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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

USDA updated yesterday its forecasts for grain and meat supplies 2012. Much of the focus in the grain front remains on the progress of S. American crops and USDA confirmed notable reductions in Argentine corn production and Brazilian soybean output. Grain futures went lower following bearish surprises in the wheat complex.

In proteins, USDA made some adjustments to its estimates for beef, pork and poultry supplies. Beef production was increased by 150 million pounds but still it is expected to be about 1.1 billion pounds (-4,1%) smaller than the previous year. A somewhat slow start for exports in January likely caused USDA analysts to pull back the export outlook by about 10 million pounds. It is a relatively minor adjustment and one that may be reversed in the next update. The latest weekly export data showed robust exports to a number of markets and the expectation is that US beef exports should continued to benefit from limited supplies in world beef markets as well as from a lower valued dollar now that risk taking appears to be returning. Imports were left unchanged at 2.090 billion pounds, about 1.9% higher than the previous year.

Strong prices for US lean cow meat and the expectation that prices could further escalate in the spring and summer will likely make the US market more competitive and bring more product into the US. Do not expect a big turnaround in imports, however, as key supplying countries (Australia, Canada, New Zealand) appear to be in herd rebuilding mode and so far appear to have plenty of grass and little incentive to sell.

WHEAT: U.S. wheat ending stocks for 2011/12 are projected lower this month. Exports are raised 25 million bushels supported by the stronger-than-expected pace of sales and shipments, particularly for competitively priced feed-quality wheat. Projected exports of Soft Red Winter and White wheat are each raised 15 million bushels on strong demand from Mexico and South Korea. Exports are also projected higher for Hard Red Winter wheat, up 5 million bushels, based on sales and shipments to date. Projected Hard Red Spring wheat exports are lowered 10 million bushels as strong domestic premiums for spring wheat continue to limit demand. Ending stocks for all wheat are projected 25 million bushels lower at 845 million. Based on prices reported to date and the lower expected carryout, the 2011/12 projected season-average farm price is raised 20 cents on the bottom end of the range to $7.15 to $7.45 per bushel.

Global wheat supplies for 2011/12 are projected 2.1 million tons higher with larger beginning stocks in Kazakhstan and increased production for India, Kazakhstan, and Morocco.

Kazakhstan beginning stocks are raised 0.6 million tons with reduced domestic consumption for 2010/11. India production for 2011/12 is increased 0.9 million tons reflecting the latest government revisions, which increased yields for the crop that was harvested last spring.

Kazakhstan production is raised 0.2 million tons based on the recent official estimate.

Production for Morocco is raised 0.2 million tons also on official revisions to estimated yields in a crop that was harvested several months ago.

Global trade is raised slightly for 2011/12 with world imports increased 0.7 million tons.

Small increases in imports are made for Saudi Arabia, Mexico, Chile, and Ethiopia. Export reductions for Ukraine, Canada, and India are more than offset by increases for Russia, the United States, Argentina, and Brazil. Global wheat consumption is reduced 1.0 million tons mostly reflecting a 1.6-million-ton reduction in India food use. Partly offsetting are smallincreases in food use for Australia, Chile, Ethiopia, and Kazakhstan. Global wheat feeding is nearly unchanged with a 1.0-million-ton reduction for Kazakhstan offset by increases for Ukraine, Saudi Arabia, Canada, and Mexico. Global ending stocks for 2011/12 are raised 3.1 million tons to a record 213.1 million. As projected, 2011/12 global wheat stocks would be 2.4 million tons higher than the previous record in 1999/2000.

LIVESTOCK:The 2012 forecast of total red meat and poultry production is lowered from last month as reduced broiler meat production is expected to more than offset higher forecast beef, pork, and turkey production.

Beef production is raised from last month. Despite expected tight fed cattle supplies, cow slaughter is expected to remain relatively strong during the first quarter and carcass weights are forecast higher.

The beef export forecast for 2012 is reduced slightly but poultry exports are raised.

Beef and pork trade estimates for 2011 are unchanged but poultry exports are raised due to stronger-than-expected shipments in November.

Cattle prices for 2012 are raised from last month, reflecting tight supplies of fed cattle.

COTTON: The 2011/12 U.S. cotton estimates reflect marginally lower domestic mill use compared with last month. With no change in the production estimate, the total cotton supply is unchanged. Domestic mill use is lowered 100,000 bales, reflecting lower than anticipated activity in recent months. The export estimate is unchanged. Ending stocks are raised 100,000 bales to 3.8 million, for a stocks-to-use ratio of 26 percent. The forecast range for the average price received by producers of 87 to 93 cents per pound is narrowed 1 cent on each end.

The 2011/12 world cotton estimates include sharply higher supplies, due to higher beginning stocks and production. Beginning stocks are raised 1.6 million bales, mainly reflecting increased estimates for India’s production in 2009/10 and 2010/11 by the India Cotton Advisory Board. World 2011/12 production is raised 505,000 bales due largely to higher estimated production for Pakistan, which is based on ginning arrivals. Forecast world consumption is reduced slightly, including decreases for Thailand, the United States, and others. World trade is raised, due to a 1.0-million-bale increase in the import forecast for China. World ending stocks are now forecast at 60.8 million bales, an increase of nearly 14 million bales from the beginning level. The stocks-to-consumption ratio of just over 55 percent is sharply higher than the past two seasons and about equal to the 2008/09 level.


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