CME: WASDE Report Holds Little Relief for Producers

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US - The latest USDA WASDE report offered little relief for livestock and poultry producers, write Steve Meyer and Len Steiner.

Key corn supply numbers came in below pre-report estimates. More importantly, the report dispelled an expectation that was building in recent weeks that yields would be higher than earlier projected. Some analysts were pegging the yield as high as 127 bushels per acre, about 5 bushels higher than what USDA reported. The October yield was pegged at 122 bu/acre, which in itself implied a 70 million bushel reduction in output. However, USDA increased the number of planted acres and harvested acres (per FSA certified data),leaving output down just 21 million bushels from the September forecast. One of the biggest changes in the report was one which was already known. Carryover stocks are down 193 million bushels, reflecting the latest data from the quarterly grain stocks survey. USDA offset some of the reduction in available supply by lowering its estimate of US corn exports by 100 million bushels. Currently USDA projects US corn exports for 2012/13 at 1.150 billion bushels, 25.5% smaller than a year ago.

USDA did not change its estimated ethanol and feed demand from the September report. Feed use is still expected to be down 9% from the previous year while ethanol use is expected to be down 10%. It remains to be seen if current corn prices are enough to force these kinds of cutbacks in livestock and energy demand for corn. At this point, USDA projects reductions in the production of all three main meat proteins. Beef production 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 2013 (corresponding to the corn marketing year) is projected to be down 3.3% from the previous year. Pork production for all of 2013 is projected at 23.017 billion pounds. This is about 95 million pounds larger than what USDA projected in September but down 1.3% from a year ago. The upward revision came despite reports that producers may be aggressively reducing their breeding herds.

Read more at http://www.thecattlesite.com/news/40181/cme-wasde-report-holds-little-relief-for-producers
 
 
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