December 14, 2010 WASDE Report Shows Wheat Stocks Up
World Agricultural Supply and Demand Estimates (WASDE) released on December 10 indicated U.S. wheat ending stocks for 2010/11 are projected 10 million bushels higher this month reflecting lower domestic use. Projected food use is lowered 10 million bushels on the latest mill-grind data from the U.S. Census Bureau which indicate flour extraction rates that are higher than the long-term average for a third straight year. With historically high wheat prices, millers continue to get more flour out of each bushel of wheat. Total exports are unchanged, but small shifts among classes result in higher projected exports of Hard Red Spring and White wheat and lower projected exports of Hard Red Winter wheat and durum. The projected marketing-year average price received by producers is narrowed 5 cents on each end of the range to $5.30 to $5.70 per bushel.
Global 2010/11 wheat supplies are projected 4.9 million tons higher this month reflecting an increase in EU-27 beginnings stocks with lower 2009/10 feed use and higher 2010/11 production in Australia, Pakistan, Canada, Brazil, and Ukraine. Production for Australia is raised 1.5 million tons as higher reported yields in eastern Australia continue to boost production prospects. Recent, heavy rains in many of these same areas, however, have dampened production prospects and reduced wheat quality. Official government statistics for Pakistan and Canada boost production 1.3 million tons and 1.0 million tons, respectively. Brazil production is raised 0.4 million tons as favorably dry harvest weather in southern growing areas add to output. Ukraine production is raised 0.2 million tons on the latest government data. Partly offsetting these increases is a 0.5-million-ton reduction for Russia.
World wheat trade for 2010/11 is projected lower this month as tighter supplies of high quality wheat raise world prices and slow demand in several smaller markets. Wheat imports are also reduced 0.5 million tons each for Brazil and EU-27. Larger production reduces the need for imports in Brazil. In EU-27, lower expected wheat feeding reduces demand for imported wheat. World wheat exports are lowered 1.7 million tons with reductions for Australia, China, Canada, and Mexico. Export prospects for Australia and Canada are reduced reflecting the lower quality of wheat in both countries this year. Partly offsetting are increases for Iran, Serbia, and Croatia.
Global 2010/11 wheat consumption is raised with higher expected wheat feeding in China and higher expected feed and residual disappearance in Australia and Canada. Reduced government incentives to export wheat from China make more wheat available for domestic feeding. Larger supplies of lower quality wheat in Australia and Canada are expected to boost feeding and increase residual losses in both countries. Partly offsetting are 0.5-million-ton reductions in feed use for both EU-17 and Russia, and small declines in food use in several countries due to high prices. Ending stocks are raised 4.2 million tons with the largest increases for Pakistan, EU-27, Australia, and Canada.
This month’s U.S. 2010/11 cotton estimates include slightly lower production and higher domestic mill use, resulting in a decrease of 200,000 bales in ending stocks compared with last month. Production is reduced 150,000 bales, as lower production in Texas is partially offset by an increase in the Southeast. Domestic mill use is raised 100,000 bales, based on stronger-than-expected consumption in recent months. The export estimate is unchanged. Ending stocks are now forecast at 1.9 million bales, or 10 percent of total use. The forecast average price received by producers of 76 to 86 cents per pound is raised 2 cents on the lower end of the range.
The 2010/11 world cotton estimates include revisions which raise production and reduce consumption, resulting in an increase in ending stocks from last month’s estimate. Production is raised nearly 300,000 bales, as increases for Australia and Brazil more than offset decreases for Pakistan, Uzbekistan, Greece, and the United States. World consumption is reduced based on a lower estimates for Pakistan and India, partially offset by an increase for the United States. World trade is down slightly, despite higher world production, as most of the larger southern hemisphere production will be shipped in 2011/12. World stocks are now forecast at 43.4 million bales, marginally below the beginning level.
The forecast of total U.S. meat production is raised for 2010 and 2011. Forecasts for 2010 beef, pork, broilers and turkeys are raised reflecting high slaughter levels during the fourth quarter and higher weights for hogs and broilers. For 2011, production forecasts for beef, pork, and broilers are increased. The beef production increase largely reflects higher forecast placements of cattle during the fourth quarter of 2010 and early 2011. Pork production is raised from last month on slightly higher slaughter. Broiler production is forecast higher as hatchery data indicate continued large egg sets and poultry placements during the fourth quarter of 2010. The turkey production forecast for 2011 is unchanged from last month. The egg production forecast is lowered slightly in 2010 but is unchanged for 2011.
Trade forecasts for 2010 are adjusted, largely reflecting third quarter data. However, beef imports are lowered for both late 2010 and early 2011 as exportable supplies of beef for several U.S suppliers are expected to be relatively tight. Beef exports are raised for 2011 as improved economic growth in major export markets is expected to stimulate sales. Pork exports for 2010 are reduced as relatively high pork prices are likely constraining growth in exports. Forecasts for pork exports for 2011 are unchanged. Poultry forecasts for 2011 are unchanged.
The cattle price forecasts for 2010 and 2011 are raised to reflect continued strong demand for cattle. Hog prices for 2010 and 2011 are forecast lower than last month as pork supplies are large. The broiler price forecast is lowered on larger supplies. Egg prices for 2010 and 2011 are forecast higher.
Forecast milk production for 2010 and 2011 is little changed last month. Fat-basis imports for 2010 are lowered primarily due to lower imports of cheese but skim-solids imports are unchanged due to higher imports of expected imports of other products. Fat basis exports for 2010 are raised as sales of cheese and fluid milk and cream are strong and skim-solids exports are boosted by strong sales of cheese and nonfat dry milk (NDM). Exports for 2011 are forecast higher due to expected growth in butter and nonfat dry milk sales. Ending stocks for 2010 are raised to reflect higher-than expected stocks of cheese.
For 2010, cheese and whey prices are unchanged from last month. NDM prices are forecast higher but the butter price forecast is reduced reflecting recent sharp declines in butter prices. With no change in either the cheese or whey price, the Class III price forecast is unchanged. However, the Class IV price forecast is reduced, due to a lower butter price forecast which more than offsets a higher expected NDM price. For 2011, the range of the cheese price forecast narrowed but whey is forecast higher. The butter price is reduced as current price weakness spills into early 2011. NDM prices are forecast higher. The ranges of the Class III and Class IV price forecasts are narrowed from last month. The all milk price is forecast to average $16.25 to $16.35 per cwt for 2010 and $15.90 to $16.70 per cwt for 2011.