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World Agricultural Supply and Demand Estimates

 

Approved by the World Agricultural Outlook Board – August 10, 2017

WHEAT: Projected 2017/18 U.S. wheat supplies are decreased this month on lower production, down 21 million bushels to 1,739 million. The August NASS production forecasts for durum and other spring wheat indicated a significant decline compared to last year, primarily due to continued severe drought conditions affecting the Northern Plains. Partially offsetting this decrease is higher winter wheat production, on increased yields, with most of the production increase for white wheat. Food use estimates for both 2016/17 and 2017/18 are reduced, based primarily on the August 1, NASS Flour Milling Products report. The other wheat usage categories for 2017/18 are unchanged this month. Projected 2017/18 ending stocks are decreased 5 million bushels to 933 million. The 2017/18 season-average farm price is unchanged at the midpoint of $4.80 per bushel and the projected range remains at $4.40 to $5.20. 

Global 2017/18 wheat supplies increased significantly, primarily on an 8.6-million-ton production increase in the Former Soviet Union (FSU). Russian production is a record 77.5 million tons, surpassing last year’s record by 5.0 million. Winter wheat yields are forecast higher for both Russia and Ukraine, based mainly on harvest results to date. Additionally, spring wheat conditions have remained very favorable for both Russia and Kazakhstan, resulting in higher production forecasts. Canadian wheat production is reduced 1.9 million tons to 26.5 million on the increasing intensification of drought conditions in major production areas of the Prairie Provinces. The increased FSU production more than offsets reduced production forecasts in Canada, EU, and U.S., raising 2017/18 global production by more than 5.0 million tons to 743.2 million. 

Foreign 2017/18 trade is increased on higher exports for Russia, Ukraine, and Kazakhstan more than offsetting reductions in Canada and EU. Projected imports are raised for several countries, led by Indonesia and Nigeria. Total world consumption is projected higher, primarily on greater usage by Russia, Indonesia, and Nigeria. Projected global ending stocks are 4.1 million tons higher this month at 264.7 million, which is a new record. 

COARSE GRAINS: This month’s 2017/18 U.S. corn outlook is for lower supplies, reduced feed and residual use and exports, and a decline in ending stocks. Corn production is forecast at 14.2 billion bushels, down 102 million from the July projection. The season’s first survey-based corn yield forecast, at 169.5 bushels per acre, is 1.2 bushels lower than last month’s trend-based projection. This month’s Crop Production report indicates that South Dakota, Iowa, Minnesota, and Illinois are forecast to have yields below a year ago. The projected yield for Indiana is unchanged relative to last year, while Nebraska and Ohio are forecast higher. Sorghum production is forecast 13 million bushels higher with the forecast yield 2.6 bushels per acre above last month’s projection. 

Projected feed and residual use for 2017/18 is lowered 25 million bushels on a smaller crop. Exports are forecast down 25 million bushels, reflecting the increased competitiveness of supplies in Argentina and Brazil and the low level of new-crop outstanding sales. With supplies falling faster than use, ending stocks are reduced 52 million bushels. The projected range for the season-average corn price received by producers is unchanged at $2.90 to $3.70 per bushel. 

This month’s 2017/18 foreign coarse grain outlook is for virtually unchanged production, lower trade, and greater stocks relative to last month. EU corn and barley production are reduced. Canada corn production is down on lower projected harvested area. Corn and barley production forecasts are raised for Russia based on higher corn area and favorable growing conditions for barley. Ukraine corn production is unchanged as a reduction in projected yield is offset by increased area. For 2016/17, corn production is increased for Brazil based on second crop corn harvest results to date. 

Major global corn grain trade changes for 2017/18 include corn export reductions for the EU, Serbia, and Canada. More than offsetting are increases for Ukraine and Russia. Brazil’s corn exports are raised for 2016/17 based on record-high shipments observed for the local marketing year beginning in March 2017. Corn imports for 2017/18 are raised, mostly reflecting increases for the EU and Iran. Foreign corn ending stocks are raised from last month. Historical revisions are made to corn stock estimates for Ukraine to better reflect statistics published by the government. 

LIVESTOCK, POULTRY, AND DAIRY: The forecast for total meat production in 2017 is raised from last month, as increases in commercial beef and broiler production more than offset declines in pork and turkey production. The increase in beef production reflects relatively large cattle placements in the second quarter which will likely impact fourth quarter cattle slaughter. Second quarter broiler production is raised slightly based on June production data, but no change is made to the outlying quarters. Pork production is reduced on lower expected slaughter in the third quarter. Forecast turkey production is reduced on a slower-than-expected recovery in demand and relatively poor returns to producers. Egg production is increased modestly on recent hatchery data. For 2018, the beef production forecast is raised from the previous month, as expected higher placements in late 2017 and early 2018 result in higher steer and heifer slaughter. Pork, poultry, and egg production forecasts for 2018 are unchanged from the previous month. 

For 2017, beef imports are raised, as higher-than-expected shipments of lean processing beef from Oceania in June are expected to carry into the third quarter. The beef export forecast is lowered from last month on recent trade data and an expected slowdown in global demand for the remainder of 2017. Pork imports are raised slightly on recent trade data. The second quarter pork export forecast is adjusted for June data, but the forecast for the remainder of the year is unchanged. The broiler export forecast is reduced on weak foreign demand. Turkey exports are adjusted to reflect June data. For 2018, the beef import forecast is unchanged from the previous month while exports are lowered slightly. Pork, poultry, and egg trade forecasts are unchanged from the previous month. 

Fed cattle prices are reduced in 2017 and 2018 as current prices have weakened and larger expected supplies of fed cattle are expected to pressure prices. Hog price forecasts are raised for 2017 and 2018 on continued strength in demand. The annual broiler price forecast for 2017 is raised, but the price forecast for 2018 is unchanged. The turkey price forecasts for 2017 and 2018 are lowered on slow recovery in demand. The egg price forecast for 2017 is raised, but no changes are made to the 2018 price forecast. 

The milk production forecasts for 2017 and 2018 are reduced from the previous month as slow growth in milk per cow more than offsets increases in dairy cow numbers. For 2017, fat basis exports are raised from the previous month on higher butter and anhydrous milk fat shipments. Fat basis imports are unchanged. The skim-solid basis export forecast for 2017 is lowered on weaker than expected whey sales. The import forecast is unchanged. For 2018, fat basis exports are raised on stronger shipments of a number of dairy products. Fat basis imports are lowered slightly. Skim-solid basis exports are raised on expected stronger sales of nonfat dry milk (NDM) and other dairy products while imports are unchanged from last month. 

Approved by the Secretary of Agriculture and the Chairman of the World Agricultural Outlook Board, Seth D. Meyer, (202) 720-6030. This report was prepared by the Interagency Commodity Estimates Committees.

APPROVED BY:
SONNY PERDUE
SECRETARY OF AGRICULTURE

 

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