Livestock and Poultry
In the June Supply/Demand report, USDA raised the total U.S. red meat and poultry forecast as higher beef and pork production more than offsets lower poultry production. Beef production was raised with higher expected steer and heifer and cow slaughter more than offsetting lower expected carcass weights. Pork production was raised for the second quarter on the current pace of slaughter. The Quarterly Hogs and Pigs report will provide indications of supplies of hogs for slaughter in later quarters on June 29. Broiler and turkey production were reduced on the slower pace of slaughter.
For 2022, beef exports were raised on stronger sales, mostly to markets in Asia, and the strength of demand is expected to continue into next year. Stronger demand for pork and poultry meat in key markets have pushed export projections higher.
The 2022 cattle price forecast was unchanged from last month. Hog, broiler, and egg prices for the second quarter were lowered on observed prices.
Milk production for 2022 was forecast lower than last month on slower growth in milk-per-cow., while 2022 projected exports on a fat basis were unchanged from last month but reduced on a skim-solids basis. The import forecast was raised on strong demand for cheese, butterfat products, and other dairy products.
Price forecasts for cheese, butter, and nonfat dry milk were raised from the previous month on recent price strength and expectations for stronger demand. The whey price forecast was lowered on observed prices. Both Class III and Class IV prices were increased. The all milk price forecast was raised on $26.20 per cwt for 2022.
The monthly supply/demand report showed larger beginning stocks for 22/23 as USDA cut the old-crop export forecast by 50 million bushels. Exports have slowed and producers are not selling their remaining stocks. Slightly higher use estimates were not enough to offset the higher beginning stocks, resulting in a higher ending stocks estimate. USDA says 72% of the crop is in good to excellent condition. It does look like the uptrend that started in 2020 is coming to an end. Both old crop and new crop contracts have broken multiple levels of support. The market has rebounded a bit in recent days, though. For July, support is at $7.20 ½, and resistance is near $8. New crop December is building support at the recent low of $6.82. Failure to hold above that support could lead to a rapid sell-off.
Technical signals for soybeans have been mixed. Weakness in soy oil futures has added pressure. However, strong weekly export sales of 317,200 metric tons of old crop beans and 407,600 metric tons of new crop beans were supportive. The crop is off to a good start despite early delays. USDA says that 70% of the crop is in good to excellent condition. The June supply/demand report showed lower beginning and ending stocks, and the average on farm price forecast was raised to $14.70/bushel.
The June supply/demand report raised beginning stocks for 22/23 by 1 million cwt as exports have been slower than expected in recent weeks. This week, however, exports were much improved at 78,400 metric tons. The all rice season-average price was unchanged at $17.80. The crop is reportedly in good shape, with 79% of Arkansas acres in good to excellent condition. Nationally, 73% of the crop is rated good to excellent condition. September futures have support between $16.45 with resistance at $17.
The cotton crop is mostly in the ground, with Arkansas farmers having seeded 100% of the crop at home, and 90% in the ground nationwide. While the mid-south crop is off to a good start, Texas farmers are facing a severe drought. USDA reports that 82% of the Arkansas crop is in good to excellent condition. USDA says that 46% of the U.S. crop is in good to excellent condition. In Texas, only 25% of the crop is rated good to excellent. The June supply/demand balance sheet was unchanged from last month, except for 5-cent increase in the season-average price, which is now estimated to be 95 cents per pound.