Exports are up. Livestock production is up. And the combination means greater consumption of grains and oilseeds, with the resulting downward push in estimated ending stocks. That was the essence of Tuesday’s USDA Supply and Demand Report, and the farm gate has the details for you to work into your marketing plan.

The market was anticipating a drop in carryover stocks due to the high pressure export market, and the USDA confirmed the expectation, but commodity prices still closed higher with the help of global stock estimates that were also friendly to the market. Here is a summary from the latest Supply and Demand Report.

Wheat. When the marketing year ends next June, US wheat stocks will be at a 60 year low of 280 million bushels and global wheat stocks were bumped up slightly, but they remain at a 30 year low. Domestic use of the old crop is rising marginally, but exports were raised 25 million bushels because of foreign demand and reduced stocks held by competitors. The World Agricultural Outlook Board at USDA raised the estimated cash price by 30¢ per bushel with the price range now $6.20 to $6.60 per bushel. Globally, wheat production estimates were lowered because of smaller expected output in Canada, Argentina, and the European Union. USDA says, “Global exports are lowered 1.0 million tons tightening the gap between projected marketing year exports and imports as world supplies tighten with lower production in major exporting countries.” Slight increases in stocks are expected in the European Union and the Former Soviet Union states.

Corn and other coarse grains. USDA reduced its estimated corn carryover next August by 100 million bushels to 1.797 billion bushels with the help of increased export estimates, which were boosted to 2.45 billion bushels. That would be a record level, and helped the USDA raise its average cash price by 15¢ to a range of $3.35 to $3.95 per bushel. Demand for coarse grains for feed and export caused USDA to also raise season average prices for sorghum by 20¢ and barley by 15¢. Global stocks were raised only slightly as a result of balancing production and exports. Global trade in coarse grains was increased because of increased livestock feeding, and the lack of feed grade wheat that is usually cheaper than corn. Global stocks of coarse grains were lowered, particularly for corn. However, global barley stocks would be at their lowest in 42 years.

Soybeans and other oilseeds. USDA reduced the soybean carryout next August to 185 million bushels, a drop of 25 million from the November estimate. The lower supply is a result of a 20 million bushel hike in exports helped by Chinese demand. The crush was also marginally increased to reflect export demand for meal. Because of the demand, USDA raised estimates for season prices by 75¢ to a range of $9.25 to $10.25 per bushel. Correspondingly, meal prices were raised to a range of $265 to $295 per ton and oil prices were raised to a range of 41¢ to 45¢ per pound. Globally, oilseed production is at a record level thanks to crops in other nations. In addition to low carryout levels for US and world soybeans, global oilseed stocks are expected to be 22% lower than year ago levels.

Livestock and dairy. More livestock in the past year means more meat production, and USDA said Tuesday that red meat and poultry production will increase in the fourth quarter. Fed cattle supplies are tight and packers have raised bids, amidst strong pork slaughter and strong expansion in poultry production. Meat exports, particularly for broilers, have been helped by the lower value of the dollar. Beef exports will be lower for both 2007 and 2008. But for 2008, USDA does not expect production to vary much from the current year. The market will be watching the next Hogs and Pigs report due out on Dec. 27, for indication about 2008 production. Fourth quarter prices for cattle will be slightly higher and pork prices will be slightly lower reflecting supply in each case. Dairy production will be slightly higher because of weaker supplies early in 2007. USDA raised its estimate of the 2007 all milk price by 10¢ from November and is forecasting the 2008 price to range from $18.00 to $18.80 per cwt.

Summary:
Despite increased production for some commodities, both in the US and globally, stocks are generally low because of strong demand or some spot production problems. Corn prices are high because of domestic US demand, but global demand is high because of higher livestock production and the lack of feed wheat. Wheat prices are high because of record low stocks and increased demand. Soybean prices are high because of demand, even with record oilseed production.