Recent reports bumps up milk and corn price forecasts

Hoard's Dairyman: 

Recent reports bumps up milk and corn price forecasts

Date: 
Mon, 07/12/2010

Forecast milk production for 2010 and 2011 is raised slightly from last month in USDA Supply and Demand Estimates released late last week. Cow numbers have remained higher than expected, and milk per cow is expected to increase more rapidly than previously forecast.

The Class III price forecast for 2010 is reduced on a lower cheese price forecast, but the Class IV price forecast is raised as the price forecast for butter is raised, more than offsetting a reduction in the NDM price. The 2011 Class III and Class IV price forecasts are raised. The All Milk Price is forecast to average $15.80 to $16.10 for 2010 and $15.90 to $16.90 for 2011.

Projected U.S. feed grain supplies for 2010/11 are lowered with reduced carryin and lower projected production. Beginning stocks for corn are projected 125 million bushels lower, reflecting higher use in 2009/10. With forecast harvested area down, corn production is lowered 125 million bushels, leaving supplies down 250 million bushels and 60 million below the 2009/10 record. The season-average farm price for corn is projected 15 cents higher on both ends of the range to $3.45 to $4.05 per bushel.

Global coarse grain supplies for 2010/11 are projected 14.9 million tons lower with nearly half of the decline driven by reductions in carryin and production in the United States. Global coarse grain production is lowered 10.8 million tons with barley, corn, and oats production lowered 6.9 million tons, 3.4 million tons, and 0.9 million tons, respectively. Partly offsetting, is a 0.6-million-ton increase in EU-27 mixed grain production. Outside the United States, the biggest reductions are for Russia, Canada, EU-27, and Kazakhstan.

Global coarse grain imports and exports are nearly unchanged for 2010/11. Corn imports are lowered for Mexico with exports increased for Ukraine, partly offsetting the U.S. export reduction.

U.S. oilseed production for 2010/11 is projected at 100.8 million tons, up 1.7 million tons from last month, with increased soybean production accounting for most of the change. Soybean production is projected at 3.345 billion bushels, up 35 million due to increased harvested area. Harvested area is estimated at a record 78 million acres in the June 30 Acreage report, 0.9 million above the June projection. The soybean yield is projected at 42.9 bushels per acre, unchanged from last month.

The U.S. season-average soybean price for 2010/11 is projected at $8.10 to $9.60 per bushel, up 10 cents on both ends of the range. Soybean meal prices are projected at $240 to $280 per short ton, up 10 dollars on both ends. Soybean oil prices are projected at 34 to 38 cents per pound, unchanged from last month.

Global oilseed production for 2010/11 is increased 0.5 million tons to a record 440.7 million tons. Foreign oilseed production is projected down 1.2 million tons to 340 million mostly due to lower rapeseed production. Global soybean production is projected at a record 251.3 million tons, up 1.4 million due mostly to higher production in the United States. Soybean production is also raised for Canada based on higher planted area reported by Statistics Canada. Rapeseed production is sharply reduced for Canada due to lower harvested area. Despite a record planted area estimate reported by Statistics Canada based on producer surveys conducted in late May and early June, significant crop area in the provinces of Saskatchewan and Manitoba did not get planted due to excessive rainfall through late June. As a result, the Canada rapeseed crop is projected at 10.2 million tons, down 1.8 million from last month. Other changes include reduced rapeseed production for China and EU-27 and increased cottonseed production for the United States, Brazil, and Uzbekistan.

U.S. soybean exports for 2009/10 are projected at a record 1.46 billion bushels, up 5 million from last month in part reflecting additional sales to China. Crush is increased 5 million bushels to 1.745 billion due to stronger-than-expected domestic disappearance for soybean meal. Soybean ending stocks for 2009/10 are projected at 175 million bushels, down 10 million.

Cow slaughter remains relatively high, boosting beef production in 2010. Higher forecast mid-year cattle placements are also expected to boost steer and heifer slaughter later in the year and into early 2011.

Cattle and hog price forecasts for 2010 are reduced from last month as demand remains relatively weak in the face of higher production.