WASDE projects higher steer prices

Dec 16, 2011

USDA raised its 2012 price forecast for cattle (5-area direct, all grades) to an average of $120 to $128 per cwt. from last month’s forecast range of $117 to $126 in the Dec. 9 World Agricultural Supply and Demand Estimates (WASDE) report.

The 2012 forecast of total red meat and poultry production was reduced from last month as lower forecast broiler production more than offsets a higher pork production forecast.

Beef and turkey production forecasts were unchanged. Broiler production is forecast lower, largely due to slower expected growth in average bird weights in the first part of the year.

Pork production is forecast high er

as slightly higher carcass weights are expected. USDA will release its Quarterly Hogs and Pigs report on Dec. 23 which will provide an indication of producer farrowing intentions into the first part of 2012.

For 2011, beef and broiler production forecasts are lowered, but the pork production forecast is raised.

The beef import forecast is raised for 2011 based on higher than expected third-quarter data, but is unchanged for 2012. Pork imports are lowered for 2011 and 2012.

Beef, pork and poultry exports are raised for 2011 and pork, broiler and turkey exports are U.S. feed grain ending stocks for 2011/12 are projected slightly higher with a small decrease in domestic corn use and a small increase in oats imports. Corn food, seed and industrial use are lowered 5 million bushels with early marketing-year corn use for sweeteners down slightly year on year.

Estimated corn usage for feed/residual and ethanol were held constant from November. The feed/residual estimate of 4.6 billion bushels is still 4 percent lower than last year. When combined with slightly lower dried distillers grains output due to a 0.4 percent reduction in ethanol usage, this drop represents about a 4 percent drop in total cornbased feed ingredient availability. The December WASDE also indicates significantly lower amounts of grain sorghum, barley and oats are expected to be used for feed this crop year.

Projected year-end corn stocks are increased by 5 million bushels but the stocks/use ratio remains roughly the same at 6.7 percent. USDA lowered its estimate of the national weighted average farm price to 30 cents on each end of the range.

“Readers are reminded that this price is computed as monthly corn marketings times monthly average price. With lower prices already included for sales in October and, especially, November, this forecast HAD to decline. The mid-point, $6.40, remains well above CME Corn futures prices at present,” CME reports point out.

Forecast year-end wheat stocks were raised by 50 million bushels due to a reduction in forecast U.S. wheat exports. The expected 878 million bushels of year-end stocks represents about 42 percent of total annual usage. World wheat stocks are the largest in over a decade, according to CME.

Comparing Chicago wheat futures prices with Chicago corn futures prices suggests that soft wheat will remain a feed ingredient in some areas depending on basis levels, CME reports said.— Traci Eatherton, WLJ Editor