February 11, 2004

Upbeat Outlook of US Corn and Wheat Sales

In a USDA report on Tuesday, sales and prices for corn and wheat are likely to increase in line with high demand. The outlook for poultry exports was good as well, however it has not yet taken into consideration the recent Chinese ban on American poultry.

The department's February forecast of stocks of corn from the 2003-04 season was 901 million bushels, down 80 million bushels from the January forecast. Higher demand for domestic use and export sales were cutting into supplies, the crop report said. Domestically, demand by U.S. producers of the corn-based fuel ethanol rose, as did winter demand for feed use, the report said.

Poultry exports would be disrupted in the short term by the outbreak of avian influenza in Delaware. USDA said that the long-term forecast for U.S. poultry exports was good because of the wide-ranging outbreak of a more virulent form of the bird flu in Asia, which has prompted some importers to ban birds from Asian nations hit by the flu.

But the report was prepared before China's announcement on Tuesday that it had joined Japan, Malaysia, Singapore and South Korea, in banning U.S. poultry imports because of the U.S. bird flu. Unlike the U.S. strain, the Asian variety has been linked to at least 19 deaths, in Vietnam and Thailand. China previously banned poultry from those nations.

According to China's Agriculture Ministry, in 2003 the country's total import of poultry meats and products was 709,000 tons - 96 percent of which came from the United States.

In the crops forecast, USDA lowered projected supplies of wheat by 25 million bushels to 534 million bushels due to increased exports. Projected exports of hard and soft red wheat, commonly used in bread, were up by 10 million bushels. The February forecast for exports of white wheat, commonly used in baked goods other than bread, was up by 5 million bushels.

Stocks of soybeans were unchanged in February at 125 million bushels. However, the department said U.S. exports could face tougher competition from record crops in South America.