December 4, 2007

US grain feed and meat exports may hit record US$44.6 billion

The fiscal 2008 forecast for US grain and feed exports is raised to a record US$27.5 billion, up US$3.2 billion from the August estimates of the US Department of Agriculture. The revision is due mainly to higher export volume for coarse grains and wheat and higher wheat unit value.

Wheat exports are raised to 28.7 million tonnes valued at US$7.5 billion, equal to fiscal 2007 due to tighter stocks in major exporting countries such as poor weather in Australia, the EU, Ukraine, and Canada. Average US export unit value for wheat is estimated at US$260 per tonne or 17 percent higher than fiscal 2007.

The export forecast for coarse grains jumps 8 million tonnes to 68 million, due to upward revisions for both corn and sorghum. While US supplies are ample, exportable feed grain supplies from competitors are limited, so competition is muted. The record 2007/08 US corn crop supports both the expansion of exports and domestic ethanol production. Export of US corn are benefiting indirectly from the sharp rise EU feed grain imports. On the other hand, larger US sorghum exports are expected due to strong EU demand for non-GMO feed. Since August, expected corn and sorghum shipments are raised 5.5 million tonnes and 2 million tonnes respectively. Unit values for corn and sorghum are forecast slightly higher than in fiscal 2007.

The fiscal 2008 forecast for oilseeds and products is raised to a record US$16.3 billion, up US$2.6 billion from both the August forecast and the previous year. Soy account for over half this increase with export value raised US$1.7 billion to a record US$10.4 billion. This outlook is due to higher unit values for all oilseeds and products in response to strong global demand and tighter supplies. Export unit value for soy is estimated at US$393 per tonne or 40 percent higher than fiscal 2007. Soy meal and oil unit values are up 22 and 31 percent, respectively. China's demand for soy remains very strong with record imports from all countries forecast, while Europe's biodiesel market increases demand for soy and soy oil. Soy export volume is lowered 1.3 million tonnes from the August forecast and 3.8 million tonnes lower than fiscal 2007. Smaller carryover reflects increased domestic crush, resulting in higher biodiesel exports.

The fiscal 2008 cotton export forecast is raised to a record US$5.8 billion, but volume remains unchanged at 3.6 million tonnes. An increasing share of higher grade cotton exports, coupled with shipments later in the season, raise export unit value. This outlook is supported by the largest US carryover stocks since 1967/68, record exportable surplus and strong foreign demand, especially from China, while global production growth remains limited. World stocks are forecast to decline, while trade should increase, driven primarily by China¡¯s import demand.

Meanwhile, fiscal projections for 2008 exports of livestock, poultry, and dairy products are increased to a record US$17.1 billion, up US$1.5 billion from August. Beef exports are increased about US$140 million to nearly $2.4 billion, mainly due to higher unit value as volume is largely unchanged. Beef export volume holds steady near 545,000 tonnes, with combined sales to Japan, Canada, and Mexico offsetting any declines for Korea resulting from the current suspension of sales. Record-large hog slaughter, a weaker US dollar, and lower hog prices in the US support an upward revision in pork shipments to a record 1.085 million tonnes valued at US$2.7 billion.

The fiscal 2008 export forecast for broiler meat is increased about US$200 million to US$2.4 billion mostly on higher unit values and stronger demand from China. The outlook for animal fat exports is improved with the tighter market and higher prices for vegetable oil. The dairy export forecast is raised about US$250 million to a record US$2.6 billion due to a weaker US dollar and competitive pricing, strong world dairy prices, and robust demand. Export volumes for such key dairy products as nonfat dry milk, cheese, and whey are expected to grow modestly.