Wednesday, December 12, 2012

October Pork Exports Set New Monthly Record

U.S. pork exports set new monthly records in October, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF), reaching 218,132 metric tons valued at $607 million. Export volume was 9 percent above last year and broke the previous monthly record of 217,080 mt set in November 2011. Export value exceeded $600 million for the first time, breaking the previous high ($597.85 million, also from November 2011) by 1.5 percent.

For January through October, U.S. pork exports were 3 percent ahead of last year’s record pace in volume (1.875 million mt) and 6 percent higher in value ($5.24 billion).

Beef exports also posted solid results in October, with export value ($496 million) increasing 10 percent over last year despite a 4 percent decline in volume (101,447 mt). This was consistent with this year’s January-October pattern, which has seen an 11 percent decline in volume (951,886 mt) compared to 2011 while export value ($4.6 billion) remained 2 percent ahead of last year’s record pace.

October pork exports accounted for 23 percent of muscle cut production and 27.4 percent when including variety meat. For January-October, these ratios were 23.6 percent and 27 percent, respectively. This was slightly higher than last year for muscle cuts (22.9 percent) and steady with last year’s percentage of total production exported. On a per-head-of-slaughter basis, October exports equated to $55.95 (compared to $57.93 in October 2011). For January through October, the per-head average increased 3.5 percent from a year ago to $56.14.

Several major pork export markets posted their best performances of the year in October, while others recorded their highest totals in several months. These included:

Mexico, with its best month since January 2012, took 56,282 mt valued at $108.5 million. This pushed the January-October totals to 499,724 mt (+16 percent from the same period last year) valued at $928.5 million (+12 percent).
Exports to Japan were the largest since March 2011, totaling 45,084 mt valued at $188.1 million. The January-October volume total was down 5 percent to 389,446 mt, but value was 4 percent ahead of last year’s record pace at $1.68 billion.

Russia posted its largest total since May 2010, with 13,278 mt valued at $38.9 million. This pushed the January-October results to 86,566 mt (+30 percent) valued at $247.6 million (+20 percent).

Exports to South Korea, below the record-setting totals of 2011 for most of this year, rebounded in October to 14,050 mt valued at just over $37 million – the best performance since March 2012. January-October totals remained well below last year (119,786 mt, -26 percent valued at $340 million, -19 percent), but these results still exceed corresponding 2010 levels by 73 percent. Korea’s domestic pork production was severely impacted by foot-and-mouth disease in 2011, boosting demand for imported pork. Production rebounded strongly in 2012, so a year-over-year decline in U.S. exports was anticipated.

Strong October totals were also recorded in Canada, Oceania, Central and South America and the ASEAN region. Export volume to China/Hong Kong was down 36 percent from last year’s record total, but posted the best performance since April 2012. Through October, exports to this region were still up 10 percent in value at $716.89 million, but volume was 3 percent behind last year at 352,125 mt.

Source: U.S. Meat Export Federation

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Artwork: Pork Cuts Butcher Chart

Saturday, September 1, 2012

2012 Corn Yield Forecast Below Average

Irrigated corn yield potential is predicted to be 2-8% below long-term average, while dryland yield potential in much of the Corn Belt will be moderately to severely reduced, falling 22-67% below normal.

To forecast potential production at 12 sites across the Corn Belt University of Nebraska–Lincoln crop experts used a "Hybrid-Maize model" to estimate end-of-season yield potential based on actual weather up to August 27, and historical long-term weather data to complete the season using data from each of the past 30 years.

Simulations were run for dryland corn in Iowa, Illinois, and South Dakota, and for both irrigated and dryland corn in Nebraska. Simulations were based on the typical planting date, hybrid relative maturity, plant population, and soil properties at each location.

The bottom line is that 2012 irrigated yields will be moderately lower than the long-term averages (2-8% below normal), while dryland corn yield potential in much of the Corn Belt will be moderately to severely reduced (22-67% below normal).

It is important to keep in mind that yields can be even lower at places where both prolonged drought and high temperature stress at pollination have occurred. Also, greater field-scale variability is being observed this year in irrigated fields due to the inability of some irrigation systems to keep up with crop water use demand, problems with pivot irrigation nozzles and uneven watering, and additional stresses from insects and diseases. Such problems can contribute to reduced yields at irrigated sites of more than the 2-8% simulated by the model.

Source: Cropwatch, University of Nebraska–Lincoln

Monday, June 18, 2012

Anticipating June Corn and Soybean Stock Estimates

The USDA will release estimates of June 1 corn and soybean inventories on June 29. The level of those stocks will reveal the rate of consumption during the third quarter of the 2011-12 marketing year and the available supply for consumption during the fourth quarter.

According to University of Illinois agricultural economist Darrel Good, there is likely to be a wide range of expectations for the estimate.

"Based partially on the on-going record strong corn basis, we anticipate that feed and residual use of corn during the third quarter was larger than the estimate for last year's use. If so, June 1 stocks would be near 3.1 billion bushels and use for the year would be expected to exceed the current USDA projection of 4.55 billion

"The June 1 stocks estimates take on a little more importance this year due to the relatively tight year-ending inventories projected for both corn and soybeans, even though more early-harvested corn is expected this year. The surprises in recent corn stocks estimates also add some drama to the upcoming report.

For corn, the estimate of June 1 stocks will reveal the level of feed and residual use during the previous quarter because weekly estimates of exports and domestic ethanol production provide on-going estimates of use in those categories. Based on
cumulative marketing year export inspections through May and Census Bureau export estimates through April, exports during the quarter were likely near 390 million bushels. Based on weekly and monthly estimates of ethanol production, total food and industrial uses of corn during the quarter may have been near 1.64 billion bushels.

For the entire 2011-12 marketing year, the USDA projects feed and residual use at 4.55 billion bushels, 243 million bushels less than use of a year ago.

"Implied use during the first half of the year was 247 million less than that of a year ago, with all of the decline occurring in the first quarter. If the USDA
forecast is correct, use during the last half of the current year should be about
equal to that of last year. Use during the final quarter of the year is expected to be relatively small due to the availability of more than the normal amount of new crop corn in August, and perhaps a little more summer wheat feeding than occurred last year."

So, what about third quarter use?

"On the surface, third quarter feed and residual use might be expected to be near that of last year. Total red meat and poultry production during the second quarter of the calendar year was about 1.5 percent less than during the same quarter last year, egg production was almost unchanged, and milk production was up about 6.5
percent. In addition, the production of distillers grains was about equal to
that of a year ago. However, implied use during the third (and fourth) quarter
last year was extremely small and there is less than complete confidence in the
accuracy of that estimate."

Good said that anticipating the June 1 stocks of soybeans is less difficult than for corn, but has been complicated by the discontinuation of the monthly Census Bureau estimate of the domestic crush. Quarterly crush estimates are now based on monthly estimates of crush by members of the National Oilseed Processors Association (NOPA). The USDA no longer reports domestic crush by quarter, but reports total domestic use that includes feed, seed, and residual use.

"Based on NOPA estimates for the March-May quarter, we estimate total domestic crush at about 425 million bushels, 7.3 percent more than crushed in the same
quarter last year."

Based on cumulative export inspections through May and Census Bureau estimates
through April, soybean exports during the third quarter of the year were near
257 million bushels. Consumption of soybeans for all purposes should have been near 722 million bushels, pointing to June 1 stocks near 650 million bushels.

Source: Darrel Good, 217-333-4716

Monday, April 16, 2012

Meat Reports

New Meat report links added to Terminal Market Reports page.

Avg. Daily U.S. & Canadian Cattle Slaughter
Monthly US Beef Exports
Monthly U.S. Broiler Exports
Monthly US Pork Exports
National Base Hog Price

Monday, April 9, 2012

Pork Profit Outlook Trimmed

With the breeding herd only 0.6 percent larger than a year ago, sow numbers stable, and the market herd reportedly 2 percent larger, the nation's pork producers are largely holding back on expansion even though the industry returned to profitability in the spring of 2011.

According to Purdue University Extension economist Chris Hurt, large financial losses in 2008 and 2009 and uncertainty associated with higher feed prices due to crop damage in South America may be some of the reasons for the reduced profit outlook for 2012.

"The current outlook is for profits of just $4 per head for 2012," Hurt said. "This compares with estimated profits of $14 per head last year. An early look toward 2013 suggests modest continued expansion of pork production with somewhat lower hog prices. Feed costs are expected to moderate to the down side with estimated total costs dropping to around $60 per live hundredweight compared with $63 in 2012.

"One thing is sure," Hurt said. "The U.S. pork industry's costs structure has changed significantly from around $40 during the $2.00-a-bushel corn era to closer to $60 per live hundredweight now."

Hurt said that cash hog prices and lean hog futures were negatively impacted by the media attention and consumer reactions surrounding lean finely textured beef.

"With that issue receiving less attention, hog prices should be set for a spring rally in the next six weeks," he said. "Over the past five years, for example, live hog prices have rallied an average of $11 per hundredweight into mid-May. A similar increase this year is expected and should take prices that are currently in the low $60s to the low $70s over coming weeks."

According to Hurt, prices are expected to average in the higher $60s for both the second and third quarters this year and then drop seasonally to near $60 in the last quarter of 2012 and first quarter of 2013.  Prices for the spring and summer of 2013 are currently expected to be in the mid-$60s.

"Pork supplies in 2012 are expected to rise by about 2 percent, but demand is expected to absorb these modest increases," Hurt said. "Exports will remain an important component of that demand as USDA analysts expect export shipments to remain at record high levels. Domestic demand should remain strong due to population increases near 1 percent and to some consumers selecting pork as an alternative to high priced beef.

Source: Chris Hurt, Purdue University Extension economist, 765-494-4273,

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Artwork: Pork Butcher

Tuesday, March 20, 2012

Corn Yield Prospects

With 2011-12 marketing year-ending stocks of U.S. corn expected to be near pipeline levels, the size of the 2012 crop has substantial price implications. Acreage intentions will be revealed in the USDA's March 30 Prospective Plantings report, but much of the current discussion centers on prospects for the U.S. average corn yield.

Widely differing views of yield prospects for 2012 have emerged. A number of factors may contribute to the diverse views, but four have received a lot of attention. These include (1) the timing of planting, (2) the magnitude and potential change in the trend yield, (3) the expected summer weather conditions, and (4) the location and magnitude of acreage changes.

The mild winter weather and early spring fieldwork suggests that the 2012 crop will be planted in a very timely fashion. There is a general perception that early planting results in a higher U.S. average yield potential, all other things being equal.

Agronomic research in the Corn Belt reveals a slight yield penalty for extremely early planting (March), a wide planting window for maximum or near maximum yield potential (early to mid-April through early May), and a yield penalty for late planting that increases with the lateness of planting.

While there is a clear yield penalty for late planting, there is not a similar yield premium for early planting. The majority of the crop is planted in the optimum window in most years.

To have an effect on U.S. average yield potential, a substantially larger or smaller portion of the crop would have to be planted outside the optimum window. For 2012, a smaller-than-average percentage of the crop planted late might increase yield potential, but that impact would be quite small.

Widely varying opinions about the trend in U.S. average corn yields have emerged in recent years. The long-term increase in average yields is associated with the development and adoption of crop production technology and crop management practices. The nature of those developments has varied over time, but there has been a steady flow of yield-enhancing technology and practices.

For the most part, variation around the trend yield reflects variation in growing season weather, although events such as pest infestations or early occurrences of freezing temperatures can have a yield effect. Confusion about the yield impact of technology and weather can occur if there is a string of years with very favorable or unfavorable weather. In that case, the impact of weather can mistakenly be attributed to technology and give the impression that the underlying trend yield has

That appeared to have happened from 2003 through 2009 when generally favorable weather led some to believe that the underlying trend yield was increasing at a faster rate. The reverse may have occurred recently; poor weather in 2010 and 2011 resulted in low yields following the record yield of 2009. Overall, evidence suggests that the trend in U.S. average corn yields has been linear since

U.S. corn plantings are expected to increase by 2 to 3 million acres in 2012. It has been argued that the increase will occur in lower-yielding areas and therefore prove to be a drag on the U.S. average yield. The most logical expectation is for an average yield near the long-term trend. The trend yield for 2012 is just under 160 bushels per acre. The USDA's early forecast for 2012 is for a yield of 164 bushels.

With harvested acreage projected at 87 million acres, a 4 to 5 bushel difference in the U.S. average corn yield represents a difference of 350 to 435 million bushels in crop size. Prospects of an average yield near 160 bushels would suggest that new-crop corn prices are probably low enough, while prospects for a yield of 164 bushels or higher would likely push prices marginally lower.

Source: Darrel Good, University of Illinois agricultural economist

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