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Production estimates decline with supplies

Cattle and Beef Markets
Jun 16, 2014

The most recent World Agricultural Supply and Demand Estimates (WASDE) report was released last Wednesday. Though much of the grain-trading world was awaiting its release, the Crop Progress report had more interesting data than did WASDE. Projections of meat and poultry production show the effect of decreased supplies in beef, however.

Overall meat and poultry production estimates for 2014 and 2015 to a lesser extent were down in the most recent WASDE report. Decreases in beef and chicken production more than offset some of the projected production gains in pork.

Beef production estimates were down specifically for 2014 due to the slow pace of cattle slaughter for the first two quarters of this year. Compared to the May WAS- DE estimates for 2014, the most recent report lowered production rates 155 million pounds (mp) to 24.48 billion pounds (bp). While carcass weights are staying up relative to previous predictions and may go higher as feed costs stay low or move lower, it is not enough to offset the reduced cattle supply.

Beef import estimates for 2014 were revised 50 mp higher than in May to 2.45 bp due to the pace of demand for grinding meat. Export estimates for 2014 remained steady at 2.51 bp, keeping the U.S. as a net exporter for 2014. Production and trade projections for 2015 remained unchanged from the May WASDE at 24.39 bp produced, 2.45 bp imported, and 2.43 bp exported. If these estimates are realized, the U.S. would become a net importer of beef in 2015 by volume.

Projections of the year’s pork production was revised up as a combination of increased slaughter and carcass weights reversed earlier thoughts of Porcine Epidemic Diarrhea virus-linked supply problems. Estimated pork production for 2014 jumped 165 mp to 22.83 bp. Estimates for 2015’s production remained steady at 23.32 bp.

Pork trade estimates for 2014 saw increases for both imports and exports. Import estimates rose 10 mp to 922 mp, and export estimates rose to 4.86 bp. Despite the increased expected exports, the increased production and import projections meant increased per capita availability estimates at 46.2 pounds of pork per person. Estimates of pork trade in 2015 stayed steady with the May report at 890 mp in imports and 5.04 bp in exports.

For once chicken (broilers) saw reduced production and export estimates.

Chicken production for 2014 was revised downwards at 37.82 bp and 38.81 bp for 2015. The decline was attributed to slowing expansion and decreased egg sets.

Expected imports of chicken in 2014 rose slightly, but export predictions decreased dramatically for both 2014 and 2015. Anticipated exports of chicken for 2014 dropped 225 mp to 7.31 bp, and fell

150 mp to 7.48 bp in 2015. Crop progress and estimates

On the domestic side, there were no changes made to corn estimates. Production predictions of the 2014/15 corn crop stood pat at 13.94 billion bushels (bb) as reported in the May WASDE. If realized, this production level would represent a record corn crop achieved on the back of projected record average yield of 165.3 bushels per acre (bpa).

According to the most recent Crop Progress report, 92 percent of planted corn has emerged, compared with 83 percent the same week last year and the five-year average of 90 percent. Of the emerged corn, 75 percent is rated good or excellent, compared with 63 percent last year. Only 3 percent of the emerged crop is rated poor or very poor, compared with 8 percent last year.

Global corn production was estimated up in the most recent WASDE as increases in the EU and former Soviet Union areas, specifically the Ukraine, brought global production estimates up to 981.12 million metric tons. Global use of corn as domestic food and feed increased slightly as international trade was projected down with the increased supplies.

Slight changes in the yield estimates for wheat had a cascading effect on the subsequent estimates for use and trade. Yield predictions for the 2014/15 wheat crop dropped from 42.7 bpa to 42.3 bpa. Beginning stocks were increased slightly as a result of lower than previously projected feed use of the 2013/14 crop, but these gains were more than eclipsed by the decreased production, estimated at 1.94 bb.

Food and feed uses of wheat declined slightly which combined to result in lower domestic use. Coupled with slightly reduced exports, the changes made to wheat predictions resulted ultimately in an increased projection of ending stocks, which in turn reduced projected average on-farm prices paid for wheat to $6.35-7.65.

The most recent Crop Progress report pegs the winter wheat crop as 86 percent headed across the major wheat-growing states, compared with 81 percent this time last year and the five-year average of 85 percent. Harvesting of winter wheat began last week and was reported at 9 percent compared with last year’s 5 percent and the five-year average of 12 percent.

The wheat condition however leaves something to be desired and was one of the reasons the WASDE yield estimates were reduced. Of the headed winter wheat, 44 percent was rated poor or very poor, compared to 42 percent the year before. Good- or excellent-rated winter wheat stood at 30 percent, compared with last year’s 31 percent.

On the other hand, spring wheat is doing well. Ninety-five percent of the spring wheat crop has been planted, and 80 percent of it emerged, in the main spring wheat states. The condition of the crop is far better than last year, as well, with 71 percent rated good or excellent and only 4 percent rated poor or very poor this year compared to 62 percent and 7 percent, respectively, last year.

Little changed about soybeans in the most recent WASDE save for a 5 mb decrease in beginning stocks that translated to a 5 mb decrease in projected ending stocks. Eighty-seven percent of the soybean crop has been planted, and of the planted crop, 71 percent of it has emerged.

This compares with 69 percent and 46 percent, respectively, last year.

Finally, pasture and range conditions across the nation are slightly improved this year compared to last. Pasture and ranges rated poor or very poor stood at 19 percent as of the most recent Crop Progress report, compared to last year’s 24 percent. Conversely, pastures rated good or excellent stood at 51 percent compared with last year’s 49 percent.

As with last year, however, the southwestern states have the worst pasture and range conditions.

California is rated 75 percent poor or very poor, New Mexico has 65 percent, and Arizona has 55 percent. The drought continues to hit the Southwest hard, though there is hope that El Niño may mitigate some of the summer’s harsh heat. — Kerry Halladay, WLJ Editor

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