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Northwest Iowa Dairy Outlooks

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

WHEAT: Projected U.S. wheat supplies for 2012/13 are raised 5 million bushels with higher estimated beginning stocks more than offsetting lower forecast production. Beginning stocks were reported in the June 29 Grain Stocks report 15 million bushels above last month’s projection. Feed and residual disappearance, seed use, and exports are all lowered slightly for 2011/12. Production for 2012/13 is reduced 10 million bushels as a 14-million-bushel reduction in winter wheat is only partly offset by higher forecast spring wheat. Among the Hard Red Winter wheat states, lower production for Texas, Colorado, Oklahoma, and Montana is only partly offset by increases for Kansas and Nebraska. For the Soft Red Winter (SRW) wheat states, increases for Ohio, Illinois, and Indiana are mostly offset by reductions in the southern SRW-producing states.

Total U.S. wheat use for 2012/13 is projected 35 million bushels higher. Domestic U.S. food use for 2012/13 is raised 5 million bushels on expectations of lower flour extraction rates for this year’s crop. Projected feed and residual use is lowered 20 million bushels, with higher prices and stronger export demand. Exports are projected 50 million bushels higher with reduced competition from Black Sea exporters. Ending stocks for 2012/13 are projected 30 million bushels lower. The projected range for the 2012/13 season average farm price is raised 60 cents on both ends to $6.20 to $7.40 per bushel, supported by sharply higher corn and soybean prices.

This compares with the record $7.24 per bushel reported for 2011/12.

Global wheat supplies for 2012/13 are reduced 5.1 million tons with lower world production more than offsetting a 1.6-million-ton increase in beginning stocks. World production is lowered 6.7 million tons with reductions for Russia, Kazakhstan, and China accounting for most of the reduction. Russia production is lowered 4.0 million tons with lower expected yields for winter wheat and lower area and yield prospects for spring wheat. Kazakhstan production is lowered 2.0 million tons as persistent June heat and dryness have also reduced production prospects. China production is reduced 2.0 million tons reflecting government indications of lower yields. Canada production is also lowered slightly, down 0.4 million tons, based on lower reported plantings in the latest official survey by Statistics Canada. EU-27 production is raised 2.1 million tons with increases for France, Germany, and Hungary more than offsetting a reduction for Poland.

Global wheat consumption for 2012/13 is lowered 1.8 million tons mostly reflecting lower expected wheat feeding in Kazakhstan, Australia, and the United States. Partly offsetting are small increases in wheat feed and residual use for EU-27 and South Korea. Global wheat trade is lowered slightly with imports lowered for China, Indonesia, and Uzbekistan. Partly offsetting is an increase in imports for Iran. Exports are reduced 4.0 million tons for Russia and 1.5 million tons for Kazakhstan. Exports, however, are raised 2.0 million tons for India, 1.5 million tons for EU-27, and 1.4 million tons for the United States. World ending stocks for 2012/13 are projected 3.3 million tons lower at 182.4 million.

COARSE GRAINS: U.S. feed grain supplies for 2012/13 are projected sharply lower with corn production prospects reduced 1.8 billion bushels from last month. The projected U.S. corn yield is lowered 20 bushels per acre to 146 bushels reflecting the rapid decline in crop conditions sinceearly June and the latest weather data. Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions. Harvested area is also reduced slightly based on the June 29 Acreage report.

Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol. Exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments. A 52-million-bushel increase in beginning stocks and a 15- million-bushel increase in imports offset only a small portion of the expected reduction in this year’s crop. Ending stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection. The season average 2012/13 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel in June.

BEEF: The forecasts for 2012 and 2013 red meat are reduced from last month as higher feed prices are expected to slow the pace of expansion and temper growth in weights. Beef production is forecast higher for 2012 as deteriorating pasture conditions are expected to increase placements in feedlots. USDA’s Cattle report, to be released on July 20 will provide an indication of the 2012 calf crop and producers’ intentions regarding heifer retention. Beef production is reduced slightly for 2013 as the earlier placement of calves in 2012 results in a small adjustment to early 2013 marketings.

Cattle carcass weights are raised for the first part of 2012, but placement of lighter-weight cattle in feedlots and the higher forecast cost of feed are expected to dampen weight growth in 2012 and 2013. Egg production is raised slightly for 2012 as higher prices support slightly faster growth, but the forecast for 2013 is reduced as higher feed prices pressure producer returns.

Beef imports are raised for 2012 as demand for processing beef remains strong and a strengthening of the U.S. dollar has helped support imports from Oceania. Beef exports are reduced from last month as exports have slowed. Strong pork exports in April support an increase in the 2012 forecast. Pork imports are unchanged.

Beef, pork, and turkey trade forecasts for 2013 are unchanged from last.

Cattle, broiler, and turkey price forecasts 2012 are lowered from last month, but hog prices are raised.

MILK: The milk production forecasts for 2012 and 2013 are reduced from last month as higher forecast feed prices are expected to pressure producer returns and encourage a more rapid decline in the cow herd. Milk per cow is also reduced due to higher forecast feed prices this year and next. In addition, milk yields in the short term may be affected by recent high temperatures. Imports are raised on a fat basis, reflecting stronger imports of cheese. Exports are raised on stronger sales of cheese, whey, and nonfat dry milk (NDM).

Cheese prices are forecast higher for 2012 and into early 2013 as stronger exports support prices. Butter prices are forecast higher in 2012 but weaker domestic demand is expected to offset lower production in 2013 and the price forecast is unchanged. Weaker expected domestic demand will also limit price movements for NDM and whey. The NDM price is reduced slightly from last month, but the forecast for 2013 is unchanged. The whey price forecasts for both 2012 and 2013 are unchanged from last month. The Class III price forecasts for 2012 and 2013 are raised from last month due to the higher forecast cheese price and the Class IV price for 2012 is raised on the higher butter price. The 2012 all milk price is forecast at $17.05 to $17.35 per cwt and the all milk price for 2013 is raised to $17.35 to $18.35 per cwt.

COTTON: This month’s 2012/13 U.S. cotton estimates show slight revisions in supply and offtake, resulting in marginally lower ending stocks. Beginning stocks are raised 100,000 bales to 3.3 million, reflecting a decrease for domestic mill use in 2011/12. Production for 2012/13 is unchanged at 17.0 million bales, despite a 4-percent reduction in planted area in the June Acreage report, as abandonment and yield have been adjusted based on current conditions.

Forecast domestic mill use is reduced 100,000 bales based on recent activity levels. Exports are raised due to higher projected global imports and slightly reduced foreign competition. Ending stocks are now projected at 4.8 million bales. The projected range for the season average farm price is unchanged at 60 to 80 cents per pound.

Lower beginning stocks and production trim this month’s 2012/13 world stocks projection by 3 percent. World production is reduced 1.5 million bales due to decreases for India, Pakistan, and others. A reduction in India’s crop of 1.0 million bales reflects lower-than-expected planted area and slightly lower yield prospects due to the monsoon delay. Total world consumption is virtually unchanged as reductions for China and the United States are offset by increases for India, Pakistan, and Vietnam.

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