January 29, 2007

 

USDA: Lower 2006-07 corn production; Broiler production up slightly in 2007; Farrowing intentions reflect higher hog feed costs

 

 

The January World Agricultural Supply and Demand Estimates (WASDE) reported a 2006-07 corn crop of 10.535 billion bushels, 210 million bushels lower than the crop reported in December, says the US Department of Agriculture report.

 

Lower production and higher export expectations more than offset slightly smaller domestic use, reducing ending stocks to 752 million bushels.

 

With continued smaller chick placements, the USDA reduced the broiler production estimates for Q4 2006 and Q1 2007.

 

As production has fallen, prices for most broiler products have strengthened. With slower production growth and higher exports expected in 2007, per capita broiler consumption is expected to decline slightly, according to the USDA report.

 

Broiler exports for the second month of the Q4 totalled 548 million pounds, up 22 percent from a year earlier. Broiler shipments surged due to lower leg-quarter prices coupled with a weaker US dollar.

 

Seasonal holiday disruptions and snow storms in the western Central Plains temporarily reduced marketings of fed cattle over the last week of 2006 and first weeks of 2007.

 

Hay stocks in some areas are declining from already-low levels and cow slaughter as a proportion of Jan 1, 2006 cow inventories has remained heavy, due to inadequate winter pastures and depleting hay stocks, says the agency report.

 

Feeder cattle placements for Nov 2006 were also lower than Nov 2005 levels, while marketings were up from year-earlier levels, both counts reflecting heavy placements over the past several months.

 

Exports to South Korea have stalled over bone fragment disputes and purported traces of dioxin. Growth in exports to Japan has been limited by the agreement that US beef exports to Japan be from cattle 20 months of age or younger. Only a limited number of US age-verifiable cattle meet this restriction.

 

The December Quarterly Hogs and Pigs reported H1 2007 farrowing intentions that are 1.4 percent higher than in the same period last year.

 

Based on the farrowing intentions reported in the December Quarterly Hogs and Pigs report, and assuming that higher feed costs will restrain growth in dressed weights to their approximate 2006 levels, the USDA forecasts 2007 US commercial pork production at 21.7 billion pounds, an increase of slightly more than 3 percent compared with 2006.

 

Larger pork supplies and strong pork demand could translate into hog prices ranging between US$42-44 per cwt, for live-equivalent prices of 51-52 percent lean hogs in 2007, 9 percent lower than last year, says the USDA report.

 

Pork exports in 2007 are expected to be more than 5 percent higher than in 2006.

 

For the full USDA report, please click here