April WASDE Report Unfriendly to Cattle & Corn
USDA World Agricultural Supply & Demand Estimates - Released on April 9th
LIVESTOCK & POULTRY: The 2019 forecast for total red meat and poultry production is lowered from last month on lower expected beef, pork and broiler production. The beef production forecast is reduced from the previous month primarily on lower carcass weights, but higher total cattle slaughter for 2019 is expected to partially offset declines in carcass weights. Pork production is lowered on a slower pace of slaughter throughout the year, but this decline is partially offset by slightly higher hog weights.
USDA’s March Quarterly Hogs and Pigs report estimated producers farrowed 2 percent more sows during December-February and indicated their intentions to farrow about 1 percent more sows in March-May. These hogs will be ready for slaughter in the second half of 2019. Broiler production is reduced on recent hatchery data and slowing weight growth while turkey production is raised slightly. The 2019 egg production forecast is raised from the previous month as the pace of expansion has been more rapid than previously expected.
For 2019, beef trade forecasts are unchanged from last month. Pork imports remain unchanged from the previous month, but the export forecast is raised on expectations of stronger global demand for U.S. pork products in the second half of the year. These forecasts assume that current trade policies remain in place. No change is made to broiler and turkey export forecasts.
The 2019 cattle price forecast is adjusted to reflect a slightly lower first-quarter price. The hog price forecast is raised from last month but demand in coming quarters is not expected to be as strong as in March and early April. The broiler price forecast is reduced, reflecting a lower first-quarter price, while modest year-over-year gains in turkey prices support a higher price forecast.
COARSE GRAINS: This month’s 2018/19 U.S. corn outlook is for lower feed and residual use, reductions in corn used for ethanol and exports, and larger stocks. Feed and residual use is lowered 75 million bushels to 5.300 billion based on corn stocks reported as of March 1, which indicated disappearance during the December-February quarter declined about 9 percent relative to a year ago.
Corn used to produce ethanol is lowered 50 million bushels to 5.500 billion based on the most recent data from the Grain Crushings and Co-Products Production report, and the pace of weekly ethanol production during March as indicated by Energy Information Administration data. Exports are reduced 75 million bushels to 2.300 billion, reflecting current outstanding sales and expectations of increased competition from Brazil, Argentina, and Ukraine. With supply unchanged and use declining, ending stocks are raised 200 million bushels to 2.035 billion. The season-average corn price received by producers is unchanged at a midpoint of $3.55 per bushel.
The global coarse grain production forecast for 2018/19 is up 5.3 million tons to 1,377.2 million. This month’s foreign coarse grain outlook is for larger production, increased trade, greater use, and marginally higher stocks relative to last month. Brazil corn production is raised, reflecting improved yield prospects for second-crop corn. Argentina corn is higher based on expectations of larger area. Corn production is raised for the EU, Mexico, and Indonesia, with reductions for the Philippines and Pakistan.
Major global trade changes for 2018/19 include higher projected corn exports for Brazil, Argentina, the EU, and Ukraine with a partially offsetting reduction for the United States. Corn imports are raised for the EU and South Africa, with lower projections for Vietnam and Bangladesh. Foreign corn ending stocks for 2018/19 are raised from last month, mostly reflecting increases for Mexico, Indonesia and South Africa that more than offset declines for Vietnam, Brazil, Pakistan, Bangladesh, and Argentina.
WHEAT: The outlook for 2018/19 U.S. wheat this month is for unchanged supplies but reduced exports and domestic use. The NASS Grain Stocks report, issued March 29, implied less feed and residual use for both the second and third quarters. Total 2018/19 feed and residual use is lowered 10 million bushels to 70 million. Wheat exports are lowered 20 million bushels to 945 million on a continued sluggish export pace.
By class, Hard Red Winter exports are raised 10 million bushels, which is offset by reductions of 15 million for Hard Red Spring, 10 million for White, and 5 million for Durum. These demand changes, as well as a small reduction in seed use, led to a 31.5-million-bushel-increase in ending stocks, which are now projected at 1,087 million bushels. The season-average farm price is raised $0.05 per bushel at the midpoint to $5.20 based on updated NASS price and marketing data. World 2018/19 wheat supplies are raised 2.1 million tons due mainly to increased beginning stocks that largely reflect multi-year revisions for Iran.
Global production and exports are each reduced fractionally, but domestic consumption is lowered 2.9 million tons. The consumption change stems primarily from lower Iran and EU feed and residual use; Iran is lowered on the series revision and the EU reduction is based on more competitive corn prices and increased coarse grain disappearance. With supplies increasing and total use declining, global ending stocks are raised 5.1 million tons to 275.6 million.