Beef production, export estimates up

Dec 16, 2013

The December World Agricultural Supply and Demand Estimates (WASDE) report was released with little fanfare last Tuesday. Though there were some exciting production estimate moves for beef, industry eyes were on corn and soybeans, which held few surprises. The market received the new WASDE without reaction as other movers were on its mind.

Overall, meat (red meat plus poultry) production expectations, imports, and consumption were adjusted up, while exports were adjusted down for both 2013 and 2014. Increased projections for beef and pork production eclipsed reduced and stagnant production expectations for chicken. Similarly, expectations for increased imports of pork and chicken countered declines in beef import numbers, moving the whole complex higher.

Beef production for both years were revised higher compared to the November WASDE. Compared to 25.68 billion pounds (bp) for 2013 and 24.17 bp for 2014, the December WASDE shifted those projections to 25.76 bp and 24.29 bp respectively. The 2013 numbers moved higher on increased production relative to earlier expectations for the third quarter, and 2014 numbers were up on projections of increased carcass weights going forward.

Though the production estimates increased within their given years relative to earlier expectations, from year to year, the decline in production estimates is noticeable.

“The decline in total output [between 2013 and 2014] reflects expectations for a sharp reduction in the number of cattle coming to market,” Steve Meyer and Len Steiner of CME’s Daily Livestock Report pointed out.

“USDA did not issue a July estimate of the calf crop but analysts peg the 2013 calf crop down about 2 percent compared to the prior year. Supplies of cattle on feed remain limited and the expectation is for placements to remain constrained for much of 2014. Demand for replacement heifers remains strong and this should limit the number of female calves going into feedlots.”

Trade of beef continues to be in favor of U.S. beef as anticipated imports of beef declined and projected exports increased. For 2013, expected imports declined by 4 million pounds (mp) to 2.25 bp, while expected exports rose 44 mp. For 2014 the numbers were similar, with projected beef imports static at 2.27 bp and exports up 10 mp at 2.31 bp. This kind of action is keeping the U.S. in the position of net exporter of beef by volume.

Another positive in the most recent WASDE was the movement of expected beef availability. The projected pounds of beef available per person for 2013 stayed steady at 56.5 pounds, but increased in 2014 to 53.3 pounds per person. This compares to recent trends of downward estimates of beef availability.

Pork production was also raised on projections of heavier carcass weights, up 70 mp to 23.24 bp in 2013 and up 145 mp to 23.92 bp in 2014. Troy Vetterkind of Vetterkind Cattle Brokerage was skeptical of this increase, however.

“The pork numbers are a little suspect due to the PEDV outbreak in the hogs,” he said of the Porcine Epidemic Diarrhea Virus which has struck U.S. piglets with deadly effects.

Broiler production was estimated down slightly for 2013—down 25 mp to 37.36 bp—based on yearto-date slaughter rates.

2014 broiler production remained steady at 38.48 bp.

Import projections were up or stagnant with pork and chicken, and conversely export expectations were down or stagnant for the two proteins. Pork’s expected exports for 2013 declined 80 mp to 4.97 bp, and for 2014, it lost 90 mp to stand at 5.18 bp. Import projections were 876 mp (up 19 mp) and 880 mp (up 20 mp), respectively.

Due in large part to the increased production and import estimates, projections of pork availability increased slightly for both 2013 and 2014, at 47 and 47.8 pounds available per person, respectively. The opposite was true of chicken, where declines in production and exports more than offset small import increases, meaning slightly decreased domestic availability. Estimated pounds of chicken available per person stood at 81.6 for 2013 and 83.7 for

2014. Corn and crops

Corn production and yield estimates stayed steady at 95.3 million acres (ma) planted, 87.2 ma harvested, a yield of 160.4 bushels per acre (bpa), and a production of 13.99 billion bushels (bb). What did change were trade and use expectations.

Expected imports of corn increased 5 million bushels (mb) to 30 mb. Export projections also increased by 50 mb to 1.45 bb. The increase in exports, like the increase in usage, comes at the expense of ending stocks, which declined from 1.89 bb to 1.79 bb.

“That puts the domestic ending stocks figure toward the low end of prereport estimates,” said Katie Micik, DTN Markets Editor. “The stocks-to-use ratio also declined from 14.6 percent last month to 13.7 percent.”

Use increased by 50 mb in the ethanol and by-products category. USDA said the increase reflected “the strong pace of weekly ethanol production since mid- October.” Exports similarly were raised, given the pace of sales so far and the expectation of higher global consumption.

World wide, corn production estimates increased by 1.45 million metric tons, led mostly by increases in Canadian and Ukrainian corn production. World soybean production rose 1.4 million metric tons largely on increases to the Argentinean crop.

U.S. soybean estimates were very much like corn’s in the December WASDE. Planted acres remained at 76.5 ma, harvested acres were 75.7 ma, yield stayed at 43 bpa, and production was steady at 3.26 mb. Like corn, however, imports of soybeans increased 10 mb to 25 mb. Exports similarly were up 25 mp to 1.48 bb. These increased uses again came at the expense of ending stocks. — Kerry Halladay, WLJ Editor