Livestock and Poultry
In the July Supply/Demand report, the forecast for 2021 red meat and poultry production was lowered from last month. The beef forecast was unchanged, but pork, broiler, and turkey forecasts were lowered. The egg production forecast was also lowered on recent production and flock data.
For 2022, the red meat and poultry production forecast was lowered, mostly due to lower pork production. In the quarterly Hogs and Pigs report, USDA indicated producers expect to farrow fewer sows in the second half of 2021 which, coupled with slower forecast growth in pigs per litter, will tighten supplies of market-ready hogs in 2022 relative to last month. USDA will release the Cattle report next week, which will provide an indication of the mid-year inventory and producer intentions for heifer retention. Broiler, turkey, and egg forecasts were unchanged from last month.
Beef import forecasts for 2021 and 2022 were unchanged and the export forecasts were increased for both years on firm demand from Asia. Broiler exports for 2021 were raised, but the 2022 forecast was unchanged.
Cattle price forecasts for 2021 were raised on the strength of recent prices, while no change was made for the 2022 price. The 2021 hog price forecast is reduced on current price weakness, but the price forecast for 2022 was unchanged as tighter supplies are expected to help support prices. The broiler price forecast for 2021 was raised, but the 2022 price forecast was unchanged. Turkey prices forecasts for both years were raised on improving demand, while egg price forecasts were lowered thanks to current price weakness.
The milk production forecast for 2021 was lowered from last month. Slower growth in milk per cow is expected and more than offsets higher forecast cow numbers. However, the 2022 milk production forecast is raised from last month on higher cow numbers. USDA’s Cattle report, to be released next week, will provide a mid-year estimate of the dairy cow inventory and producer intentions regarding retention of heifers for dairy cow replacement.
For 2021, cheese, butter, nonfat dry milk, and whey prices forecasts were lowered on relatively high stocks and weaker than expected demand. Asa result, Class III and Class IV prices were lowered. The 2021 all milk forecast was lowered to $18.30 per cwt. For 2022, price forecasts for cheese and butter were lowered on larger expected stocks and higher production. Class III and Class IV price forecasts were reduced, and the 2022 all milk price forecast was lowered to $18.50 per cwt.
September rice futures have found support at $12.75 and have been working higher. The market will likely find some resistance between $13.40 and $13.60. Export demand remains lackluster amid comfortable world supplies. India’s monsoon season is favorable to a big crop there. In the U.S., 72% of the crop is currently rated good to excellent.
After a strong rally in recent weeks, December cotton futures are now consolidating below resistance near 90 cents. In the July WASDE report, USDA raised its 21-22 cotton carryout estimate by 400,000 bales. It raised the production estimate to 17.8 million bales, as the West Texas crop outlook is favorable. Support has come from weakness in the dollar.
December corn futures have been working higher and have mostly closed a big chart gap left in June. The market charted a bearish outside day on both Friday and Monday, suggesting the upside potential of the market is limited, but there hasn’t been any follow-through selling at this point. The focus of the market is the weather and the yield potential of the crop. USDA has pegged production at a record-setting 151.165 billion bushels.
Soybean futures have continued to trend higher. November charted a bearish outside day on Monday after failing to challenge resistance at $14.23, but there hasn’t been much follow through selling. USDA didn’t make any changes to supply/demand balance sheet in the July report. They did, however, lower the projected on-farm price for 20-21 to $11.05, and for 21-22 to $13.70.