U.S. to be net beef importer in 2013
The August USDA World Agricultural Supply and Demand Estimates (WASDE) report came out Friday, Aug. 10. The report showed beef production up compared to prior projections, but still down compared to prior years. It also predicted the U.S. will become a net importer of beef by 2013. The big news of corn was released in line with expectations, with production being sharply down and prices expected to go up.
Beef and other meat
August’s WASDE report increased the annual beef production estimates for both 2012 and 2013 compared to July’s estimates. The production estimate for 2012 rose 405 million pounds (mp) to 25.68 billion pounds (bp). August’s production estimate for 2013 gained only 15 mp to stand at 24.67 bp. Though up from July’s estimates, both of the revised estimates are below 2011’s 26.29 bp of beef produced.
August’s report saw no changes to the estimated ending stocks of either year, with 2012 remaining at 575 mp and 2013 remaining at 550 mp. Quarterly beef production estimates were as follows; 12Q3 producing 6.62 bp, 12Q4 producing 6.21 bp, 13Q1 producing 6.11 bp, and 13Q2 producing 6.32 bp. These quarterly estimates are all above July’s estimates.
Expectations of import trade in beef moved very little in August’s report. Projections of 2012 beef imports were reduced by 21 mp to 2.46 bp and stayed steady at 2.62 bp for 2013. Both of these estimates are above the import levels of 2011.
Export estimates were reduced by 110 mp to 2.48 bp in 2012 and down 100 mp to 2.55 bp in 2013. Both of these estimates are well below 2011’s 2.79 bp export levels. Also important to note is that, according to the USDA’s estimates, the U.S. will become a net importer of beef in 2013.
Estimates for average annual prices paid for cattle (steers of all grades in the 5-Area direct sales) were reduced in the August report, but even the reduced average price estimates were well above 2011’s $114.73 price per cwt paid for cattle. For 2012, the estimate dropped from $123-126 to $119- 122. The estimate for 2013’s average price for cattle went from $124-135 to $122-132.
The estimate for overall usage of beef for 2012 rose in August’s report, up 494 mp to 25.68 bp of beef used. This estimate would place 2012 usage over 2011’s level of 25.55 bp. The total use estimates for 2013 were also upped in the most recent report—from 24.65 to 24.77 bp—but even with this increase, the estimate for 2013 would still be below 2011.
Per capita availability estimates increased from July’s predictions, but were still lower than 2011’s 57.3 pounds of beef available per person. The 2012 estimate gained 1.1 pounds per capita and the 2013 estimate gained 0.3 pounds, settling at 57.2 and 54.8 pounds per capita, respectively.
Production estimates for pork and chicken (broilers) in 2012 were generally mixed, with pork production estimates decreasing from earlier predictions but still being above 2011 levels and chicken being in the opposite situation. In 2011, 22.78 bp of pork and 36.80 bp of chicken were produced. August estimates for pork production in 2012 were reduced to 23.25 bp and chicken production estimates were raised to 36.57 bp.
Import and export estimates for 2012 were reduced in the August report for pork and chicken. Pork import estimates for 2012 were reduced from 812 mp to 808 mp and export estimates were reduced 8 mp to 5.4 bp. Despite the reductions, both import and export estimates for 2012 pork are higher than 2011’s 803 mp of imports and 5.19 bp of exports. August’s chicken import estimates for 2012 were down 1 mp to 101 mp, which is lower than 2011’s chicken imports. Chicken export estimates dropped as well—from 7.14 bp to 7.08 bp—but were still above 2011’s chicken exports of 6.97 bp.
Overall, estimates suggest pork producers will get as much as $4 less per cwt for their hogs in this and the next year as compared to 2011’s annual average of $66.11. Chicken producers, on the other hand, are estimated to get 3-5 cents per pound more in 2012 and 4-11 cents per pound more in 2013 compared to 2011’s annual average of 79 cents.
Estimated per capita availability of pork for 2012 was reduced in August’s report by 0.3 pounds. This would put it steady with last year’s 45.7 pounds of pork available per person. Estimates for chicken availability were increased—from 80.4 pounds to 80.9 pounds per capita—but that wasn’t enough to best 2011’s per capita availability of 82.9 pounds.
Corn and other crops
In the August report, US- DA reduced its projections of corn for the 2012/2013 year. The overall acreage planted number remained the same at 96.4 million acres (ma) but the estimated acreage to be harvested fell 1.5 ma from July’s estimate of 88.9 ma harvested. This level is still questioned by analysts and is expected to be further reduced in coming months.
Yield estimates were also reduced as expected. Compared to July’s expectations of 146 bushels per acre (bpa), the August report lowered yield predictions to 123.4bpa. Though it has been speculated that may go down in the future, the figure is more in line with earlier expectations. Overall production estimates for August stand at 10.78 billion bushels (bb)—or 273.79 million metric tons (mmt)—down 2.19 bb from July’s report.
Import and export estimates were altered in keeping with what one would expect given the extreme cut to domestic production; projected imports went up and exports went down. The July report suggested 30 million bushels (mb)—or 760,000 metric tons—would be imported in the 2012/13 year.
The August report upped that estimate significantly to 75 mb (or 1.91 mmt) imported. Export projections were decreased from July’s 1.6 bb to 1.3 bb in August.
Corn use has been a matter of growing conversation in the agricultural world, particularly with the issue of ethanol mandates. Talk of rationing has been floating around for a while. The August projections on corn use were all reduced, likely reflecting the necessity of rationing in the future.
Feed and residuals use expectations were reduced 725 mb in August down to 4.08 bb, a 15 percent drop relative to July’s predictions. The total domestic use estimate went from 12.72 bb to 11.23 bb in the August report, a 12 percent drop from July. However, the expected reduction in use of corn for ethanol and byproducts (including distillers grains, corn gluten feed and meal, and corn oil) is only 400 mb, representing an 8 percent decrease.
Ending stocks of corn are projected to be greatly lowered from previous expectations, from 1.18 bb to 650 mb, a 45 percent drop. Along with the expectations of tightened production and supplies, projected prices paid at the farm rose dramatically over July’s numbers. While July’s report placed the annual average price paid at the farm per bushel at $5.40-6.40, August’s report estimated that price will rise $1.10-3.50 for an annual average of $7.50- 8.90. The higher prices are thought to also curtail usage in the near future.
Estimates for soybean production and the subsequent uses of soybeans are down, with estimated acreage harvested decreasing 700,000 acres to 74.6 ma. Yield predictions have dipped 4.4 bpa to 36.1 bpa and overall soybean production is expected to stand at 2.69 bb—or 73.27 mmt—as of the August report. Estimated annual average for on-farm prices paid for soybeans rose up to $4, to $15-17/bu.
The one growing area of the August WASDE report was wheat. Production estimates on all fronts stayed steady or were raised from July’s expectations. Unlike the other two major crops, harvested area stayed the same at 48.8 ma. Yield estimates were raised from 45.6 bpa to 46.5 bpa. Overall production was raised 44 mb to 2.27 bb.
Exports of wheat are expected to stay the same at 1.2 bb but anticipated imports are to rise 10 mb in 2012/13. To cover for the coming tightness in corn for feed supplies, projected feed-use of wheat is expected to rise 20 mb to 220 mb.
Overall expected annual average price paid at the farm was similarly raised, up $0.20-2.80 to $7.60-9/bu. — Kerry Halladay, WLJ Editor