New USDA Report: Bumper supplies of major crops, livestock producers see profits again

By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.

Washington, May 11 – Not a lot of surprises, but USDA’s monthly update of world supply and consumption prospects, indicates that bumper supplies of major crops will keep downward pressure on most farm-gate prices, while the livestock industry starts to regain profitability.

Here are some of the highlights:

Corn: Production for 2010/11 is projected at 13.4 billion bushels, up 260 million from 2009/10 as a 2.3-million-acre increase in intended plantings more than offsets a projected decline in yield from last year’s record.  Based on the rapid pace of 2010 planting as reported in Crop Progress, the 2010/11 yield is projected at 163.5 bushels per acre, 2.7 bushels above the 1990-09 trend.  Corn supplies are projected at a record 15.1 billion bushels, 325 million higher than in 2009/10.

Total U.S. corn use for 2010/11 is projected up 2 percent from the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use.  FSI use is projected 4 percent higher with a 200-million-bushel increase in corn used for ethanol accounting for most of the increase.  Corn ethanol use, projected at 4.6 billion bushels, is supported by rising Federal biofuels mandates and strong blending incentives that continue to boost ethanol usage.  Exports are projected up 3 percent with larger supplies and lower prices, but rising foreign feed grain supplies, mostly corn, limit export growth in 2010/11.

The season-average farm price is projected at $3.20 to $3.80 per bushel compared with the 2009/10 forecast of $3.50 to $3.70 per bushel.

Wheat:  Beginning stocks are up 45% from 2009/10 and the highest in a decade more than offsetting a forecast 8% reduction in this year’s crop.  Total production is projected at 2,043 million bushels, down 173 million from last year. U.S. wheat supplies for 2010/11 are projected at 3,103 million bushels, up 4% from the current year and the largest since 2000/01.

Total U.S. wheat use for 2010/11 is projected up 3 percent with higher expected domestic use and exports. Exports are projected at 900 million bushels, up 35 million bushels from the current year as large, early season supplies and lower prices improve U.S. competitiveness.  Despite higher expected use, U.S. ending stocks are projected at nearly 1 billion bushels and the highest since 1987/88.  The season-average farm price for all wheat is projected at $4.10 to $5.10 per bushel, compared with the 2009/10 projection of $4.90 per bushel.

Oilseeds: U.S. oilseed production for 2010/11 is projected at 99.1 million tons, up less than 1 percent from 2009/10.  Soybean production is projected at 3.3 billion bushels, down 49 million from the record crop produced in 2009 as increased planted and harvested area are more than offset by lower yields.  Harvested area is projected at a record 77.1 million acres based on an average harvested-to-planted ratio. Soybean yields are projected at a trend level of 42.9 bushels per acre, down 1.1 bushels from the 2009 record.  Soybean supplies are projected at 3.5 billion bushels, unchanged from 2009/10 as larger beginning stocks offset lower production.  Soybean ending stocks for 2009/10 are unchanged at 190 million bushels as increased exports and crush projections are offset by reduced residual.

Soybean crush for 2010/11 is projected to decline 5 percent.  Sharply lower U.S. soybean meal exports are only partly offset by a small increase in domestic soybean meal use.  U.S. export prospects are reduced due to increased export competition from Argentina and India.  Domestic soybean oil consumption is projected to increase 3 percent as biodiesel production gains more than offset reduced food use.  Soybean oil used for biodiesel production is projected at 2.9 billion pounds, up 700 million from 2009/10.  A rebound in South American supplies from last year’s drought-reduced levels is projected to limit U.S. soybean exports to 1.35 billion bushels in 2010/11, down from a record 1.455 billion in 2009/10.  Ending stocks for 2010/11 are projected at 365 million bushels, up 175 million from the projection for 2009/10.

The U.S. season-average soybean price for 2010/11 is projected at $8.00 to $9.50 per bushel compared with $9.50 per bushel in 2009/10.  Soybean meal prices are forecast at $230 to $270 per short ton compared with $295 per ton for 2009/10.  Soybean oil prices are projected at 34 to 38 cents per pound compared with 36 cents for 2009/10.

Rice: Total rice supplies in 2010/11 are projected at a record 296.4 million cwt, 9% above the previous year, and 7% above the previous record in 2005/06.  U.S. rice production is projected at a record 244.0 million cwt, 11% above 2009/10, and 5% above the previous record in 2004/05.  Planted area in 2009 is estimated at 3.41 million acres, up 9% from 2009 and the largest area since 1999.  Harvested area is estimated at 3.39 million acres and is an average of the previous five-year harvested-to-planted ratios.  Average rice yield is projected at a near-record 7,202 pounds per acre, up 2% from the previous year, but down less than 1 percent from the 2007/08 record.  Imports for 2009/10 are projected at 22.0 million cwt, up 5% from the previous year.

U.S. 2010/11 rice use is projected at a record 245.0 million cwt, 2% above the year earlier.  U.S. domestic and residual use is projected at a record 138.0 million cwt, 2% above 2009/10. Exports are projected at 107.0 million cwt, 2 percent above revised 2009/10.  Despite an expected increase in global import demand, competition for those markets will be greater as U.S. and competitor supplies are expected to be large.  U.S. ending stocks in 2010/11 are projected at 51.4 million cwt, 69% above the previous year, and the largest stocks since 1985/86.

The 2010/11 long-grain season-average farm price is projected at $10.00 to $11.00 per cwt compared to a revised $12.90 to $13.10 for the previous year.  The combined medium- and short-grain price is projected at $14.50 to $15.50 per cwt, compared to a revised $17.65 to $17.85 for the year earlier.  The 2010/11 all rice price is projected at $11.15 to $12.15 per cwt, compared to a revised $14.05 to $14.25 per cwt for 2009/10.

Cotton:  The 2010/11 U.S. cotton projections include higher supplies offset by higher exports relative to last season, resulting in marginally lower ending stocks.  Production is projected at 16.7 million bales, which is based on the March 31 Prospective Plantings, combined with 7% abandonment and a yield of 815 pounds per harvested acre.  Projected abandonment is reduced from the 10-year average of 11% due to unusually favorable soil moisture in Texas. Domestic mill use is projected at 3.3 million bales, a marginal reduction from 2009/10. Exports are projected to rise 1.5 million bales from 2009/10 to 13.5 million, as foreign demand is expected to outpace supply.  Ending stocks are projected at 3.0 million bales, the lowest since 1995/96.  The projected range for the marketing-year average price received by producers is 60 to 74 cents per pound.

Livestock, poultry and dairy: Total U.S. meat production for 2011 is projected to be slightly higher than 2010 as increased pork and poultry production more than offset declines in beef production.  Beef production for 2011 declines on tighter supplies of cattle. Declining cow inventories and calf crops over the past several years, coupled with expected lower imports of cattle during 2011 will result in a smaller pool of cattle available for slaughter.  Pork production for 2011 is expected to increase as improved returns encourage increased sows farrowing and carcass weights are heavier.  Both broiler and turkey production for 2011 are forecast higher as producers respond to improved returns. Egg production is forecast higher as production gradually builds upon the measured expansion currently underway.

For more perspective on the report, listen to our audio update for Tuesday: USDA takes first stab at new-crop balance sheets and prices in May S&D report.

To return to the News Index page, click: