Beef production, exports projected up

Mar 14, 2014

— Pork, chicken estimated down; corn exports increase

Beef is still reigning in the most recent World Agricultural Supply and Demand Estimates (WASDE) report, released last Monday. It again saw increased production estimates while its competitors saw declines.

Beef production estimates rose in the most recent WASDE compared to prior estimates, up almost 200 million pounds (mp) for a total of 24.62 billion pounds (bp). This came as a result of the higher-thanexpected placement trend seen so far this quarter compared to the first quarter in 2013.

“Coupled with heavier carcass weights and higher expected first-quarter cow slaughter, the beef production forecast is raised,” read the report.

Beginning stocks of beef for 2014 were raised by 2 mp, which helped contribute to the overall increase of total supply estimates—27.49 bp—but most of it came from increased production estimates.

Beef trade projections remained in the favor of the U.S. in the March estimates. Beef imports stayed pat at 2.29 bp while exports rose 100 mp to 2.44 bp. While still lower export numbers than in past years, and higher import numbers than in the past, the U.S. is still poised as a net exporter of beef.

Overall consumption estimates show a modest 0.2 pound increase in per capita availability for beef, up to 53.9 pounds per person. Though also down compared to past years, beef per capita availability still outstripped pork availability estimates, at 46.7 pounds per person.

Price estimates paid for steers on an average, annualized basis for 2014 increased significantly in the March WASDE. Compared to the February prediction of a $132-140 average price range for steers, March saw that range shift over six dollars to $138-146. Quarterly estimates put the first quarter as the best quarter for steer prices at $144-147, but all quarters save the last one had $147 as their upper limit to their estimate range. The estimates for the fourth quarter stated a range of $134-146.

The production estimate increases for beef were more than wiped out by projected decreases in pork and poultry. Pork production estimates for March declined 60 mp to 23.38 bp, largely due to the impact of Porcine Epidemic Diarrhea virus (PEDv), though the estimates are still very conservative by some perspectives.

While commenting on the curious detail of corn’s feed and residual use not changing—discussed more below—Steve Meyer and Len Steiner of the CME Daily Livestock Report pointed out the USDA has been slow to include the impact of PEDv into its estimates.

“But it makes sense. US- DA’s various agencies can’t just ‘wing it’ on these estimates. The WASDE also includes estimates of meat [production, supply and distribution] for the year and changing feed/residual corn use would imply some changes in those numbers which, in turn, must at least be in line with USDA’s other estimates such as the hog numbers in the most recent (December) Hogs and Pigs report. Keeping those estimates in some semblance of agreement creates some inertia that prevents them from responding to changing situations very quickly. And that is true in spades when the situation involves as much fuzzy and anecdotal evidence as the current porcine epidemic diarrhea virus (PEDv) situation.”

The next Hogs and Pigs report will be released at the end of March.

Broiler production led the downward charge for overall meat estimates, down 173 mp for a March estimate of 38.29 bp. This alteration came as a result of slower growth in egg sets and chick placements than earlier expected.

Trade in the competing proteins moved slightly in most categories. Pork imports increased by 10 mp to a total of 890 mp, and chicken imports stayed steady at 112 mp. Pork exports declined by 55 mp to 5.09 bp. Chicken exports, on the other hand, increased by 55 mp to 7.55 bp.

As mentioned, pork availability stayed pat at 46.7 pounds per person, while per capita chicken availability decreased a half pound to 83.2 pounds per person. Corn Little changed in the world of corn in the most recent WASDE report, though the one change had some far-reaching ripples.

The export estimates for old crop corn rose by 25 million bushels (mb) to 1.63 billion bushels. This change was attributed to the stronger world imports and the rising pace of export shipments in recent weeks.

This in turn increased the overall use to 13.33 bb and decreased the ending stocks estimate to 1.46 bb. The estimates of average farm prices per bushel tightened 5 cents on either side of the range to $4.25- 4.75. Near-term corn futures fell somewhat following the release of the report.

Little changed for corn on the global scale. Overall global production estimates rose a little under 1 million metric tons, mostly on increases projected from China and the EU. Feed use estimate increases in the EU and Indonesia are reportedly driving the increases in production.

But corn was playing second fiddle in the grain markets, according to Meyer and Steiner. They project that will not end soon in the U.S.

“In fact, corn has to compete for acres this spring,” they said. “Achieving US- DA’s predicted 92 million acres (or even the slightly higher levels predicted by some private analysts) will mean keeping up with soybean returns.”

At this point estimates on corn plantings for the 2014/2015 crop have been made without the benefit of solid evidence. That should change come the end of the month when the Prospective Plantings report will come out. The report covers what surveyed farmers plan to plant in the coming year. — Kerry Halladay, WLJ Editor