In the Cattle Markets
Supply and demand report recap.
Friday, Nov. 9, USDA and the World Agricultural Outlook Board released their monthly World Agricultural Supply and Demand Estimates (WASDE) report. The report was widely viewed as having a bearish tone for crops given the significant increases in supplies and carryover for soybeans compared to what was expected. This has spilled over into other grain and oilseed markets in the days that have followed.
Nonetheless, corn supply and use were left mostly unchanged from the October WASDE report, with the only noticeable change being an increase in projected corn imports from 75 million bushels (bu.) to 100 million bu. (up 33%). Estimated yield per acre was raised slightly to 122.3 bu., compared to an average of analyst expectations of 122.1 and 122.0 reported the previous month. This raised U.S. production 19 million bu. to 10.725 billion.
Analysts were looking for harvested acres to drop slightly from 87.7 million in October’s report to 87.1 million, but USDA left those unchanged in the current report. Expected corn used for food purposes — up 17 million bu. from last month to 1.367 billion bu. (when excluding corn used for ethanol) — was the only demand-side change in the report for corn.
Collectively, the amount of corn that will be carried over to the next marketing year is currently pegged at 647 million bu., up 28 million from last month’s projection. Based on this, the stocks-to-use ratio is 5.8%.
More noticeable in the report was the unexpected soybean projections. The WASDE reported an expected soybean yield of 33.9 bu. per acre, up from last month’s 37.8-bu.-per-acre projection and outside the range of pre-report estimates, where the highest guess was 39.1 bu. per acre. This increase led to a larger-than-expected bump in production, which is currently forecast at 2.971 billion bu. vs. 2.891 from pre-report expectations (with the highest guess at 2.959) and 2.860 forecasted last month.
Offsetting adjustments on the demand side were seen with increases in projected crushings and exports, respectively up 20 and 80 million bu. from last month. Soybean ending stocks were reported to be an expected 140 million bu., up 10 million from last month and 7 million higher than the average of analysts’ pre-report expectation. These out-of-range changes to the soybean supply sent grain and oilseed markets tumbling until today (Tuesday, Nov. 13).
These adjustments to the soybean supply were not nearly as impactful with respect to soybean meal use from a domestic standpoint. Projected domestic disappearance and final ending stocks were unchanged from last month, while the larger crushings reported for soybeans were forecast to be exported.
Beef production in the United States remained relatively stable compared to last month’s estimates. Production for 2012 and 2013 are currently forecast at 25.587 and 24.520 billion pounds (lb.), respectively. The 2012 estimate was lower by 6 million lb., and the 2013 estimate was lower by 110 million lb. The broiler production forecast, on the other hand, was higher by 172 and 30 million lb., respectively, at 36.889 billion lb. in 2012 and 36.445 billion lb. in 2013 compared to October’s estimates.
Beef’s export projection was lowered 9 million lb. to 2.469 billion lb. for 2012, while 2013 export expectations were left unchanged at 2.450 billion lb. This would put the United States as a net exporter in 2012, but a net importer in 2013. The increase in beef imports from 2012 to 2013 is most likely to offset the tight supplies that are expected to continue in the United States.
Per capita consumption of beef was once again reduced in this month’s report to 56.8 and 54.8 lb. per person for 2012 and 2013, respectively, again largely due to supply constraints.
