Despite a wet spring followed by a hot, dry summer in the Corn Belt’s mid-section, the U.S. corn crop appears undaunted– a testimony to plant breeding and the hardy hybrids available today. On a global basis, corn production is exceeding expectations and soybean harvest is headed for record levels.
Meanwhile, pork production into next year is reported lower to steady from previous year’s levels as noted in the September Hogs and Pigs Report. Combine the two factors, and you have the makings of another profitable year for pork producers in 2002.
USDA’s Economic Research Service’s “World Agricultural Supply and Demand Estimates” for October project 2001/2002 ending corn stocks up 97 million bushels from last month. This is due to larger-than-expected yields, which more than offset lower beginning stocks and expanding use. Forecast production is up 192 million bushels from the September estimate, but the crop is more than 500 million bushels below the 2000/2001 crop.
There remains a lot of uncertainty in this market, because of recent world events, declining economies in many countries and the unknown of how corn exports will fair in all of this. World corn production appears strong. U.S. carryover stocks are down 39 million bushels below last month's forecast, but projected industrial use is also down 20 million bushels. Projected price range for corn is $1.90 to $2.30 per bushel.
U.S. soybean production is forecast at a record 2.907 million bushels, up 73 million bushels from last month based on improved yields. A large South American supply and global uncertainty have reduced U.S. soybean prospects by 10 million bushels this month. However, increased domestic meal use has kept soybean crushers busy, offsetting a decline in soybean meal exports. U.S. season-average soybean prices for 2001/2002 are projected at $3.90 to $4.70 per bushel. That compares with $4.40 to $5.40 per bushel in September, and a preliminary estimate of $4.55 for 2001/2001. Look for soybean meal prices at $145 to $165 per short ton, down $20 dollars on both ends of the range.
Foreign soybean production is forecast at 231 million tons, up 3 million tons from September. Brazil is looking for a record 41.5 million tons, up 3.1 million tons from last year's revised estimate. Argentina's crop is pegged at 27 million tons, up 1 million tons from last month based on increased plantings.
Meat production forecast for 2001 has increased slightly from September as higher broiler production offsets a decline in beef and pork. Keep in mind that pork is driving the projected meat production decline for 2002– beef and broilers are both showing increases. It’s worth noting, however, that the broiler industry is not posting its typical 5 percent year-to-year growth.
USDA’s September Quarterly Hogs and Pigs Report showed that expansion will be much slower than previously expected. That comes in the face of months of hog/corn ratios at, near or exceeding 20:1. Sows farrowing in June/August were 2 percent below 2001 levels, and producers intend to farrow only 1 percent more sows this fall (September/November). The upcoming December/February intentions were 3 percent higher than the previous year, but productivity gains appear to be slowing, which suggests more restrained growth in pig crops than we’ve seen in the past few years. That spells good news for producers well into 2002–provided the numbers are right and they follow through with intentions. Slaughter capacity is still a long-term issue that pork producers need to respect if profitability is to last.
USDA Economic Research Service “World Agricultural Supply and Demand Estimate”