Livestock, Poultry, and Dairy
In the May Supply/Demand report, USDA increased the red meat and poultry production estimate for 2021 and forecast higher year-over-year production in 2022. Beef production is expected to decline in 2022, but the decline will be more than offset by higher pork and poultry production. Egg production estimates for 2021 were reduced on lowered hatchery and flock data but is expected to increase in 2022 on stronger expected prices during the second half of 2021. Export estimates for beef, pork and broilers were increased in the report based upon recent trade data and strong growth in a number of key markets.
Milk production for 2022 is forecast higher than 2021 as continued gains in milk per cow more than offset a small reduction in the diary cow herd. The 2021 all milk price is forecast at $18.95 and the 2022 all milk price is forecast at $18.50.
A couple of USDA reports have sent corn sharply lower this week, resulting in the charts taking on a toppy appearance. Farmers have now seeded 67% of expected corn acres. That is up from 46% just last week and from a 5-year average of 52%. The brisk planting pace is alleviating previous concerns about weather-delayed planting. In the monthly Supply/Demand report, 21-22 ending stocks were begged at 1.507 billion bushels, up 250 million bushels from the 20-21 marketing year estimate of 1.275 billion and at the high end of trade expectations. The average on-farm price was pegged at $5.70. Technically, December has support near $5.40, but a downturn could send the market lower to close the gap left between $4.77 ½ and $4.80 ¾.
Soybean futures got a boost from the monthly Supply/Demand report. The 20-21 ending stocks estimate as unchanged at 120 million bushels, which means supplies are still expected to be very tight. 21-22 ending stocks are pegged at 140 million bushels, which was in line with pre-report estimates. The average on-farm price is estimated to be $13.85. USDA says that 42% of the U.S. crop has been seeded, outpacing the 5-year average of 22% as farmers rush to get beans in the ground, even ahead of corn. Arkansas farmers have planted 48% of the crop here, ahead of the 5-year average of 41%. November futures have charted another leg higher and are now trading at contract high levels.
Cotton futures got a bullish surprise in the May Supply/Demand report and reacted accordingly. USDA lowered its 20-21 ending stocks estimate by 600,000 bales to 3.3 million on increased exports. The initial 21-22 carryout estimate came in at 3.1 million bales, mostly on expectations for increased abandonment as West Texas began the crop year in extreme drought. The average on-farm price is pegged at 75 cents. December futures are chopping along mostly sideways below resistance at 87 cents.
USDA says 74% of the crop is in the ground across the country. Arkansas farmers have seeded 77% of intended acres, which is exactly the 5-year average. We are nearing the final planting date for crop insurance and conditions have not been favorable this week with heavy rains and below-average temperatures hindering progress. Analysts are now wondering if Arkansas will even plant a million acres of rice, given not only weather but strong prices for competing crops. In the May Supply/Demand report, 20-21 carryout is pegged at 42.9 million cwt, which starts 21-22 off with a burdensome stocks situation. Significantly reduced production, however, offsets that, and 21-22 ending stocks are pegged at 41 million cwt. The average on-farm price is estimated to be $14.20.