Note: This report presents USDA's initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for the 2005/06 season. Also presented are the first calendar-year 2006 projections of U.S. livestock and dairy products. Projections reflect economic analysis, normal weather, trends, and judgment.

Because spring planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative. National Agricultural Statistics Service (NASS) forecasts are used for U.S. winter wheat. For other U.S. crops, the March 31 NASS Prospective Plantings report is used for planted acreage.

Methods used to project harvested acreage and yield are noted on each table.

Starting with this issue, milk and dairy product supply, use, and prices are reported on a calendar-year basis and use is reported on a skim-solids basis as well as on a fat basis (page 31). Price forecasts now include several major dairy products as well as milk (page 32).

WHEAT: The 2005/06 U.S. wheat outlook is for a modest increase in production, a decrease in exports, and a rise in stocks. Total production is up 1 percent from 2004/05 to 2,185 million bushels. The survey-based forecast of winter wheat production is up 6 percent because of reduced abandonment and higher yields. Spring and durum production is projected to decline based on trend yields and the most recent 10-year average of harvested-to-planted ratios. Total wheat supplies are up only 2 percent, reflecting smaller beginning stocks.

Total wheat use is projected to decrease by 5 percent in 2005/06 because of smaller exports and feed and residual use.

Food use is unchanged. Projected exports of 950 million bushels are down 100 million because of larger exportable supplies in the EU-25, Ukraine, and Russia. U.S. ending stocks are up 137 million bushels, and the largest since 2001/02. The 2005/06 price range is $2.55 to $3.05 per bushel, compared with an estimated $3.39 for 2004/05.

The 2005/06 global wheat outlook includes larger carry-in stocks, offsetting smaller crops, resulting in larger supplies.

Global wheat production declines to 615.2 million tons, down 9.7 million. Most of the decrease is due to a drop in EU-25 production with smaller declines projected for Canada, Ukraine, Argentina, and Russia. Canada's crop is down but quality is expected to improve. Larger crops are projected for the United States, China, India, Kazakhstan, and Australia. Despite the drop in global production, stocks are expected to decline just 2.1 million tons.

World wheat imports are projected down just over 1 million tons, partly due to lower imports by China and Pakistan.

However, Turkey and Morocco's imports rise. Smaller coarse grain crops are projected to increase wheat feeding in the EU-25, Russia, and Ukraine. Global wheat stocks decline slightly with the largest reduction in China. The largest increase in stocks is projected for the United States.

COARSE GRAINS: The U.S. outlook for 2005/06 includes decreased feed-grain production but larger supplies, lower domestic use but higher exports, increased ending stocks, and lower prices. The 2005/06 corn crop is projected at 10,985 million bushels, 7 percent below last year's record. The projection is based on Prospective Plantings, the harvested-to-planted relationship for 1999-2004 (omitting 2002), and trend yields adjusted up for the rapid pace of 2005 planting. The smaller corn crop is offset by larger carry-in stocks, leaving total corn supplies up.

Total 2005/06 corn use expands as higher exports offset a decline in domestic use, which is down 40 million bushels largely due to reduced feed and residual use. Feed and residual use declines due to increased use of non-grain feed ingredients and lower residual disappearance because of a return to near-to-trend yields. Food, seed, and industrial use is up due to increased use of corn to produce ethanol. U.S. corn exports are up 150 million bushels because of less competition. With supplies exceeding use, ending stocks of corn are 2,540 million bushels, up 325 million, and the largest since 1987/88. The projected price range for corn is $1.55 to $1.95 for 2005/06, compared with $2.00 to $2.10 for 2004/05. Stocks of grain sorghum and oats are little changed but barley stocks are down 15 million bushels.

The global outlook for 2005/06 is for decreased production, lower use, and a moderate drop in stocks. Smaller coarse grain crops are expected in the United States, the EU-25, and several other countries. Global coarse grain use and imports are down fractionally. U.S. corn exports are expected to expand because of reduced competition from China, Argentina, Brazil, and Ukraine. China's corn stocks are projected to continue to decline in 2005/06 with global coarse grain stocks down 12 million tons. However, coarse grain stocks in the United States are up 8 million tons.

RICE: U.S. rice production in 2005/06 is projected at 225.0 million cwt, 5.8 million cwt below record 2004/05. Planted area is estimated at 3.358 million acres, up 11,000 acres, while harvested area is projected at 3.333 million acres, up 8,000 acres. Rice yield is projected at 6,751 pounds per acre, down 191 pounds per acre or nearly 3 percent from the 2004/05 record. The lower yield is based on trend yields for 1990 through 2004. Additionally, the lower yield reflects that a smaller share of the 2005/06 crop will be comprised of higher-yielding, medium-grain rice produced in California. Total supplies are projected at a record 278.9 million cwt, 4 percent above 2004/05.

Domestic and residual use for 2005/06 is projected at a record 126.2 million cwt, 3 million cwt above 2004/05. Exports are projected at 120 million cwt, 14 million cwt above the revised 2004/05 projection, and the second largest export level on record. Ending stocks of 32.7 million cwt would be 6.7 million cwt below the revised 2004/05 level, including long-grain ending stocks of 23.5 million cwt and combined medium- and short-grain stocks of 8.1 million cwt. U.S. rice prices are expected to continue to be supported by tight global supplies and a firmness in international prices. The projected seasonal-average price range for 2005/06 is $7.20 to $7.50 per cwt compared to a revised $7.20 to $7.40 per cwt for 2004/05.

Global 2005/06 rice production is projected at a record 410.3 million tons, up about 8 million from 2004/05. World consumption is projected at a record 416.6 million tons, up 3.2 million tons. Global exports are expected to be down slightly from 2004/05, and down 2.6 million tons from 2003/04.

Ending stocks are expected to decline for the sixth consecutive year, to 68.5 million tons, 6.3 million below 2004/05, and the lowest since 1982/83. The global stocks-to-use ratio is projected at 16.5 percent, down from 18.1 percent in 2004/05, and the lowest since 1976/77.

OILSEEDS: U.S. oilseed production for 2005/06 is projected at 89.2 million tons, down 8 percent from 2004/05. Soybean production will account for most of the reduction, falling 8 percent from last season's record crop to 2,895 million bushels (78.8 million tons). Other U.S. oilseed production is expected to decline by 0.6 million tons as smaller cottonseed production more than offsets gains for sunflowerseed and canola. Soybean supplies are projected to reach 3,253 million bushels, almost unchanged from 2004/05. Ending stocks for 2005/06 are projected at 290 million bushels, down 65 million as crush and exports expand modestly. Higher soybean crush reflects moderate increases in domestic soybean meal demand and exports. Soybean exports are projected to increase to 1,125 million bushels for 2005/06. Large U.S. soybean supplies combined with lower than expected Brazilian stocks this fall are projected to boost U.S. soybean exports to record levels.

Global oilseed production for 2005/06 is projected at 378 million tons, down 2.3 million from 2004/05. If realized, this will be the first year-to-year decline in global oilseed production since 1995/96. Lower production in the U.S. will more than offset a 5 million ton increase in foreign production.

The U.S. seasonal average soybean price for 2005/06 is projected at $4.70 to $5.70 per bushel, compared with $5.65 per bushel in 2004/05. Soybean meal prices are forecast at $150 to $180 per short ton, compared with $175 per ton for 2004/05.

Soybean oil prices are also projected lower at 20 to 23 cents per pound compared with 22.5 cents per pound for 2004/05.

Global 2004/05 oilseed output is projected at 380.3 million tons, down 2.5 million tons from last month. Brazil's soybean crop is reduced 1 million tons to 53.0 million tons, reflecting the impact of dry weather on yields in the southern growing region.

SUGAR: Projected U.S. sugar supply for fiscal year 2005/06 is 11.1 million short tons, raw value, down from 11.6 million in 2004/05, mainly due to lower beginning stocks. Production of 8.1 million tons is up marginally. Beet sugar production is lower, at 4.37 million tons, while cane sugar is higher at 3.77 million tons. Imports under the sugar tariff rate quota (TRQ) are put at 1.206 million short tons to reflect only the U.S. commitment to the World Trade Organization to import a minimum quantity of raw and refined sugar, minus a shortfall of 50,000 tons. The Secretary will establish the actual level of the TRQ at a later date. Imports under the other programs, mainly for re-export, are 325,000 tons and other non-program imports are 60,000 tons. Projected use totals 10.32 million tons, comprising 9.95 million tons delivered for domestic food use, 165,000 tons for other domestic deliveries, and 200,000 tons of sugar exports. Year-ending stocks are 759,000 tons.

LIVESTOCK, POULTRY, AND DAIRY: NOTE: Due to uncertainties regarding the length of the bans on trade in ruminants and ruminant products related to the discovery of BSE in the United States and Canada, forecasts for 2005 and 2006 assume a continuation of policies currently in place among U.S. trading partners. It is also assumed that the current delay in the implementation of the minimal-risk rule is temporary.

Subsequent forecasts will reflect any announced changes. Total U.S. meat production in 2006 is forecast above 2005 as gains are expected in both red meat and poultry production.

Although beef production likely will be constrained by heifer retention and lower cow numbers, normalized trade in cattle less than 30 months old and higher slaughter weights are expected to raise beef production. Pork production is forecast slightly higher as producers continue their cautious expansion.

Although returns to hog producers have been good and feed prices are expected to remain moderate, increased meat supplies are expected to result in lower hog prices, pressuring returns for hog producers during late 2005 and into 2006. Broiler and turkey production is forecast to rise as moderate feed costs and relatively stable broiler and turkey prices encourage expansion.

Egg production is forecast higher in 2006 as prices in the latter part of 2005 recover.

Red meat and poultry production in 2005 is reduced from last month. The beef production forecast is reduced because slaughter in the second quarter is expected to be lower than previously forecast. Small changes are made to production of other meats.

Meat exports in 2006 are forecast higher than 2005 due to increased pork and poultry shipments. Small gains in 2006 beef exports are currently forecast as major markets are assumed closed due to the BSE discovery in 2004. Meat imports are forecast to increase slightly in 2006.

Import forecasts for 2005 are reduced slightly from last month reflecting weaker-than-expected beef and pork shipments during the first quarter. Beef imports are also reduced slightly due to expected short-term disruptions in imports of beef from Brazil.

The broiler export forecast for 2005 is reduced as first quarter shipments were smaller than previously expected.

Cattle and hog prices in 2006 are forecast to weaken as supplies of meat are expected to increase. Broiler prices are expected to be little changed as increases in broiler production are moderate. Turkey prices are forecast to decline slightly.

Egg prices will increase as production increases modestly.

In 2005, the cattle price forecast is increased to $85 to $89 per cwt and hogs are raised to $48 to $51 per cwt. Tight supplies of cattle and hogs are pushing prices higher. Broiler and turkey prices are unchanged.

Milk production in 2006 is forecast above 2005 as relatively strong milk prices over the past 2 years are expected to help stabilize cow numbers in 2006. Milk per cow is expected to increase at a more rapid rate in 2006. Fat-basis commercial use is expected to increase more rapidly than in 2005, but growth in commercial use of skim solids is expected to be somewhat slower than this year. Milk prices are forecast to fall from the strong prices of 2005 as product prices weaken. With weaker nonfat dry milk prices, positive CCC net removals of nonfat dry milk are forecast for 2006.

The dairy production forecast for 2005 is raised from last month as slower milk per cow growth is more than offset by higher cow numbers. Fat basis commercial use is little changed from last month and fat basis stocks are higher. Commercial nonfat dry milk exports are expected to continue to help absorb skim solid supplies. Larger milk supplies result in lower milk prices than forecast previously.

COTTON: The first U.S. projections for 2005/06 include lower production and domestic mill use, higher exports, and lower ending stocks relative to 2004/05. Production of 19.5 million bales, 16 percent below last season, reflects the most recent three-year national average abandonment rate and yield.

Domestic mill use is projected down 8 percent to 5.8 million bales, as growth in textile imports is likely to reduce domestic mills' market share; this estimate does not include impacts from potential safeguards on China textile imports currently under consideration by the Committee for the Implementation of Textile Agreements. Exports are projected to reach a record 14.5 million bales, supported by strong growth in China's import demand. Ending stocks will fall 11 percent to 6.3 million bales, or 31 percent of total use.

The world 2005/06 projections include sharply lower production and higher consumption and trade, with ending stocks projected to fall about 8 percent. China's planted area is likely to fall about 15 percent from last season due to low prices at harvest; reduced production in China and the United States accounts for about 60 percent of the 12.3-million-bale decline anticipated for the world. World consumption of 111.5 million bales assumes above-average growth for the second consecutive year, based on continued expansion in textile demand and favorable cotton prices relative to polyester. A sharp increase in world trade is driven by anticipated China imports of 15.0 million bales, nearly double the estimated 2004/05 level. World ending stocks are projected at 45.2 million bales.

For 2004/05, the U.S. estimates include slightly higher production that is offset by higher exports. Production reflects revisions reported by NASS, while exports reflect sales and shipments to date. World 2004/05 beginning stocks are raised 1.7 million bales to include historical revisions to China's balance sheet beginning in 1994/95 a full explanation of these adjustments will be posted at 9:00 a.m. on May 12 at: http://www.fas.usda.gov/cotton/circular/2005/05/ChinaReport.pdf.

World 2004/05 production is raised marginally from last month, while a consumption increase of about 900,000 bales includes increases for China, Thailand, and Pakistan. Imports are raised mainly in Thailand and Mexico, partially offset by a decrease for Indonesia. World ending stocks are 1.2 million bales above last month.