Unchanged WASDE corn estimates surprise industry

Jun 14, 2013

Last week saw the release of the monthly World Agricultural Supply and Demand Estimate (WASDE) report. While beef production was estimated up from earlier reports, the biggest surprise was the lack of change in the corn acreage projections.

Overall, red meat and poultry (beef, pork, chicken and turkey) production was estimated up for 2013 compared to the May WASDE.

Gains in beef and chicken (broilers) production more than offset the expected shortcomings of pork production. In trade, estimates for all meats were revised upwards for imports, and again downwards for exports.

Beef production estimates were increased by 330 million pounds (mp) to 25.52 billion pounds (bp) for 2013. Continued poor range conditions in key cattle states pushing relatively large placements of cattle into feedlots and continued high cow slaughter were credited by USDA as the motivation behind the estimate increase. Production estimates for 2014 remained unchanged at 24.19 bp.

Beef trade continues to slip in USDA’s projection of the future. For 2013, it estimated that beef imports will remain at 2.56 bp, but exports will decrease 100 mp compared to the May estimate of 2.41 bp.

The increased production estimate along with a decreased export projection led to an increase in the anticipated per capita availability on the domestic market. Compared to last month’s WASDE, beef per capita availability rose an entire pound for 2013 to 57.1 pounds of beef per person.

There was little upward news for pork in terms of the WASDE revisions; everything was either down or steady with past projections. Production estimates were reduced by 55 mp and per capita availability of pork for 2013 decreased to 47 pounds per person. Trade estimates for pork in 2013 remained steady with earlier reports at 797 mp for imports and 5.03 bp for exports.

The opposite was true of broilers, where just about everything exciting was revised upwards. Broiler production expectations were increased to 37.36 bp, up from 37.34 bp, and exports were increased 100 mp to 7.36 bp. As projected exports exceeded the projected increases in production, the estimated per capita availability was reduced slightly, from 82 pounds per person to 81.8 pounds per person.

Corn concerns

As mentioned, the nonactivity of WASDE regarding the 2013/2014 corn crop was the big surprise. Area planted estimates and area harvested estimates were not touched and remained at last month’s levels, at 97.3 million acres planted and 89.5 million acres harvested. This detail raised many eyebrows in the face of continued weekly Crop Progress reports which show corn plantings still lagging.

As of Monday, June 10, 95 percent of the expected corn crop had been planted. Analysts expected the number of acres which would be shifted to soybeans or claimed for prevented plantings would increase over previous projections. Industry experts polled by Reuters prior to WASDE’s Wednesday release expected planted corn acres to decline by 2.2 million with soybean acres increasing by 1.1 million. However, the numbers still don’t add up.

“Given Monday’s planting levels, [Corn Belt] states have 84.056 million acres planted. If other states match that percentage, it implies that 92.3 million acres had been planted by Monday, leaving about 5 million corn acres empty at this time. That is considerably more unplanted acres than 2.2 million analysts are expecting,” reported Steve Meyer and Len Steiner of CME’s Daily Livestock Report ahead of WASDE’s release.

USDA’s lack of action violated expectations, though the report did include a note calling crop projections “highly tentative.” Meyer and Steiner also pointed out that USDA has been historically reluctant to change projections without objective data being available.

The corn yield estimates were reduced, however— from 158 bushels per acre (bpa) to 156.8 bpa—thereby bringing overall production estimates down to 14.01 bil lion

bushels (bb). This reduced domestic availability trickled down into reductions in other areas. Feed and residual usage was estimated down—from 5.33 bb to 5.2 bb—on the likelihood of increased feed prices. Ending stock estimates were also decreased by 55 million bushels (mb) to 1.95 bb.

Corn trade estimates remained steady with prior

WASDE reports at 25 mb imports and 1.3 bb exports. Expected ethanol and byproducts increased 50 mb, which the report said was “in line with an increase this month for the 2012/13 marketing year.” The anticipated average farm price for 2013/2014 corn rose 10 cents on each side of the range to $4.40-5.20/bu. — Kerry Halladay, WLJ Editor