News & Media

Market Briefs for June 10, 2021

Red Meat and Poultry 
In the monthly Supply/Demand report, USDA raised their for 2021 red meat and poultry production estimate from last month as higher forecast beef, broiler, and turkey production more than offsets lower pork production. The increase in beef production is small as higher expected cow slaughter is largely offset by lower steer and heifer slaughter. Pork production is lowered as higher expected slaughter is more than offset by lower carcass weights. The broiler production forecast is raised primarily on higher production in the second quarter while turkey production is raised on hatchery data and a more rapid pace of slaughter. Egg production is raised from the previous month on recent hatchery data. The 2022 red meat and poultry production forecast is little changed from last month with only a slight increase in turkey production due to expected improvement in turkey prices.

The beef import forecast is raised for 2021 and 2022 on expected strength in demand for processing beef. Exports for both years are raised on expected firm demand from Asian markets. Pork export forecasts for 2021 and 2022 are raised from the previous month as demand in several markets has strengthened. Broiler and turkey export forecasts for 2021 are raised on recent trade data; no change is made to 2022.

For 2021, cattle, hog, and turkey price forecasts are raised, reflecting current price strength. Hog and turkey prices are also raised for the first quarter of 2022. Broiler and egg price forecasts are reduced for second quarter 2021 based on current prices; no changes are made to prices in the outlying quarters. 

In the June supply/demand report, milk production for 2021 is raised from last month on higher expected cow numbers. The fat basis import forecast is reduced from the previous month on lower expected imports of butterfat containing products, while the skim-solids basis import forecast is unchanged. Exports on both fat and skims-solids bases are raised from last month. Fat basis export increases are underpinned largely by higher shipments of butterfat-containing products and cheese, while skim-solids increases primarily reflect stronger expected cheese, lactose, and whey shipments. Price forecasts for butter, nonfat dry milk (NDM), and whey are raised from the previous month on recent price strength and stronger anticipated demand. The cheese price forecast is lowered from last month on relatively large stocks and current prices. The lower forecast cheese price results in a lower Class III price, but the higher NDM and butter prices support result in a higher Class IV price. The all-milk price forecast is lowered to $18.85 per cwt for 2021.

The 2022 milk production forecast is raised from last month as higher forecast cow numbers for 2021 carry into 2022. Import forecasts are unchanged. The fat basis export forecast is unchanged, but the skim-solids export forecast is increased on expected strength in whey exports. For 2022, butter, NDM, and whey price forecasts are raised from the previous month while the cheese price is unchanged. Thus, Class III and Class IV price forecasts are raised from last month. The all-milk price forecast is raised to $18.75 per cwt for 2022.  

Rice futures have faced renewed selling pressure this week. September has fallen to its lowest level in over 2 months, with the next level of support below $13. In the June 6 conditions report, 77% of the crop in Arkansas was rated good to excellent, but that was before devastating flooding that has resulted in disaster declarations in the state this week. The only changes in the supply/demand report were decreased imports and increased exports for the 20/21 crop resulting in a small adjustment in beginning stocks for 21/22 that carried through the report to decrease ending stocks for 21/22 as well. The on-farm price for the 21/22 crop was pegged at $14.20, unchanged from last month. 

USDA’s old-crop corn carryout estimate in the June supply/demand report was down 150 million bushels from last month at 1.107 billion bushels. That carried through to a lower ending stocks estimate for 21/22 of 1.357 billion bushels. Both were below the average trade estimate and a positive surprise for the market. The estimated on-farm price was unchanged at $5.70/bushel. 72% of the crop is currently rated good to excellent, down 4% from just last week. Forecasts for hot, dry weather for the Corn Belt are providing support, and private estimates are not rating the crop quite as high as USDA, and heavy rains and flooding in the south will certainly have an impact as well. There are still expectations that farmers will plant significantly more corn than USDA reported in the March Prospective Plantings estimates, and that could limit the upside. 

New-crop November set a new high of $14.80 this week before settling into a more side-ways trading pattern. Support at $13.25 3/4 looks solid for now. USDA says 90% of the crop has been planted, well ahead of the 5-year average of 79%. In Arkansas, 86% of the crop is in the ground, ahead of the 5-year average of 81%. 67% of the crop is in good-excellent condition according to the USDA. Recent flooding in the south, however, will likely change those ratings in next week’s report. A hot, dry weather pattern is expected for the next couple of weeks through the Corn Belt and northern plains, and that could develop into a bad situation for farmers quickly if crop conditions deteriorate. USDA increased their soybean carryout estimate to 135 million bushels due to a lower crush projection, but that is still a relatively tight supply situation. 

The U.S. cotton projections for 2021/22 showed a 100,000-bale increase in exports from last month, to 14.8 million bales, on stronger than expected late-season 2020/21 shipments are projected to continue. U.S. 2021/22 production and consumption are unchanged from last month, and with lower beginning stocks and higher exports, ending stocks are now 200,000 bales lower, at 2.9 million. The upland cotton farm price for 2021/22 was unchanged, at 75 cents per pound, while the 2020/21 price was pegged at 67 cents, down a penny from the previous report. The U.S. crop is 71% planted, with Texas, Louisiana, and Oklahoma behind due to heavy rains. Crop conditions will likely continue to deteriorate after this week’s flooding.