Beef production slips, pork on the rise
Wednesday, April 10 saw the release of the most recent World Agricultural Supply and Demand Estimates (WASDE) report. There were a few surprises, particularly in corn, and beef production numbers slacked off.
Overall, meat (beef, pork, chicken, and turkey) production was estimated up compared to the prior month’s report—mostly on declines from beef—while imports were expected to be up and exports were projected to be down. All of this results in a higher-than-anticipated domestic meat supply, upping the per capita availability.
Estimates of 2013’s beef production dropped in the most recent WASDE report. Compared to the prior report, which predicted an annual production rate of 25.21 billion pounds (bp), the April WASDE estimates pegged it at 24.98 bp. This one percent decline in projected beef production, down 230 million pounds (mp).
The report itself attributed the drop in estimates to the declines in expected fed cattle and bull slaughter offset increases in cow slaughter.
“The decline likely reflects expectations for a notable reduction in cattle slaughter, especially in the second half of the year and a slowdown in cattle carcass weight gains,” said CME’s Steve Meyer and Len Steiner of the Daily Livestock Report.
“Smaller feedlot placements will continue to limit the number of cattle coming to market in the next few months. The slowdown in weight gains is also significant, as last year the surge in cattle weights managed to offset a good portion of the decline in the number of cattle coming to market.”
Beef trade estimates were adjusted slightly in a way which increased the trade imbalance spread. Import estimates rose 10 mp to 2.57 bp, up from last month’s 2.56 bp, on greater than expected supplies from Oceania. This import estimate is almost 25 percent higher than confirmed imports from 2011.
At the same time, beef export estimates were reduced by 15 mp to 2.43 bp.
The export conditions of the first quarter have been less than stellar and the altered export estimates reflect that.
See the U.S. Meat Export Federation’s story on the most recent confirmed export data on page 5 of today’s WLJ for more information on the export situation.
Along with declining production which outstrips the increases from trade changes, the most recent WASDE lowered the per capita availability on beef by almost a half-pound. Where last month’s report projected 56.1 pounds per person, the most recent report lowered that to 55.7 pounds per person.
Pork and Poultry
Pork production estimates increased by 130 mp to 23.52 bp compared to last month’s WASDE. Much of this increase comes from the results of the March 28 quarterly Hogs and Pigs report which indicated a slightly higher-than-expected firstquarter pig crop and a smaller decline in the number of sows which farrowed or are expected to farrow in the first half of the year. Increased carcass weights coming from declining feed prices have also had a hand in the increased production estimates for pork.
At the same time, production estimates for chicken and turkey fell slightly, down 15 mp and 64 mp respectively. Reduction in poultry production estimates stem from existing data on broiler slow down for chicken and decreased egg sets and poult placement for turkeys.
Import predictions for pork and poultry remained unchanged, but export expectations were lowered for all three meats. Declines in pork export expectations— to the tune of 160 mp lower at 5.21 bp—stem largely from the de facto bans on U.S. pork in China and Russia. Chicken and turkey export expectations dropped 50 mp and 30 mp respectively mostly on higher prices comparative to the world market.
Collectively, increased supplies of pork and poultry have moved the overall expectation of per capita meat availability up slightly. Compared to the prior month’s report, April’s WASDE placed per capita meat availability at 204.1 pounds per person, a .2-pound increase.
There were a few surprises in the main crops, primarily in how low the U.S. ending stocks for corn estimates were. Compared to pre-report projections, the USDA estimates were well below what was expected.
Corn: Adjustments to the domestic corn situation raised some eyebrows. A 150 mb decrease in expected Feed and Residual use was the largest change, with increases to Food, Seed and Industrial uses as well as ethanol production. Expected export figures for corn also fell 25 mb. Collectively, the alterations resulted in a 125 mb increase to domestic corn ending stocks, bringing them to 757 mb.
“USDA has some explaining to do with its corn ending stocks figure of 757 mb,” said DTN Senior Analyst, Darin Newsom. “The average prereport estimate was 824 mb with most leaning higher given the recent quarterly stocks number.”
According to WASDE, larger-than-expected March 1 corn supplies, lower corn prices, and favorable margins for producing and blending ethanol are combining to limit the expected year-to-year decline in ethanol production during the second half of the marketing year (March-August).
Since the prior week’s lows, corn futures have been heading up steadily on the near term.
Globally, corn production estimates increased 1.85 million metric tons, led mostly by increased corn expectations from the EU and Brazil. At the same time, global corn trade and domestic feed usage are expected to decrease, meaning that world ending stocks for corn are projected up. The increase in Brazilian estimates came from the recent spate of good weather.
Wheat: U.S. wheat estimates stayed mostly unchanged, though some usage and allocation details shifted around between last month’s and this month’s WASDE. Seed use increase by 1 million bushels (mb) to 76 mb, and feed and residual use dropped by 15 mb. This increased the ending stock estimates accordingly.
The most recent Crop Progress report, released Mon., April 8, indicated that little had changed across the country in terms of winter wheat condition. Poor to very poor still described 30 percent of the crop condition, but the good to excellent condition gained two more percentage points at 36 percent compared to the prior week.
According to DTN’s Katie Micik, ending stocks for wheat in the most recent WASDE were dead even with the average pre-report guess with 731 mb, and a 15 mb increase from March. Those 15 mb come from lower feed and residual use than USDA previously expected. The stocks-to-use ratio climbed to 30.3 percent.
Globally, wheat supplies for 2012/13 were raised 2.9 million tons on higher world beginning stocks, but most all of this is attributable to paperwork things and revisions in older records rather than new events. — Kerry Halladay, WLJ Editor