NOTE: This report presents USDA's initial assessment of U.S. and world crop supply and demand prospects and U.S. prices for the 2007/08 season. Also presented are the first calendar-year 2008 projections of U.S. livestock, poultry, 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 30 NASS Prospective Plantings report is used for planted acreage. Methods used to project harvested acreage and yield are noted on each table.
WHEAT: The 2007/08 U.S. wheat outlook is for higher production with increased feed use and exports and a modest growth in ending stocks. Total production is projected at 2.2 billion bushels, up 20 percent from 2006/07. The survey-based forecast of winter wheat production is up 24 percent as area and yield are higher than last year. Spring wheat production is expected to rebound from last year's drought in the Northern Plains despite lower planted area for 2007 as reported in Prospective Plantings. Durum and other spring wheat are projected at 558 million bushels, up 9 percent from 2006/07, based on 10-year harvested-to-planted ratios and trend yields. Total wheat supplies are projected up 7 percent from 2006/07 as lower carryin partly offsets higher expected production. Ending stocks for 2006/07 are reduced 10 million bushels this month reflecting an increase in the 2006/07 export projection.
Total wheat use for 2007/08 is projected 6 percent higher as domestic use and exports are expected to rise year-to-year.
Food use is projected at 930 million bushels, up 5 million from the current year reflecting small, but steady growth in domestic demand for wheat-based products. Feed and residual use is projected at 230 million bushels, up 35 percent from 2006/07 as high corn prices encourage domestic wheat feeding.
Exports are projected at 975 million bushels, up 7 percent from 2006/07 as tight world supplies boost demand for U.S. milling quality wheat. Ending stocks are projected up 57 million bushels. At 469 million bushels, 2007/08 ending stocks would be the second lowest since 1996/97. Relatively tight stocks, strong export demand, and higher corn prices are expected to boost 2007/08 farm prices. The national average farm price for 2007/08 is projected at $4.35 to $4.95 per bushel, well above the 2006/07 forecast of $4.27 per bushel. Due to forward contracting, prices received by farmers in 2007/08 will also reflect strong prices during early 2007 for new-crop delivery.
Global wheat production for 2007/08 is projected 4 percent higher than in 2006/07, but remains below 2004/05 and 2005/06. Higher projected production in Australia, Brazil, FSU-12, India, and the United States is partly offset by lower expected output by Argentina, Canada, and China. EU-27 production is expected to be up just 2 percent from 2006/07 due to dry April weather and freezes that reduced yield prospects, especially in Germany and Poland.
Tight exportable supplies in key export competitors such as Argentina, Australia, Canada, and EU-27 are expected to boost U.S. wheat exports and prices. World wheat feeding is expected to fall 3 percent in 2007/08 with declines in Canada and EU-27 more than offsetting higher wheat feeding in the United States. Wheat imports are expected to increase for Egypt, EU-27, Morocco, and several smaller countries, but decline for Brazil and India with larger crops expected in both countries.
World exports are projected higher with increases for Australia, Russia, Ukraine, and the United States more than offsetting lower exports for Canada and EU-27. Global ending stocks for 2007/08 are projected at 113.4 million tons, down 6 percent from 2006/07, and the lowest since 1981/82.
COARSE GRAINS: The 2007/08 U.S. coarse grains outlook is for sharply higher feed grain production primarily from expanding corn acreage and record output. Sorghum, barley, and oat production are also expected to rise. Despite record feed grain output, U.S. feed grain stocks will rise just 1 percent. The 2007/08 corn crop is projected at 12.5 billion bushels, up 18 percent from 2006/07. Planted area is based on producer intentions reported in Prospective Plantings.
Harvested area is based on derived demand for silage and historical abandonment. The yield is projected at 150.3 bushels per acre reflecting the slower-than-average planting pace reported in Crop Progress. Despite a 1-billion-bushel decline in carryin stocks from 2006/07, total corn supplies are projected at a record 13.4 billion, up 7 percent from the current year.
Total U.S. corn use in 2007/08 expands substantially despite lower feeding and exports as ethanol corn use is expected to rise 58 percent. For the first time, ethanol use is projected above exports at 3.4 billion bushels reflecting continued expansion in ethanol plant capacity and profitability for ethanol producers. Feed and residual use is projected at 5.7 billion bushels, down 3 percent from this year despite expected increases in hog and poultry feeding. Rising supplies of distillers grains and other non-grain feeds resulting from ethanol production are expected to reduce corn feeding.
U.S. corn exports are projected at 1,975 million bushels, 10 percent lower as expanding corn demand for ethanol keeps U.S. prices strong, and record production in South America provides importers with alternatives to U.S. supplies. Despite record production, with sharply higher use and lower carryin, 2007/08 ending stocks are expected to remain relatively flat at 947 million bushels. The season-average price received by farmers is projected at $3.10 to $3.70 per bushel compared with $3.00 to $3.20 per bushel for the current year.
Global 2007/08 coarse grain production is projected at a record 1.1 billion tons, up 8 percent from 2006/07. Rising corn production in the United States accounts for much of this increase; however, corn production is also expected at record levels again in 2007/08 in Argentina and Brazil. Increases in corn production are also expected for Canada, China, FSU-12, India, Mexico, and several other countries. Barley production is expected to increase in Australia. Despite higher world coarse grain output, lower carryin and rising consumption leave world ending stocks down 3 percent from this year's projection.
RICE: U.S. rice production in 2007/08 is projected at 183 million cwt, about 6 percent below 2006/07, and the smallest crop since 1997/98. Planted area is estimated at 2.64 million acres as reported in Prospective Plantings, down 7 percent from 2006, and the lowest area since 1987/88. Average rice yield is projected at a near-record 6,966 pounds per acre, up 98 pounds per acre or about 1 percent from 2006/07.
Imports for 2007/08 are projected at a record 21.0 million cwt, up 2 percent from revised 2006/07.
Domestic and residual use for 2007/08 is projected at a record 124.7 million cwt, about 2 percent above 2006/07. Exports are projected at 93 million cwt, 4 percent below the revised 2006/07 projection. Tighter supplies and higher prices will constrain exports in the new marketing year. The 2006/07 export projection is lowered 5 million cwt to 97 million cwt.
Ending stocks in 2007/08 are projected at 23.7 million cwt, about 37 percent below revised 2006/07. The projected season price range for 2007/08 is $10.25 to $10.75 per cwt, compared to a revised $9.65 to $9.75 per cwt for 2006/07.
Tighter domestic supplies along with expected higher global prices will help to support prices during the year.
Global 2007/08 rice production is projected at a record 420.8 million tons, up 4.3 million from 2006/07. World disappearance (consumption and residual) is projected at a record 424.5 million tons, up 5.5 million tons. Global exports are expected to be about the same as 2006/07 at nearly 30 million tons. Ending stocks are expected to decline for the seventh consecutive year to 72 million tons, 3.7 million below 2006/07, and the lowest since 1983/84. The global stocks-to-use ratio is projected at 16.9 percent, down from 18.1 percent in 2006/07, and the lowest since 1976/77.
The historical Vietnam supply and use balances have been modified beginning with the 1997/98 marketing year to reflect lower stocks and higher disappearance (consumption and residual). Vietnam's rice stocks are revised downward reflecting input from the U.S. Agricultural Affairs Office in Hanoi and market analysis. Ending stocks in Vietnam in 2007/08 are estimated at 1.2 million tons.
OILSEEDS: U.S. oilseed production for 2007/08 is projected at 84.1 million tons, down 13 percent from 2006/07. Lower soybean production, mainly due to sharply lower planted area, accounts for most of the reduction. Cottonseed production is also projected lower, while production of sunflowerseed, canola, and peanuts are each projected to increase from 2006/07 levels. Soybean production is projected at 2.7 billion bushels, down 443 million bushels from the 2005/06 record.
Soybean supplies are projected to reach 3.4 billion bushels, down 8 percent from 2006/07 despite sharply higher beginning stocks. Soybean crush is projected to increase 1 percent to 1.8 billion bushels, reflecting limited growth prospects for domestic soybean meal use and soybean meal exports. In contrast, rapidly expanding production of biodiesel from soybean oil is contributing to a projected 6 percent increase in domestic soybean oil disappearance. Biodiesel production is projected to use 19 percent of total soybean oil production for 2007/08 compared with 13 percent in 2006/07. Soybean exports are projected at 1.1 billion bushels for 2007/08, unchanged from 2006/07. Lower U.S. soybean supplies and sharply higher soybean stocks in South America are expected to limit export growth prospects. Ending stocks for 2007/08 are projected at 320 million bushels, down from a record 610 million bushels for 2006/07.
The U.S. season-average soybean price for 2007/08 is projected at $6.50 to $7.50 per bushel, compared with $6.30 per bushel in 2006/07. U.S. prices are expected to remain firm due to relatively strong corn and soybean oil prices. Soybean meal prices are forecast at $185 to $215 per short ton, compared with $195 per ton for 2006/07. Soybean oil prices are projected at 29.5 to 33.5 cents per pound compared with 29.5 cents per pound for 2006/07.
Global oilseed production for 2007/08 is projected at 399 million tons, down 3.8 million tons from 2006/07. 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 be partly offset by increased foreign production. Total foreign supplies are projected to increase by nearly 3 percent from 2006/07.
Global oilseed ending stocks for 2006/07 are projected at 68.3 million tons, up 0.9 million tons from last month. Most of the increase is due to higher projected soybean stocks in South America resulting from reduced export prospects for Brazil and Argentina. Soybean stocks for Brazil and Argentina are projected at a record 38.4 million tons, up 4.2 million from 2005/06. China soybean imports for 2006/07 are projected at 30 million tons, down 1 million from last month.
SUGAR: Projected U.S. sugar supply for fiscal year 2007/08 of 11.8 million short tons, raw value, is down 476,000 tons from 2006/07, mainly due to lower production and imports.
Production of 8.26 million tons is down 3 percent from 2006/07. Beet sugar production is lower, based on lower area and a return to trend yields. Cane sugar production is higher, as trend yields are an improvement over 2006/07. Imports under the sugar tariff rate quota (TRQ) are put at 1.28 million short tons to reflect U.S. commitments to the World Trade Organization to import a minimum quantity of raw and refined sugar and the Dominican Republic-Central American Free Trade Agreement. The TRQ shortfall is 70,000 tons. The Secretary of Agriculture will establish the actual level of the TRQ at a later date. Imports under the other programs (mainly for re-export) are up slightly from 2006/07. Other non-program imports include 75,000 tons from Mexico. Projected total use of 10.42 million tons is down 100,000 tons and includes 10 million tons delivered for domestic food use, 170,000 tons for other domestic deliveries, and 250,000 tons of sugar exports.
Year-ending stocks are 1.34 million tons.
LIVESTOCK, POULTRY, AND DAIRY: Total U.S. meat production in 2008 is projected to grow 1.4 percent compared with a fractional increase for 2007. A recovery in cattle weights should support higher beef production despite expected smaller fed cattle marketings in 2008. Pork production growth is forecast to be moderate as producers remain cautious about expansion. Producers are expected to balance relatively strong hog prices against concerns about feed costs. Pork supplies will be supplemented by increased imports of hogs from Canada. Broiler production in 2008 is expected to increase as producers respond to higher prices through early 2008. Although turkey production is forecast to increase for a fourth year, the pace of expansion is expected to be slower than in 2007. Egg production is forecast slightly higher.
Meat production forecasts for 2007 are reduced from last month. Beef production is reduced due to lower expected dressed weights and a slower pace of fed cattle marketings.
Pork production is reduced because of slower expected slaughter through the middle of the year. Forecast broiler production is raised as lower-than-expected first quarter slaughter is more than offset by higher forecast production in the second half of the year.
All meat exports are forecast to increase in 2008. Beef exports are expected to continue to recover next year with slow growth in exports to Japan and South Korea. Pork exports are forecast to continue to expand although slower than exhibited in recent years. Broiler and turkey exports continue to increase. Beef imports are forecast to increase slightly in 2008 as domestic cow slaughter declines, but import growth may be limited by tight foreign beef supplies. Pork imports are about unchanged next year.
The beef export forecast for 2007 is nearly unchanged from last month but the pork export forecast is reduced sharply, because of expected weak pork sales to a number of markets.
Broiler exports are lowered slightly because of weaker-than-expected first quarter shipments.
In 2008, livestock and poultry prices are forecast lower as meat supplies are forecast higher. Although lower, cattle and hog prices will remain relatively high, reflecting slow growth in meat production and continued strength in domestic demand and growth in exports. Poultry prices will decline as larger supplies pressure markets.
Cattle and hog price forecasts for 2007 are raised sharply.
Tight supplies of both cattle and hogs have supported prices at higher than expected levels and although prices are expected to ease in the second part of the year, forecast prices are raised in all quarters. Poultry price forecasts are raised as supplies of poultry and turkey meat are relatively tight. Egg price forecasts are raised in all quarters.
Milk production is forecast to increase in 2008 reflecting strong milk prices and expected improved availability of hay. Milk cow numbers are likely to be only fractionally below 2007 and milk per cow growth should increase more rapidly than in 2007. Commercial use of fat and skim solids is expected to remain strong, and commercial stocks will likely tighten. Butter prices are forecast to increase in 2008 but cheese prices are forecast to decline slightly. Continued strength in export demand as well as domestic use of nonfat dry milk (NDM) and whey will help support prices with the annual average price of NDM above 2007. Whey prices are expected to decline modestly from 2007 with increased supplies but will remain above historical prices. In the face of slightly weaker product prices, the Class III price is forecast to decline slightly from 2007 but, supported by continued strength in NDM prices, the Class IV price is expected to increase from 2007. The all milk price is forecast at $17.00 to $18.00 per cwt in 2008.
Forecast milk supply in 2007 is raised from last month as higher milk prices are expected to slow the pace of decline in cow numbers. Price forecasts for all products are raised sharply from last month as demand for all products remains strong and production growth is expected to lag the past several years. Class III and Class IV prices are raised and the all milk price is forecast to average $17.05 to $17.55 per cwt.
COTTON: The first U.S. 2007/08 cotton projections include lower production and higher exports relative to 2006/07, drawing stocks down by nearly one-third. Production is projected at 18.8 million bales, 13 percent below 2006/07.
While the planted area reported in Prospective Plantings was more than 20 percent below last season, the proportion of acres harvested is likely to rise due to favorable soil moisture conditions in the Southwest. The yield per harvested acre is projected at 820 pounds, reflecting the most recent 3-year average by state. Domestic mill use is likely to decline to 4.4 million bales as U.S. mills lose market share to textile imports.
In contrast, exports are projected to rise nearly one third to 17.5 million bales, due to both strong foreign import demand and record U.S. exportable supplies. Ending stocks are projected at 6.4 million bales, or about 29 percent of total disappearance.
The world 2007/08 projections show consumption increases outstripping production, resulting in a stocks decline of 8.5 percent. Production is forecast down slightly from 2006/07 at 116.0 million bales. World consumption is projected at 127.0 million bales, an increase of nearly 4 percent, reflecting continued strong world economic growth and competitive cotton prices relative to polyester.
The China balance sheet shows production stable and consumption rising 8 percent to 54.0 million bales. The China residual factor is raised beginning in 2005/06 to represent the likely existence of supplies not accounted for in the official data, as evidenced by weaker than anticipated import demand during the 2006/07 season. Including a residual of 6.0 million bales for 2007/08, China's imports are forecast at 17.0 million bales. World stocks fall to just under 51 million bales.
For 2006/07, this month's U.S. estimates reflect a marginal end-of-season adjustment in production, slightly lower domestic mill use, and a reduction of 250,000 bales in the export forecast to 13.25 million; while export sales have increased consistent with expectations, the pace of export shipments continues to lag. These adjustments raise ending stocks to 9.5 million bales, the largest since 1966/67.