1. Vol. 10, No. 198 / October 12, 2012
USDA/WASDE Corn Supply/Demand Estimates
Market Comments
2011/12 2012/13 Projection
The latest USDA WASDE report offered little relief USDA USDA USDA Change vs.
for livestock and poultry producers. Key corn supply numbers Estimate Sep Est Oct Est Jul.
came in below pre-report estimates. More importantly, the report million acres
Planted 91.9 96.4 96.9 0.5
dispelled an expectation that was building in recent weeks that
Harvested 84.0 87.4 87.7 0.3
yields would be higher than earlier projected. Some analysts were
bushels
pegging the yield as high as 127 bushels per acre, about 5 bushels Yield 147.2 122.8 122.0 ‐0.8
higher than what USDA reported. The October yield was pegged at million bushels
122 bu/acre, which in itself implied a 70 million bushel reduction in Beginning stocks 1,128 1,181 988 ‐193
output. However, USDA increased the number of planted acres Production 12,358 10,727 10,706 -21
and harvested acres (per FSA certified data), leaving output down Imports 28 75 75 0
just 21 million bushels from the September forecast. One of the Supply, total 13,514 11,983 11,769
biggest changes in the report was one which was already known. Feed and residual 4,562 4,150 4,150 0
Carryover stocks are down 193 million bushels, reflecting the latest Ethanol for fuel 5,000 4,500 4,500 0
data from the quarterly grain stocks survey. USDA offset some of Food, seed, other 1,421 1,350 1,350 0
the reduction in available supply by lowering its estimate of US Domestic use, total 10,983 10,000 10,000 0
corn exports by 100 million bushels. Currently USDA projects US Exports 1,543 1,250 1,150 ‐100
corn exports for 2012/13 at 1.150 billion bushels, 25.5% smaller Use, total 12,526 11,250 11,150 -100
Ending stocks 988 733 619 ‐114
than a year ago.
Stocks/Use 7.9% 6.5% 5.6%
USDA did not change its estimated ethanol and feed de-
mand from the September report. Feed use is still expected to be Year/Year Change in Beef, Pork and Broiler Production
Based on Sep. 2012 WASDE Est., Million Pounds, CWE
down 9% from the previous year while ethanol use is expected to be
Beef Pork Broilers
down 10%. It remains to be seen if current corn prices are
1,500
enough to force these kinds of cutbacks in livestock and y/y change
mil lbs.
energy demand for corn. At this point, USDA projects reductions
in the production of all three main meat proteins. Beef production 1,000
for 2013 is currently pegged at 24.726 billion pounds, 3.7% lower
than a year ago. US beef production for the period Q4 2012 - Q3 500
2013 (corresponding to the corn marketing year) is projected to be
down 3.3% from the previous year. Pork production for all of 2013 0
is projected at 23.017 billion pounds. This is about 95 million
pounds larger than what USDA projected in September but down ‐1.3% ‐0.8%
1.3% from a year ago. The upward revision came despite reports
‐500
that producers may be aggressively reducing their breeding herds.
Indeed, for the period Q4 2012—Q3 2013, USDA pork production is ‐1,000
‐3.7%
down just 0.2% from the previous year. Broiler production is ex-
pected to decline further, down 0.8% from a year ago following a ‐1,500
1.3% reduction in 2012. Still, looking at output projections for Q4 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
2012 - Q3 2013 USDA expects broiler production to decline 1.3%.
Those that hold a more bullish view of the corn market point to ther but that will likely require lower crude oil prices. There is
these kinds of reductions in meat production and conclude that feed talk of higher corn imports, which could end up hitting 100 mil-
demand may not decline as much as what the USDA balance sheet lion bushels but still too small to make a dent. In the end, live-
indicates. And with current corn ending stocks at minimum pipe- stock producers could be squeezed further in order to force bigger
line levels, something will have to give. Ethanol could decline fur- production cutbacks.
The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe/unsubscribe visit www.dailylivestockreport.com.
Disclaimer: The Daily Livestock Report is intended solely for information purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any
commodities or securities whatsoever. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are
attempted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indication of future performance. Futures are a leveraged investment, and because only a percentage of a con-
tract’s value is require to trade, it is possible to lose more than the amount of money initially deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their life-
style. And only a portion of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.
CME Group is the trademark of CME Group, Inc. The Globe logo, Globex® and CME® are trademarks of Chicago Mercantile Exchange, Inc. CBOT® is the trademark of the Board of Trade of the City of Chicago. NYMEX,
New York Mercantile Exchange, and ClearPort are trademarks of New York Mercantile Exchange. Inc. COMEX is a trademark of Commodity Exchange, Inc. Copyright © 2011 CME Group. All rights reserved.