last report.