USDA Reports

March Hogs and Pigs Report: Record Litter Rates Offset Smallest Breeding Herd Since 2014

Thu, 26 Mar 2026 23:18:49 GMT

The total hogs and pigs inventory in the March 1 USDA Hogs and Pigs Report was 74.3 million head, up 0.4% last year and a little below analysts’ pre-report estimates.

“These quarterly reports always help us reset our market expectations,” says economist Lee Schulz during a webinar hosted by the National Pork Board. “We have a quarter’s worth of slaughter data, production data and demand data that comes at us, and this gives us a chance to reevaluate those expectations.”

He praised the December Hogs and Pigs Report for being “spot on.”

“USDA only missed by 6,000 head,” Schulz says. “That’s astonishing, given that we slaughter about a half a million head a day ... that margin of error was very small. I think that gives us a little more confidence as we look at this latest report and how those market hog inventories may play out over the next six months.”

He notes numbers in this report are close to a year ago .

“I think one interpretation of the market is that we’re not seeing larger supplies now, but we’re also not seeing shrinking supplies,” Schulz explains. “Relative to pre-report expectations, overall we would see tighter levels than what those pre-report expectations would tell us. Now, how much and for how long our markets react to that is to be debated.”

A Look at the Numbers

The total inventory for all hogs and pigs on March 1 was 74.3 million head, up slightly from a year ago, and down 1% from Dec. 1, 2025.

The market hog inventory on March 1 was 68.4 million, up 1% from 2025 but down 2% from the previous quarter. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 53% of the total U.S. hog inventory on March 1, up 1% from 2025.

The breeding inventory came in at 5.89 million head, down 1% from a year ago, and down slightly from Dec. 1. The December 2025 to February 2026 pig crop, at 33.2 million head, was up 1% from 2025. The number of sows that farrowed during this three-month period was down 1% from 2025 at 2.79 million head, which represents 47% of the breeding herd. The average pigs saved per litter was 11.90 for the December 2025 through February 2026 period, compared to 11.65 last year.

U.S. hog producers intend to farrow 2.86 million sows during the March through May 2026 quarter, up slightly from the actual sows farrowing during the same period in 2025, but down 2% from the same period in 2024. Intended sows farrowing for June through August 2026, at 2.90 million sows, are down 2% from the same period in 2025, and down 3% from the same period in 2024.

“Revisions were very minor from the December report,” Schulz says. “I think that’s really important, because if there’s not a lot of revisions to the report, that means that there’s not a lot of moving parts when we think about how to interpret the report, as well as how the market may react to the report.”

All inventory and pig crop estimates for March 2025 through December 2025 were reviewed using final pig crop, official slaughter, death loss and updated import and export data. The revision made to the December 2025 all hogs and pigs inventory was 0.2%. The net revision made to the September 2025 all hogs and pigs inventory was 1.3%. A net revision of 2.8% was made to the June-August 2025 pig crop.

A Smaller Breeding Herd with Record Productivity

The breeding herd came in 1.5% below March 2025 levels, a larger contraction than analysts expected. Schulz notes this is the smallest March 1 breeding herd since 2014.

“The size of the breeding herd makes sense relative to the slaughter data,” he says. “We’ve seen an annualized slaughter rate of 48.5% that is lower than what the five-year average is, but you did see some notably large slaughter culling rates back in 2020, 2023 and 2024 but it is higher than we’ve seen over the 10-year average. That is indicative that there is still some contraction in the industry.”

Despite a smaller herd, productivity continues to climb and offset some of that contraction. Litter rates jumped 2.1% year over year, setting new records, Schulz says.

“It’s like when you start setting records in a race,” he says. “You don’t set records by a really large gap; usually it’s by milliseconds. What the latest litter rate data would say is, again, we’re jumping back up to setting those records by a wide margin.”

According to the report, producers intend to farrow fewer sows in the coming quarters compared to previous estimates. He says this is likely due to the shrinking breeding herd and market uncertainty.

Is There an Incentive to Add Weight?

Schulz points out that hog slaughter is down 0.9% year to date, according to the latest data. However, he says it’s important to remember this is unadjusted data.

“We need to adjust for slaughter days, which can change interpretation here,” he says. “Yes, hog slaughter is down 0.9% year over year, but we’re not necessarily comparing apples to apples.”

When adjusting for slaughter days, it shows that slaughter is actually up compared to 2025 year to date, depending on the metric that you like to use, Schulz explains. Weekly slaughter would suggest slaughter is up about 0.5% since the beginning of the year.

“I would really encourage you when we make some of these comparisons, when we’re looking at slaughter levels, when we’re helping benchmark the Hogs and Pigs Report, know what you’re comparing,” he says. “I like to use the daily data adjusted for slaughter days, or it’s pretty easy to use the weekly data, and that helps smooth out some of those comparisons year over year.”

Market weights are roughly 2 lb. heavier than 2025 levels. Low feed costs and available finishing capacity provide a strong incentive for producers to add weight, he says.

Profitability Outlook

Cash prices for weaned and feeder pigs are at or near record levels, signaling strong demand for barn space and optimism regarding forward margins, Schulz says.

Costs remain elevated, roughly 31% higher than in 2020, driven by inflationary pressures on non-feed variables.

The forecasted average profit for 2026 is approximately $15 per head. While positive, Schulz emphasizes that producers are still in a “healing” phase for their balance sheets after the heavy losses of 2023 and 2024.

“Favorable margins with some upside are possible, but there’s notable downside potential based on historical levels,” he says. “During the 2016-2026 period, the range in profits was -$57.97 to $57.31. During the 2016-2025 period, 60% of months were profitable and 40% were unprofitable.”

Over the 74 months since 2020, the average per head marketed is $2 per head, according to the most recent actual data in February 2026.

“Balance sheets continue to recover,” Schulz says. “As you think about where these inventories are in the latest Hogs & Pigs Report, the 1.5% decrease in the breeding herd and not a whole lot of growth in the inventories, I think this is a bit indicative we’re still healing some of those balance sheets out there.”

Help Protect the U.S. from African Swine Fever

Thu, 22 Jan 2026 21:45:49 GMT

The USDA’s Animal and Plant Health Inspection Service (APHIS) invites U.S. swine producers, small farms, and pig owners to participate in the “I Protect Pigs” Photo Contest as part of this year’s Protect Our Pigs campaign. The campaign, in its fifth year, reinforces steps all pig owners can take to help protect our nation’s swine industry from deadly animal diseases like African swine fever (ASF). This year’s photo contest gives participants an opportunity to highlight how they help this effort on an individual basis.

ASF has never been detected in the U.S. However, since its 2021 detection in the Dominican Republic and Haiti—the closest in decades—USDA has partnered with industry and states to strengthen safeguards that protect the U.S. swine herd. Biosecurity is the best defense, and we want to see how you put it into practice.

Get your camera ready and be creative! Share photos that highlight your biosecurity efforts. Here are some picture-perfect ideas:

Keep farm equipment and vehicles clean
Wear clean clothes and boots near pigs
Use protective gloves when handling animals

There’s no penalty for cuteness, but we’re really looking for how you keep your pigs safe and healthy. Learn more and submit your photo at: www.aphis.usda.gov/iprotectpigs

Join us on X (formerly Twitter), Facebook, and USDA’s Instagram for updates and contest highlights. Through the Protect Our Pigs campaign, USDA is raising awareness about ASF and providing resources to help producers and veterinarians defend their herds and livelihoods.

Free tools—including videos, downloadable materials, and interactive guides—are available on the Protect Our Pigs website. Be sure to check the website and sign up for our GovDelivery email list so you don’t miss contest details and other important updates.

A Bearish December Hogs and Pigs Report: It’s Been a While, Schulz Says

Tue, 23 Dec 2025 22:54:47 GMT

Were strong profit margins – past, present and projected – enough to encourage producers to retain more gilts? According to the Dec. 1 USDA Hogs and Pigs Report , it appears not. The breeding inventory came in at 5.95 million head, down 1% from a year ago.

“This is the smallest U.S. Dec 1. breeding herd since 2014,” economist Lee Schulz said during a webinar hosted by the National Pork Board. “Farrowing intentions are also above year-ago levels at 2.89 million sows for the December 2025 through February 2026 quarter. The outlook is favorable so the incentive is there to farrow more sows, but there is a limit given the size of the breeding herd.”

The breeding inventory was in line with pre-report expectations, Schulz says. However, some believed the breeding herd could have seen some modest expansion and been larger than a year ago.

A Report Full of Surprises
“Pre-report estimates are important because they generally reflect the aggregate opinion, or forecast, of what data will be in the report,” says Schulz, chief economist at Ever.Ag. “More importantly, these general expectations are often ‘bid into’ market prices before the report’s release. Assuming markets are efficient, the market price for hogs reflects this pre-report information even before the report is available. Therefore, much of the market reaction following the report often is relative to the market’s pre-report estimates, not necessarily the actual increases or decreases in hog supply in the report.”

Anything plus or minus more than one percentage point from the average of pre-report expectations is commonly considered a surprise, Schulz adds. For each report, there are often a couple of USDA estimates that are a surprise under this criterion.

“There were quite a few surprises in this report if you compare to the pre-report estimates,” he says. “In fact, nine of the key numbers were a surprise.”

The largest change in inventory from a year ago was in the 180 lb. and over market hog category, with a 3% increase compared to Dec. 1, 2025. On average, analysts expected the heaviest weight group inventory to be up 0.5%. That’s a difference of over two percentage points.

A Look at the Numbers
The total inventory for all hogs and pigs on Dec. 1 was 75.5 million head, up 1% from a year ago, and up slightly from Sept. 1.

The market hog inventory on Dec. 1 was 69.6 million, which was up 1% from 2024 and up slightly from the previous quarter. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 52% of the total U.S. hog inventory on Dec. 1, up 2% from 2024.

The breeding inventory came in at 5.95 million head, down 1% from a year ago, but up slightly from Sept. 1. The September through November 2025 pig crop, at 35.0 million head, was up slightly from 2024. The number of sows that farrowed during this three-month period was up slightly from 2024 at 2.93 million head, which represents 49% of the breeding herd. The average pigs saved per litter was 11.93 for the September through November period, compared to 11.92 last year.

U.S. hog producers intend to farrow 2.89 million sows during the December 2025 through February 2026 quarter, up 2% from the actual sows farrowing during the same period in 2024, but down 1% from the same period in 2023. Intended sows farrowing for March through May 2026, at 2.91 million sows, are up 2% from the same period in 2024, but down slightly from the same period in 2023.

All inventory and pig crop estimates for December 2023 through September 2025 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. The revision made to the September 2025 all hogs and pigs inventory was 1.1%. A revision of 2.5% was made to the June-August 2025 pig crop. The net revision made to the June 2025 all hogs and pigs inventory was 1.9%. A net revision of 1.9% was made to the March through May 2025 pig crop.

Records Aren’t Easy to Break
The last 17 quarterly U.S. pigs saved per litter estimates have been records for their respective quarters, notes Schulz. The September-November 2025 pigs saved per litter was no exception, coming in slightly higher than a year ago at 11.93.

“While analysts expected another year-over-year litter rate gain and a record for the September through November quarter, they expected a lower rate of increase than has been realized over the last couple of years,” Schulz says. “On average, analysts expected the September through November 2025 litter rate up 0.8% compared to the same quarter in 2024.”

Why the slower increase? If nothing else, Schulz says comparisons are being made to a high base period a year prior.

“Normally when setting a new record, in anything, it’s by a razor-thin margin,” Schulz says. “Records are highly context-dependent. Setting a new one isn’t just about talent or hard work. It also often takes a syzygy of good circumstances and good luck. How often do all the right variables align? For the number of pigs saved per litter, it appears favorable conditions are aligning more often than not and that is expected to continue.”

Although the pigs per litter estimate is not a surprise to analysts, it was a lower growth than analysts expected.

“This is still a record – but barely. This is the first real modest productivity increase that we’ve seen in a while,” Schulz says. “That begs the question, is that related to disease incidence and impact on pre-wean mortality?”

Schulz believes the genetic potential exists to increase pigs saved per litter, but many factors have to align to push these records higher.

Where Does Trade Go From Here?
As the year comes to a close, it will be interesting to see how the market responds to this report with more supply than originally assumed in the Sept. 1 report.

“This is a bearish report, and we haven’t had one of those for a while,” Schulz says. “It’s up to the market to decide how bearish they think it is and where trade goes from here. Some of this larger supply was already priced into the market.”

Looking forward, he projects a moderately profitable 2026, with losses not projected until late in the year. He says there are favorable margins with some upside possible, but notable downside potential based on historical levels.

“There is opportunity,” Schulz says. “Allow for some upside participation. Use the tools available to help manage risk.”

September 2025 Hogs and Pigs Report: Here's What You Need to Know

Thu, 25 Sep 2025 21:55:59 GMT

The surprise in Thursday’s USDA Hogs and Pigs Report is the breeding herd failed to increase. At 5.93 million head, the drop is despite robust producer margins, prospects of ample feed supplies and some of the lowest feed costs in more than a decade, when adjusted for inflation, according to Altin Kalo, chief economist at Steiner Consulting Group.

Analysts thought the herd would be a little more than 6 million head, Kalo says, which would still be 0.5% lower than last year, but it would imply an increase of around 35,000 head from the June breeding herd. Instead, the breeding herd as of Sept. 1 was 15,000 head lower versus June (and USDA even revised and lowered the June figure).

Rather than keeping a few more gilts, it appears retention was less than the sows producers culled.

“Clearly, it was a surprise that goes counter to expectations for more pork supply due to lower feed costs,” Kalo says.

When Chris Ford, vice president corporate swine lender with Farm Credit, was reviewing the September numbers, the first thing that jumped out at him was the under 50 lb. and 50 to 119 lb. weight groups. He expected those two categories, which came in at 21,662 head and 19,667 head, respectively, to be much higher this September versus a year ago at 22,194 and 20,132, respectively.

“We have seen and heard of improved health across the industry, which is fairly typical for summer months,” he says. “I think this is the biggest takeaway because those are the animals that will be driving the supply chains in quarter four of 2025 and quarter one of 2026.”

Margins are solid today, and considering the industry is on the cusp of new crop corn, Ford expects to see an impact from improved average daily gain and increased supply.

“Harvest season is upon us and we all understand the importance of the corn and meal prices and how quickly that impacts profitability, or lack thereof, within the pork industry,” Ford says. “USDA has given us their estimates for what this crop will be, but until the grain is in the bin we aren’t going to know the true impacts of cost of production into 2026.”

Revisions Made to Previous Reports

What was not a surprise, Kalo explains is that USDA went back and revised figures previously reported.

“The number of hogs that came to market this past spring and summer was far smaller than what the previous inventory surveys indicated,” he says. “Thus, June 1 hog inventory was revised down by 1.42 million head, a 1.9% downward revision. March 1 inventory was also revised lower by 750,000 head.”

Kalo says additional takeaways from the report include:

This winter and next spring, the pork supply will be lower than a year ago.
The number of pigs produced in June, July and August was 2.6% lower than a year ago. “The smaller breeding herd and a lower farrowing rate than last year could not overcome previous productivity gains,” he says.
The decline in the June to August pig crop will impact slaughter during December, January and February.
The smaller breeding herd on Sept. 1 also means there will be fewer farrowings during this period. “Last year pigs per litter in September to November was up 2.2% year or year, far above trend,” Kalo explains. “This year pigs per litter could be flat to only slightly higher. The result implied by the survey is that slaughter next spring may be down year over year, which again runs counter to expectations.”

Profit Picture for 2026

As Ford visits with producers and travels the country, he says nobody has forgot where the industry was fewer than 24 months ago.

“Quarter four of 2022 to quarter four of 2024 was undoubtedly the most difficult period in the industry for nearly 20 years,” he says. “There are many components that drive volatility — health/production, feed costs, trade/tariffs and continued rising wages and other costs. We as an industry need to remain vigilant to laying off as much of that risk as possible but continue to find areas to participate in the volatility.

“There is near-record high participation from outside funds in the market and paying close attention to the managed money and how long will they stay long will be critical,” Ford adds.

On the heels of the September Hogs and Pigs Report, there are other factors impacting the pork industry. For example, exports have seen a dip with continued tariff uncertainty. However, Ford says trade partners in Mexico and Latin America have been strong partners, so keeping an eye on exports remains key as one-third of U.S. pork products are exported.

The tight supplies and historically low cold storage levels are continuing to support current price levels, but he adds seasonality, increased supplies, improved efficiencies and uncertainty in trade could apply pressure at the end of 2025 and into 2026.

The good news, Kalo summarizes: “With no growth in supply expected, hog prices should remain well supported. Combined with lower feed costs, this sets the stage for another profitable year in 2026.”

He also points out USDA reports have produced wide swings in expectations.

“Producers may want to take advantage of the potential rally that may follow the bullish results from this report and manage price risk for next winter and spring,” he suggests.

If your comfortable with their health status and pig flow, Ford encourages revisiting your risk management plan and consider protecting the bottom side.

“Utilizing the risk management tools that we have at our disposal will help protect these margins going into these months that traditionally aren’t moments of profit,” he says. “Every operation is different, and everyone is different in their risk tolerance, but at least knowing the opportunities currently being presented is critical to sustainability and leveling out the highs and lows.”

Read the full report here.

USDA Set To Downsize With Reorganization Plan

Thu, 24 Jul 2025 18:10:23 GMT

Agriculture Secretary Brooke Rollins announced July 24 that the USDA would reorganize, representing consolidation and elimination of programs and personnel.

Dubbed the “ USDA Department Reorganization Plan ,” the move will include moving more than half of the agency’s Washington, D.C.-area staff to five different hubs across the country, “refocusing its core operations” on USDA’s founding mission, and reducing overall staff. According to the announcement and plan document, the move is intended to “improve the internal management” of the department.

“Here at USDA, we are refocusing our core operations to better align with President Lincoln’s founding mission of supporting American farming, ranching, and forestry, as well as serving American taxpayers,” Rollins wrote Thursday morning on social platform X.

Here @USDA, we are refocusing our core operations to better align with President Lincoln’s founding mission of supporting American farming, ranching, and forestry, as well as serving American taxpayers.
— Secretary Brooke Rollins (@SecRollins) July 24, 2025

The reorganization is built around what the agency calls four pillars:

Ensure the size of USDA’s workforce aligns with financial resources and priorities.
Bring USDA closer to its customers by relocated resources outside of the national capital region.
Eliminate management layers and bureaucracy.
Consolidate support functions.

USDA Workforce Costs and Location Changes

Highlighting the high cost of living in the nation’s capital — where average monthly rent in January 2024 was $2,475, according to real estate and rental search site RedFin — USDA’s reorg seeks to move roughly 2,600 of its current 4,600 D.C.-area personnel to five “hub locations” across the country.

According to the plan document, these locations were selected considering cost of living and “existing concentrations of USDA employees.”

These hubs (and their January 2024 average rent levels) are:

Salt Lake City, Utah ($1,627)
Fort Collins, Colo. ($1,607)
Raleigh, N.C. ($1,371)
Indianapolis, Ind. ($1,265)
Kansas City, Mo. ($1,140)

“In addition to these five hubs, USDA will maintain two additional core administrative support locations: Albuquerque, New Mexico and Minneapolis, Minnesota,” the reorg plan reads. “USDA will continue to maintain critical service centers and laboratories including agency service centers in St. Louis, Missouri; Lincoln, Nebraska; and Missoula, Montana.”

The department says it aims to have no more than 2,000 staff members remain in the National Capital Region.

“The details are still to be determined,” adds Callie Eideberg, a Principal with The Vogel Group. “It will be helpful when we know the pace and cadence of these changes, as that will determine how smooth or chaotic this move will be.”

She agrees that the reorganization could benefit those employees looking for a lower cost of living, but the distance between hubs will make for its own workforce management issues.

“Different administrations have tried, in smaller ways, to move the federal workforce to other regions and they’ve been met with these management obstacles,” adds Eideberg. “Stakeholders, as well, will now need to travel to five different locations around the country to have their conversations with USDA instead of ‘one stop shopping’ in Washington.”

The location changes are not limited to personnel only, however. The physical buildings USDA will be occupying in the capital area will also change. The reorg plan cited costs associated with maintaining and repairing some of the overly large buildings as part of the motivation.

Announced building changes include:

The South Building and Braddock Place facilities will be vacated.
Beltsville Agricultural Research Center will be vacated over several years “to avoid disruption of critical USDA research activities.”
George Washington Carver Center, currently being used for area USDA personnel during the reorg, will be sold or transferred eventually.

The department said the Whitten Building will remain the USDA headquarters, and both the Yates Building and the National Agricultural Library “will be retained for use.”

Consolidation and Elimination

Though the reorg document stressed that “USDA is not conducting a large-scale workforce reduction” as part of the change, it also highlighted that the move is part of its ongoing process of reducing its workforce.

“Much of this reduction was through voluntary retirements and the Deferred Retirement Program (DRP), a completely voluntary tool. As of today, 15,364 individuals voluntarily elected deferred resignation,” the reorg document read.

According to the agency’s own site — both currently and during the previous administration — the USDA has “nearly 100,000 employees.” This makes the stated number of USDA employees who have taken deferred resignation slightly more than 15% of the agency’s overall staff.

Programs within USDA will also be consolidated or eliminated. Those programs and efforts highlighted include:

The Agricultural Research Service (ARS) will eliminate its area offices, with “residual functions” to be preformed by its Office of National Programs.
The National Agricultural Statistics Service (NASS) will consolidate its current 12 regions into five “over a multi-year period.”
The Food and Nutrition Service will reduce its current seven regions into five, aligned with the five hubs, in the next two years.
The Forest Service will “phase out” its nine regional offices in the coming year. It will maintain a reduced state office in Juneau, Alaska, and consolidate its stand-alone research stations into one in Fort Collins, Colo. It will keep its Fire Sciences Lab and Forest Products Lab.
Most “support functions” previously done within the USDA — such as civil rights functions, Freedom of Information Act responses, IT and HR, legislative and tribal relations, and others — will be moved into other agencies of the federal government in an effort “to reduce duplication” within the department.

The reorg document also notes that it will consolidate grants and financial assistance: “This consolidation will include, where feasible, the transfer of grant making and administration functions from USDA offices and agencies that currently have limited capacity to perform such duties to other offices and agencies.”

Most extension personnel in hub-area institutions whom The Packer reached out to about the potential impacts of the reorg either had not responded as of press time or reported that it is too early to provide any meaningful insight.

The News Service from Colorado State University in Fort Collins said, “CSU is continually tracking changes at the federal level and assessing impact to our work.”

Rollins: Impact in Her Own Words

Midday July 24, Rollins spoke to AgriTalk ‘s Chip Flory to talk about the announcement.

“This is just another step in the implementation of getting the government out of Washington, D.C., and getting it to the people,” she says, adding that the move “will save a lot of money.”

When asked if the existing D.C. staff will make the move to the five hubs or if new personnel will need to be hired in those areas, Rollins says she thinks it will be “half and half.”

“For those that do want to continue leading in the Forest Service or working hard on food stamps or, of course, our key work supporting farmers and ranchers, they’re going to have an amazing opportunity to move to, frankly, a better part of the country,” she says. “Out of Washington, D.C., better quality of life, better cost of living and continue to serve the great people of our country. I think that’s a win-win.”

For those who don’t want to move, she says “there are plenty of opportunities in the private sector.”

Rollins adds that the transition is not going to be easy, but the department is ready to do hard work that will streamline its operations and bring services closer to the communities being served. She gave the example of the Forest Service.

“A lot of people don’t know that the USDA manages all of our national forests. We’ve got 11,000 full-time firefighters on the USDA payroll that are constantly battling our fires and are the frontliners,” she says. “The fact that that leadership is in Washington, D.C., but most of the fires are in the West — that doesn’t make any sense. Why don’t we have the leadership of the Forest Service closer to the fires and the firefighters that they serve?”

5 Takeaways from June 2025 Hogs and Pigs Report

Fri, 27 Jun 2025 00:32:25 GMT

With the release of the latest USDA’s Hogs and Pigs Report , Lee Schulz, chief economist with Ever.Ag, says it could be August before getting back to breakeven.

“I think there’s still been a lot of financial healing going on in the industry because of the losses that we’ve seen in ’23 and ’24, and the situation has changed rather quickly,” Schulz says. “If you go back to about two months ago, late April, we’ve seen forecasts that really got us close to breakeven, then we would hover around that breakeven from a cumulative standpoint.”

The industry is starting to see profits from a cumulative standpoint similar to levels in August 2022.

“That really shows you that our situation has changed quite a bit, but we’re still kind of back to maybe those levels in 2022 and so why we haven’t seen many changes in the inventories in this last couple of reports, it’s really indicative of what we’ve seen from a financial situation.”

He didn’t see many surprises with the report compared to pre-report expectations.

“Our breeding herd is under 6 million head — 28,000 head fewer than this time last year, or half a percent smaller than than this last time last year, so even if you’re culling at a same rate, you’re calling from a lower base, and so we would expect a little bit lower from a sow slaughter standpoint,” Schulz says.

According to the WASDE report from June 12, the forecasts for 2025 production was for .7% increase, which Schulz says is reflective of the increases in litter rates, slight increases in carcass weights, given a slightly larger production.

“I think this level of production is pretty consistent with the latest Hog and Pigs Report, and we shouldn’t see any major revisions to this in the next was the release in July,” he adds.

63% of producers responded to the survey, which reflects data as of June 1, 2025.

Here are additional key takeaways from Schulz from the 2025 Q2 USDA Quarterly Hogs and Pigs Report discussion hosted by the National Pork Board:

1. Market Fundamentals

Slaughter is down only about 0.4% when adjusted for calendar differences (last year two more dates than in 2025 included in report)
Hog weights are stable, only up about half a pound year-to-date
Feeder pig prices suggest available finishing space

2. Disease Impact

Pathogen detection shows several major pork-producing states above baseline
Despite disease challenges, national aggregate numbers don’t show large negative impacts
Individual producers and systems may still be experiencing production challenges

3. Financial Outlook

2025 profit estimates average $23 per head (range from $3 loss to $58 profit)
2026 profit forecast is $8 per head (range
Producers are returning to profitability after significant losses in 2023-2024
Costs are still over 30% higher than in 2020

4. Production Forecasts

2025 production expected to increase 0.7%
2026 production projected to increase 1.3%
Continued productivity improvements, producing more pigs with a smaller breeding herd

5. Market Prices

Expectations of stronger prices in 2025
Slightly softer prices anticipated in 2026

“In 2025 there’s expectation of stronger prices overall,” Schulz says. “From a composite standpoint, about 8% higher prices in 2025 compared to 2024. This would average about $91/cwt.”

Your next read: New Products and Acquisitions: dsm-firmenich, Hog Slat, Novus International, TechMix

Don't Count on Pork Supply Growth in 2025, Kalo Says

Fri, 28 Mar 2025 18:03:13 GMT

The bullish March 1 USDA Hogs and Pigs Report is a reminder of how savvy U.S. pork producers are, says Altin Kalo, chief economist at Steiner Consulting Group.

“We shouldn’t count on any significant supply growth this summer, and any supply growth that may come in the fall is going to be very modest at best,” Kalo says. “This is good news for producers. The last thing you want is to have headwinds in terms of exports along with a slowdown in sales to key markets like Mexico, while at the same time you’ve got a lot of hogs on the ground you’re going to have to push through.”

The expected reduction might be offset somewhat by higher carcass weights but the report points to a notable downward revision in USDA pork supply estimates, he concludes.

“You can look at the report itself and construe it as bullish,” Kalo says. “I think it is because we’re basically looking at supplies for the summer roughly what they were last year. In terms of slaughter, they might be even a little bit lower. If you add the normal increase you have in weights, you’re looking at a modest increase versus what USDA had in their latest estimates in March that had production up 2% to 3% year over year.”

He believes the market itself was more realistic as to what supply to expect this summer.

“There was a lot of talk during the winter about the impact PRRS was having on producers and what that implied for supplies in the summer,” Kalo adds. “I think some of that was already in the market. It just got muddied a bit because of all the stock with tariffs and the risk that that presents.”

Pig crop during December Through February: 5-Year Average compared to 2023, 2024 and 2025

(Steiner Consulting Group)

A Look at the Numbers
The total inventory for all hogs and pigs on March 1 was 74.5 million head, down slightly from a year ago, and down 1% from Dec. 1. The market hog inventory on March 1 was 68.5 million, down slightly from 2024 and down 1% from the previous quarter. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 52% of the total U.S. hog inventory on March 1, unchanged from 2024.

The breeding inventory came in at 5.98 million head, down slightly from a year ago, and down 1% from March 1. The December 2024 through February 2025 pig crop, at 33.7 million head, was down slightly from 2024. The number of sows that farrowed during this three-month period was down 1% from 2024 at 2.89 million head, which represents 48% of the breeding herd. The average pigs saved per litter was 11.65 for the December through February period, compared to 11.53 last year.

U.S. hog producers intend to farrow 2.91 million sows during the March through May 2025 quarter, down slightly from the actual sows farrowing during the same period in 2024, and down 1% from the same period in 2023. Intended sows farrowing for June through August 2025, at 2.96 million sows, are down 1% from the same period in 2024, and down 2% from the same period in 2023.

“The decline in the breeding herd suggests producers are far from retaining any hogs,” Kalo says. “Implied gilt retention during the December to February period seen down 7.6% from previous year and ratio to sow/boar slaughter seen slightly lower than a year ago.”

“Trade remains a major factor going forward, however, and futures will continue to focus on the potential for retaliatory tariffs in Mexico, Canada and other countries should U.S. administration decide to go ahead with planned tariffs,” Kalo adds.

Revisions and More Revisions
Admittedly, this report came in much different than analysts’ expectations. All numbers were outside analyst estimates, Kalo says.

“You have the analysts on one hand coming up with their estimates, and usually when they do their estimates, they use what the USDA survey said the previous quarter,” Kalo says. “That’s what drives a lot of the estimates. When the USDA makes revisions like they did, they do so because of the numbers that came to market. They saw what the survey said in September, and then what December ended up being, overly optimistic in terms of overall supplies, and so that’s why you had a miss.”

The revision made to the December 2024 all hogs and pigs inventory was 1.2%. A revision of 1.4% was made to the September 2024 to November 2024 pig crop. The net revision made to the September 2024 all hogs and pigs inventory was 1.3%. A net revision of 0.1% was made to the June to August 2024 pig crop. The net revision made to the June 2024 all hogs and pigs inventory was 0.5%. A net revision of 0.8% was made to the March to May 2024 pig crop.

Questions Remain
For Kalo, one of the questions on his mind is what will the pigs per litter number be during March through May 2025? The decline that happened to December through February was more significant that the industry has seen in the previous couple of years.

Quarterly Pigs Per Litter: 2015-2019 Trend +Actual for 2020-2024 + Estimates Next Two Quarters

(Steiner Consulting Group)

“If pigs per litter during September to November were estimated at 11.92, 2.3% above previous year and well above trend, during the December to February quarter pigs per litter were 11.65, just 1.1% higher than a year ago and below the pre-COVID trend,” Kalo says. “Pigs per litter did not increase as much as expected and was not enough to offset the reduction in farrowings.”

He says the trend would suggest the number to be 11.79, a 2% increase from a year ago. However, if a similar departure from trend occurs like the December to February quarter, then spring pigs per litter would be around 11.7, a 1.2% increase year over year.

“Pork producers are very savvy. They’re not going to go out there and make the investments given all the uncertainty that exists. They also aren’t going to do it simply because the corn price is a little bit lower or they ended up with a few months of good profits after sustaining significant losses in 2023 and early 2024,” Kalo says. " Decision making now is very different than it was 10 to 20 years ago, when you had more smaller producers out there making independent decisions.”

Read the full report here.

December Hogs and Pigs Report Shows Relative Restraint in Pork Industry

Tue, 24 Dec 2024 02:39:00 GMT

Although there were no earth-shattering surprises in the Dec. 1 USDA Hogs and Pigs Report , economist Lee Schulz says there are several important takeaways for pork producers as the year comes to a close.

“I think it shows relative restraint,” says Schulz, chief economist at Ever.Ag. “We’re not seeing any indication of expansion as you look at where the breeding herd is at, where sow farrowing numbers are at and where farrowing intentions are at.”

A big takeaway from this report is the continuation of productivity increases, he pointed out during a webinar hosted by the National Pork Board.

“As you think about the breeding herd, you could argue we have one of the youngest and most productive sow herds we’ve ever had,” Schulz says. “I think that is certainly contributing to large litter rates year over year.”

Of course there are still a lot of challenges out there, he adds, from disease pressure to labor availability. Still, the industry is seeing overall large productivity numbers compared to prior year levels.

“Productivity increases show the efficiency of the pork industry. We see roughly the same number of sows farrowed as a year ago, but the pig crop is up 2% because of larger litter rates,” Schulz says.

A Look at the Numbers
For the most part, the report numbers came in close to analysts’ expectations. The total inventory for all hogs and pigs on Dec. 1 was 75.8 million head, up 1% from a year ago, but down slightly from Sept. 1.

The market hog inventory on Dec. 1 was 69.8 million, up 1% from 2023 but down slightly from the previous quarter. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 50% of the total U.S. hog inventory on Dec. 1, down 1% from 2023.

The breeding inventory came in at 6 million head, up slightly from a year ago, but down 1% from Sept. 1. The September through November 2024 pig crop, at 35.2 million head, was up 2% from 2023. The number of sows that farrowed during this three-month period was down slightly from 2023 at 2.96 million head, which represents 49% of the breeding herd. The average pigs saved per litter was 11.92 for the September through November period, compared to 11.66 last year.

U.S. hog producers intend to farrow 2.93 million sows during the December 2024 through February 2025 quarter, up slightly from the actual sows farrowing during the same period in 2023, and down 1% from the same period in 2022. Intended sows farrowing for March through May 2025, at 2.95 million sows, are up 1% from the same period in 2023, and up slightly from the same period in 2022.

All inventory and pig crop estimates for December 2022 through September 2024 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data.

Program changes were made following the 2022 Census of Agriculture. As a result of these changes, the following states are no longer published in December 2024: AL, AK, AZ, AR, CA, CT, DE, FL, GA, HI, ID, LA, ME, MD, MA, MS, MT, NV, NH, NJ, NM, NY, ND, OR, RI, SC, TN, UT, VT, VA, WA, WV, WI and WY.

The revision made to the September 2024 all hogs and pigs inventory was 0.5%. A revision of 1.2% was made to the June through August 2024 pig crop. The net revision made to the June 2024 all hogs and pigs inventory was 0.4%. A net revision of 1.1% was made to the March through May 2024 pig crop. The net revision made to the September 2023 all hogs and pigs inventory was 2.2%. A net revision of 2.6% was made to the June through August 2023 pig crop.

A Tale of Two Different Periods
“It’s really been a tale of two different periods in 2024,” Schulz says. “For the first half of the year, we’ve seen sow slaughter up roughly 5%. But then as the latter part of the year came into focus, we’ve seen sow slaughter down notably, especially as we looked at the June-August period, down almost 9%.”

He reminds producers that the industry is comparing this year to very high sow slaughter levels in the second half of 2023. This is contributing to larger year-over-year changes when studying the sow slaughter numbers.

“We also have to take into consideration, there were fewer sow and boar imports, from Canada that were to be slaughtered in the U.S., down roughly 19% for the year,” Schulz says. “That equates to about 75,000 head fewer. Once you adjust for the decline in live hog imports from Canada, the sow slaughter decline in 2024 wasn’t quite as large and is consistent where USDA has estimated the breeding herd.”

A Little Surprise
If there were any surprises in this report, Schulz says the September through November 2024 pigs saved per litter number would have been the biggest surprise.

“If you go back to March through May 2023, we started to see large year-over-year increases, and that lasted into December 2023 through February 2024 and even March through May 2024,” he explains. “As we got into June through August 2024 and started comparing to large litter rates of the prior year, we did see a bit of a slowing increase to productivity. But that wasn’t any indication of lower productivity numbers to come. It’s a result of comparing large levels a year ago. Its hard to break records year in and year out, in anything, especially by a wide margin.”

In September through November 2024, however, the report showed a large 2.2% increase compared to year-ago levels. He says this was much larger than pre-report expectations which had the increase at 0.6%.

“As you think about implications for slaughter into 2025, this report is generally neutral especially in the short-term. It came in line with pre-report expectations for the heaviest two market hog inventories. Medium-term, the report has a bit of a bearish tone given the lightest two market hog inventories came in higher that analysts’ expectations,” Schulz says. “The larger pig crop for September through November 2024, because of larger litter rates, suggests a higher April through June 2025 slaughter. March through May 2025 farrowing intentions, though the first estimate by producers, were much higher than pre-report expectations and would hike up October through December 2025 slaughter.”

Longer-term, the breeding herd remains stable with year-ago levels and suggests no meaningful expansion on the horizon, he adds.

Where Does Profitability Stand for Producers?
Using costs of production figures and futures prices, Schulz says he is looking at profitability in 2024 at roughly break even. In 2025, he estimates a $12 to $13 per-head profit.

“That is coming off of the worst year ever for pork producers in 2023,” he says. “There’s still a lot of financial healing to be done in the industry as indicated by cumulative profits since 2020.”

Read the full report here.

Your Next Read: Why 2025 Will Be Different for U.S. Pork

What a Government Shutdown Would Mean for Upcoming USDA Reports

Fri, 20 Dec 2024 19:08:30 GMT

Lawmakers were working Friday to to keep the government funded past the Dec. 20 midnight ET lapse of the current funding measure.

Reports signaled the House will vote on three bills: a continuing resolution until March; a disaster relief package, including economic aid for farmers; and an extension of the farm bill.

If the funding measure fails, USDA has a contingency plan in place for essential workers and services. The plan would retain a small number of administrative employees to oversee activities including disaster response and cybersecurity should funding lapse.

Impacts on Upcoming USDA Reports

We asked Lance Honig, Director of Methodology Division and Chair of the Agricultural Statistics Board at USDA-National Agricultural Statistics Service (NASS), what impact a potential shutdown would have on upcoming USDA reports.

“For all of our end-of-season crop and December stocks data, we are finished collecting the data, so the only issue would be with timing,” Honig told Farm Journal. “In other words, we have all of the data we need to work with, just need time to analyze & compile it. So if there were a shutdown, it would just depend on how long it was in determining when the reports could be published (if any delay were necessary). So not a question of if we could publish, just maybe when.”

Honig says the Hogs & Pigs report is scheduled to publish January, so that is another report that will hinge on timing.

“The one I would be watching more closely is the January Cattle report. We will collect that data in January, so IF we were shut down then, it gets a little more complicated. Not saying we couldn’t do it — just that the overall timeline/process would have to be re-worked,” said Honig.

Economists React

Economists began detailing the fallout of a potential shutdown. GDP growth would fall by 0.15 percentage points “for each week it lasted,” Alec Phillips, an economist for Goldman Sachs, wrote this week in a client note. The disruption shouldn’t hinder the federal government’s ability to borrow in the near term, he added.

Corn and Soybean Prices Tank After USDA Report Makes Surprising Revisions to Yield

Fri, 12 Jan 2024 19:41:03 GMT

USDA’s final look at crop production for 2023 caught the commodity markets by surprise. The agency increased the final yield estimates for both corn and soybeans, and as a result, prices plummeted on Friday.

The big news in the report was the revisions to yield. USDA raised the national corn yield to 177. 3 bu. per acre in the January report, which is a new national record yield. It’s also a big jump from November, when USDA had the national yield penciled at 174.9 bu. per acre.

USDA also cut harvested acreage, but with the big increase in production, USDA pegs the 2023 corn production figure of 15.34 billion bushels.

The increases to yield and production were larger than what the trade expected, which caused corn prices to sink.

“We got a lot of criticism for our estimate all summer long being too high. And we ended up too low,” says Arlan Suderman of StoneX Group. “This crop, I’m just really impressed with, not just the genetics of it, but farmers with their technology, the seed placement, just the management of it. They are getting better and better at withstanding the stresses and it just makes you wonder how good this crop might have been had we not had the stresses we had.”

(Farm Journal)

USDA also increased demand, which helped offset a portion of the increased yield. USDA increased feed use by 25 million bushels. The agency also increased ethanol use by 50 million bushels.

“Those revisions were pretty much in line with what the trade expected,” says Jim McCormmick of AgMarket.net. “And I guess it’s a good thing because without those upward revisions of demand, this carryout would have really exploded to the upside. And I think the market could’ve had an even worse negative reaction than it’s currently having.”

Surprise in Soybeans

USDA also surprised traders with the increase in the soybean yield estimate. USDA raised it’s soybean yield forecast for the 2023 crop to 50.6 bu per acre, which was up from the 49.9 bu. per acre forecast in November. Soybean production is now pegged at 4.16 billion bushels.

Suderman says these yield increases are something farmers should note, especially with the current debate on how much of an impact weather will have on Brazil’s crop that’s currently in the ground.

“The same genetics we plant here we plant in South America as well, essentially, so we need to look at South America in that same light,” Suderman says. “This crop really did well, especially in eastern Midwest. We saw some really good yields from corn and soybeans this year. And some of that may have been some of the benefits from the smoke coming from the Canadian fires. That’s one of the theories now that was sulfur and some other positive effects were coming from that smoke.”

Cuts to Brazil

After drought impacted Brazil’s crop for much of the growing season, USDA cut its soybean forecast in Brazil to 157 million metric tons. That’s down from the 161 million metric tons forecast in the last report. USDA also trimmed its corn estimate for Brazil by 2 million metric tons.

“Traders were looking for bigger cuts,” McCormick says. “The rhetoric I think was even for bigger cuts and what the average straight guess was. So yeah, it was definitely a little bit disappointing. But time will tell where we’re at. Some of the modeling I’ve seen for the weather is that we are going to turn a little bit warmer and drier here in the middle part of January, and with this latest crop that has been planted, that could cause some problems to that crop and still shrink it. And of course, we still haven’t started planting safrinha corn crops. So the size of that crop is yet to be determined.”

Quarterly Grain Stocks

(Farm Journal)

USDA’s revisions to the 2023 crop production numbers pushed the quarterly grain stock estimates higher and above trade expectations.

Corn stocks are forecast up 13% to 12.2 billion bushels. Soybeans were adjusted down 1% from December to 3 billion bushels.

Wheat supplies on December 1 were forecast to be up 8% from a year ago at 1.41 billion bushels.

Game Changer for Soybeans? USDA Ignites Fireworks in the Markets With Two Major Acreage Surprises

Sat, 01 Jul 2023 01:33:09 GMT

USDA released a few big surprises in the June acreage report , including a spike in corn acres and a large reduction in soybean acres. The agency also forecasts grain stocks below trade expectations. The markets had a lot of news to digest on Friday between the report news and the rain and derecho damage across the Corn Belt , but analysts called Friday’s reports a “game changer” for soybeans.

According to USDA, farmers made a big cut to their intended soybean acreage. USDA Jun acreage report shows farmers planted 83.5 million acres of soybeans, a large reduction from the the 87.51-million-acre intention in March. This year’s planted acreage for soybeans is 5% below last year.

The other big surprise came in corn. USDA says farmers planted 94.1 million acres of corn this year, which is up from the 91.9 million acres reported in the 2023 Prospective Plantings report in March. The 94.1 million acres planted is also 6% higher than what farmers planted in 2022.

Other acreage highlights include:

Cotton Acres: 11.1 million, down from 11.3 million reported in USDA’s March planting intentions survey, a 19% reduction from 2022
Wheat Acres: 49.6 million acres, slightly lower than the 49.9 million acres in March, a 9% increase from last year

(Farm Journal)

A Major Market Game Changer

The biggest surprise was in soybeans, with analysts saying this could change the course for soybean prices.

“It’s an absolute game changer in regard to the soybean balance sheets,” says Joe Vaclavik of Standard Grain. “What it means it gives you very, very little room for error in regard to yield and production given this lower acreage number. And on the flip side, we saw a higher corn acreage number that went up to 94.1 from 92, even in March. So it was it was a big divergence in the markets sell off in corn on a higher acreage number and a sharp rally in soybeans on a drastically lower acreage number.”

Mark Gold of StoneX Group says this year proves when April weather is dry, farmers will plant more corn.

“It’s just the corn acres going up as much as they did wasn’t that big of a surprise. It’s the beans coming down,” says Gold. “That was the bigger surprise. And now you’re left with very tight carry outs on the beans. And this is assuming the government’s right on yield at 181.5 bu. per acre on corn and 52 [bu. per acre] on beans. And I don’t believe we’re near there, even with the rains that we’ve seen.”

Tighter Stocks Theme Continues in June Report

USDA’s March Grain Stocks report showed tighter stocks, which stole headlines. That theme continued Friday, with USDA’s estimates coming in lower than what the trade expected.

As of June 1, 2023, USDA shows the following adjustments in grain stocks:

Corn: 4.106 billion bushels, which is lower than the 4.35 billion at this time last year.
According to USDA, soybean stocks sit at 796 million bushels, also lower than the 968 million in June 2022.
Wheat stocks are projected at 580 million bushels, lower than the 698 million a year ago.

(Farm Journal)

Vaclavik says he doesn’t view the grain stocks report alone as bullish or bearish, but when you step back and look at the larger picture, demand is still an issue, but the supply story is changing after Friday’s reports.

“New crop demand for U.S. corn and U.S. soybeans is not good,” Vaclavik says. “The book of export sales is terrible. Ethanol production has not been where it needs to be. The one bright spot would be soybean crush, and we’re going to continue to set records there because of the crush expansion. But I think that as prices rise, especially in soybeans, you’ve probably got to look at the demand side and you could this you could say for the corn balance sheet to USDA is in all likelihood overstating new crop demand for both of those crops on the balance sheets given what we know today.”

The Yield Debate Heats Up

USDA’s reports definitely caused some fireworks, but says traders will digest those reports in a couple days. Then, the focus is back on weather.

“I’ll tell you this, the yield number and the acreage numbers are going to be digest not not the yield number. But the acreage numbers that we saw today, they will be digested by the trade very quickly. It’ll take maybe another day or two. And we’re going to be on again trading weather and yield prospects,” says Vaclavik.

The other possible crop impact is the derecho that blasted across the Midwest on Thursday . While the system brought crop-saving rain, it also packed a punch of winds topping 100 mph. According to agronomist Ken Ferrie who lives in Heyworth, Illinois, he thinks the earlier planted corn will be impacted the most.

“April-planted corn is pushing tassels and trying to pollinate, so unfortunately, it’ll get hit the hardest because it’s hard for tasseled corn to stand back up; it’ll just curve at the top,” Ferrie told AgWeb’s Rhonda Brooks. “And that down that’s corn creates pollination problems. So, from a yield problem that’ll be the tough spot, and that’ll be the tougher stuff to harvest because it just won’t stand back up.”

Yesterday, @NOAA's #GOESEast 🛰️ tracked a destructive #derecho as it raced across the Midwest, causing widespread damage across several states. This visible imagery shows the bubbling clouds, and the satellite's Geostationary Lightning Mapper allowed us to see the frequent… pic.twitter.com/SvYbnuf5em
— NOAA Satellites (@NOAASatellites) June 30, 2023

Ferrie points out farmers could have done without the wind, but the rains could be extremely beneficial for much of the Illinois crop. That’s as c rop conditions last week dropped to the lowest since 1988 . Gold says now it’s a debate of just how beneficial those rains were this week.

“Before we had these rains this week, we were looking at a corn yield of maybe maybe 174 bu. per acre or 175, somewhere in that range. I think he got to bump it up a little bit, because a lot of areas did get some rains without the damage. But we don’t know the derecho damage, we’ll have to see what the crop progresses on Monday, but I’m not sure it’s going to show all the damage by any stretch of the imagination. And the bottom line is, the corn yield, in my opinion can’t get anywhere near 181.5 [bu. per acre]. We’ve had rains, we’re gonna get more rains here this weekend. What is it a little bit too much too late. We’ll have to see. The crops are resilient. We know that.

Peter Meyer of S&P Global Commodity Insights says the rains this week will help, but he thinks damage has been done to the crops. He doesn’t think it’s as bad as 2012, but he sees some similarities to 1992.

“In 1992, conditions were lower than 2023 levels early in the season, but rebounded with early-July rains, resulting in a corn yield that was 8% above trend at the time while soybean yields outperformed trend by 10%,” says Meyer. “While the 2023 weather pattern has changed with the transition to an El Nino, U.S. corn and soybean acres are/were dry enough to require constant moisture at this point. 1992 was also an El Nino year but that El Nino started in the summer of 1991 and was already entrenched for 12 months. 1992 also saw on the wettest July’s on record, a tall task at this point.”

Before this week’s rains, an AgWeb poll showed growers were extremely concerned about yields. The poll found 61% of respondents are getting more worried by the day when it comes to corn yields. 25% aren’t sure. 15% say they are feeling good about current yield potential.

(Farm Journal)

There is more rain in the forecast for Illinois, as Ferrie points out, with the possible crop prospects improving now that they had the initial rain, even if it did come with high winds.

“That inch of water, many farmers would probably take the wind in the corn to get the water, because it looked like we weren’t going to get any of it, and suddenly our forecast has rain for the next five out of six days,” says Ferrie. “So, it kind of broke that bubble that was holding us in the drought.”

Wide Range of Yield Estimates in Ag Economists’ Monthly Monitor

Ahead of USDA’s updated look at planted acres in the June acreage report, a new survey of ag economists shows a wide range of yield estimates. The June Ag Economists’ Monthly Monitor , conducted by University of Missouri and Farm Journal, shows the average estimate by economists is below USDA’s current projection for all crops, except cotton.

The survey showed:

Corn: 178.68 bu. per acre versus 181.5 bu. per acre (USDA’s current estimate)
Soybeans: 51.06 bu. per acre versus 52 bu. per acre
Wheat: 44.47 bu. per acre versus 44.9 bu. per acre
Sorghum: 68.17 bu. per acre versus 69.2 bu. per acre
Cotton: 855.18 pounds versus 841 pounds

(Farm Journal)

Scott Brown, an agricultural economist with the University of Missouri, points out the yield variation largely depends on upcoming weather, but the dry weather in June is creating a wide range of yield estimates this year.

“I think when you look at both corn and soybean acres, there wasn’t a lot of deviation from the Prospective Plantings report USDA came out with a few months ago, so we didn’t see a big change there,” Brown says. “On the yield side, there are certainly some differences. The average yield estimate, on the corn side from the survey was a little more than 178 bu. per acre, with a downside of 175 bu. Likewise on soybeans, that came in at about 51 bu. per acre. Both corn and soybeans are below where USDA currently sees yields. I will say those are going to change quickly as we look at weather and what’s occurred since the survey would have gone out roughly a week ago now.”

Economists also expect crop prices to decline this year and next; however, there is a wide range in estimates signaling volatility will continue.

The average corn price is estimated to hit $4.99 per bushel for the current crop year and $4.74 for 2024/2025. The high range of the estimate for this year is $6 per bushel, with a low of $4.25 per bushel. Soybeans are also expected to trend lower, with an average estimate of $12.52 per bushel this year. The high came in at $14 per bushel. The low estimate was $10.85 per bushel. The average estimate for 2024/2025 is $11.90 per bushel.

Wheat prices are estimated to average $7.63 per bushel this year, with a low of $7 and a high of $8.49. The average estimate for wheat prices in 2024/2025 is $7.10 per bushel, with a high of $8 and a low of $6.49.

Related Stories:

USDA Reports Hold Bullish Surprise for Beans, But Bearish for Corn

Derecho Packs Punch Of 100 MPH Winds, Flattens Cornfields and Crushes Grain Bins Across the Midwest

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

USDA Confirms Farmers’ Fears: Net Farm and Net Cash Farm Income Expected to Fall This Year

Tue, 07 Feb 2023 21:04:08 GMT

Even with the rise in fertilizer and fuel prices, net farm income hit a record in 2022. Now, USDA ERS says 2023 could be a different story, forecasting net farm income to fall nearly 16% this year.

USDA’s first official net farm income forecast of the year shows higher costs will drive down 2023 net farm income, but the bigger factor is the forecast for a decline in commodity prices. If commodity prices can at least hold where prices sit today, the picture won’t turn bleak, at least for this year, but it’s still a changing scenario from 2023.

Initial Forecast Points to Expected Drop in Cash Receipts, Government Payments

Farm Journal Washington correspondent Jim Wiesemeyer says his biggest takeaway form the initial net farm income forecast is both net cash and net farm income forecasts are lower for this year, with an expected drop in cash receipts, government payments, but an increase in expenses.

“Working capital is also falling as farmers have eaten into their cash reserves, much like consumers have burned through their savings, but to a lesser degree in agriculture,” says Wiesemeyer. “But working capital at $118.45 billion is still nearly double the recent low of $65 billion in 2016. Financial health remains solid even as debt-to-asset and debt-to-equity ratios are both expected to rise in 2023 versus 2022.”

(Farm Journal)

ERS forecasts cash receipts from the sale of agricultural commodities to drop $23.6 billion, or 4.3%. That’s after a record high forecast for last year of $543.4 billion. USDA says those specializing in dairy and hogs are expected to see the largest decline relative to 2022.

The breakdown of cash receipts broken down by commodity includes:

• Total crop receipts are expected to decrease by $8.9 billion (3.1 percent) from the forecast 2022 level
• The drop is led by lower receipts for soybeans and corn
• Total animal/animal product receipts are expected to decrease by $14.7 billion (5.7 percent)
• The decline in livestock is driven by lower receipts for milk, eggs, broilers and hogs.

“The impact of lower receipts is actually greater than that of higher costs,” points out Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri . “On the cost side, the overall increase in expenses is 4.1%, after a 18.5% increase in 2022. Purchased livestock costs (think feeder steer) are projected to increase quite a bit; most other increases are fairly modest, and some categories (e.g. fuel) actually show a decline relative to 2022.”

Expectation for Fewer Government Payments

Another factor at play is the forecast for lower government payments. USDA’s forecasting:

• Direct government payments to fall by $5.4 billion (34.4 percent) from 2022
• Direct government payments are expected to reach $10.2 billion in 2023
• The decrease is largely due to expectation of lower supplemental and ad hoc disaster assistance in 2023 compared to the previous years

“USDA shows more than a $5 billion drop in payments this year,” says Westhoff. “That’s reasonable given current policies and projected prices, but Congress or the Administration could always provide new programs not included here.”

A Lot Can Still Change for Net Farm Income

While the initial forecast shows a drop in net farm income, Westhoff points out much can change in a year’s time.

“Weather always matters, as does the health of the general economy,” says Westhoff. “And, as we’ve learned the last few years, there will be wildcards, think China trade war, COVID and the Russian invasion of Ukraine.”

Farmer Sentiments Inch Higher in January

Despite the waning outlook for net farm income, farmer sentiment seems to be improving. The latest CME Group/Purdue Ag Economy Barometer , which was also released on Tuesday, shows farm sentiments improved 4 points from December to January.

“An improvement in future expectations was the driver behind the modest rise in sentiment, as the Future Expectations Index rose 5 points in January,” authors of the barometer stated.

The also pointed out that while sentiments did edge higher, the majority of farmers report they expect tighter margins in 2023 than in 2022.

“Just over one out of five producers expect to have a larger operating loan in 2023 than in 2022, with higher operating expenses being the most commonly cited reason,” the January Ag Economy Barometer stated.

USDA expects total operator dwelling expenses to increase 4.1% to $459.5 billion in 2023. Of that, interest expenses and livestock/poultry purchases make up the largest dollar increases year-over-year.

Read the full USDA forecast and report here.

Related Story:

USDA Forecasts Farm Sector Profits to Remain Above Average in 2022

The Rest of the Story: Pre-Report Bullet Points to Ponder

Thu, 22 Sep 2022 02:38:26 GMT

The media comments this weekend still had the familiar thread that in the final analysis—regardless of what the acreage survey report states on Thursday—acres planted to corn will likely rise and soybeans fall by the time we know for sure in October. That’s when the 578 reports are finally collected. Given the safety of the USDA Outlook Forum numbers of 90-90, most of the private guesses are huddled around those numbers, with advice to be prepared ahead of time for a surprise but neglecting to state what that surprise might be.

The market is grudgingly discounting a few estimates under 90 at 89.0 mil-ac of corn and above 90 of 91.2 soybeans with a likely increase in spring wheat of 400,000 acres. I say grudgingly because few actually perform a survey of their own nor do they understand or account for the “unintended consequences” of the last three years of poor economic conditions that were only mitigated by record yields.

Informa is reportedly out with an expectation of 88.9 million acres of corn and 91.5 million acres of soybeans, doing so with basically an unchanged estimate for Iowa and an actual increase in corn acres for Nebraska, which makes their estimate highly suspect. But one has to consider that they try to estimate what NASS will say, not necessarily what the end result is going to be.

We (Gulke Group) don’t publicly release client surveys, as we feel them to be proprietary and often have been more accurate than those publicly released. That’s especially true if there is a significant departure from what otherwise might be normal circumstances. Given that focus as a backdrop, I would expect a surprise, and have prepared accordingly.

Conventional wisdom suggests that based on last year’s acreage of near equality in corn and soybeans, we don’t have much room to increase soybeans at the expense of corn. At least without treading dangerously of bean-on-bean production (two years of planting same crop on same land). That conclusion doesn’t consider that two to three years of beans on beans, while not conventional, has happened. It’s also likely to happen again in some areas, especially those areas north of the mail corn belt.

Furthermore, there are states whose corn acreage still exceeds soybeans by a significant amount. A good exercise is to examine that for yourself. If you or your broker has trouble assessing the facts or understanding the implication, contact me and I’ll give some hint, after the report is out of course.

My Top Producer April column (the last until summer) should be released on Agweb this week and explores some realistic facts that may indirectly affect acreage decisions and help keep what we hear on Thursday from changing, barring a weather influence. The following is an excerpt from the column worth contemplating and is based on personal calculations about 30 days or so ago.

While my calculations are debatable, rest assured the non-ag producing speculators or analysts haven’t attempted to understand something only someone in the trenches can relate to. Thus my thoughts that the unusual economic scenarios we find ourselves in make a surprise possible.

Rude Awakening. Based on a per 1,000-acre corn scenario, my seed company makes $93,000, my fertilizer guy makes $73,000 and my landlord makes $250,000 ($250 per acre), while I invest roughly $650,000 in corn for the privilege of making $28,000. Whereas, I invest $574,000 in soybeans and make $90,000. Odds are the machinery manufacturer does better than I do. A 5,000- or even 10,000-acre farmer increases disposable income, and might argue he can produce his way out of a problem by getting 110% of actual production history. But, in this environment, high leverage, production risk, wide basis and sub-$4-cash corn can bring down an operation in a year or two. We are in a year where the risk is the highest it has been in decades because low prices have deteriorated operating cash.

If dealing with the uncertainty of weather wasn’t enough, I found it equally concerning of the appointment of Larry Kudlow to the administration. Out of archives I found an interview I did on CNBC 10 years ago on the subject of “subsidizing rich farmers,” in which Larry Kudlow was also interviewed. You may recall the backdrop back then of new folks that know little regarding Ag policies were concerned that we were burning corn for fuel (ethanol) while some were going without food.

Take time to listen to the interview, especially Kudlow’s views on farmers and ag: https://youtu.be/RVGq4ZgxtjQ .

If it were up to CNBC, soybeans would already have capitulated on negative vibes of being the target of China’s retaliation. But fortunately for us, South American supplies will not be as available as most global buyers thought just two to three months ago.

Meats, on the other hand, look to be the most vulnerable as pork prices are at or below cost of production in China. Beef has also seen growth globally and is vulnerable. Depending on exports to keep prices afloat, especially when tied to the 800-lb. Gorilla of China, makes a minor cut in actual or expectations of an export cutback or retaliation that much more tenuous especially in a time of total meat expansion.

If the USDA was kicking the decision can down the road in the February Annual Outlook meeting, they will have the facts to update their perspective including being able to blame the U.S. farmer for his planning intentions.

In addition, the stocks-in-all positions will give us more information on how much was used, how much is left and who is holding it. Especially important is how on-farm stocks compare to off-farm. If the producer is holding a lot of on-farm corn stocks, it is unlikely he will move those stocks until more certainty of U.S. acreage and new-crop potential.

The average analyst still believing we like planting corn for the fun of it. Perhaps there will be another eye-opening event, as there was both here in the U.S. last year and in Canada, where farmers in both countries opted for the least-cost decision.

Good Marketing,

Jerry Gulke

Learn more about the Gulke Group and upcoming events at www.gulkegroup.com

Contact them at 480-285-4745 or 707-365-0601

Contact Jerry directly by emailing comments and questions to info@gulkegroup.com .

Shrinking Global Stocks Create Bullish Story for Corn Prices

Thu, 22 Sep 2022 02:38:22 GMT

A few important factors are at play that could keep corn prices on an upward trajectory for the next year. Declining U.S. corn acres, a slow start to corn planting and stable domestic consumption are all painting a rosy picture for corn, according to a new report from RaboResearch .

“Of the major global grain and oilseed crops, corn seems most susceptible to elevated prices primarily because global stocks have declined over the past year,” says Sterling Liddell, vice president and senior global analytics specialist with RaboResearch. He is featured in the new report, “ Don’t Fall Asleep Behind the Risk Management Wheel: Modelling the Price Risk for Corn .”

Both global corn and soybeans stocks are expected to decline during 2017/18, by 14.5% and 6.6%, RaboResearch reports. Four of the largest exporters’ reserves of corn will all shrink.

Therefore, with USDA’s planting intentions of 88 million acres , the 2018 season is increasingly likely to see U.S. corn stocks-to-use fall below critical points. That should create increased bidding for corn.

“This 88 million acres of corn drops below what we call an equilibrium point, where the balance sheet remains neutral,” Liddell says. “At 88 million acres, that means we are below equilibrium, which starts to increase the probability that we’ll actually deplete stocks this years as opposed to keeping the same or growing.”

Since the U.S. is the largest exporter with the most available corn stocks, global stocks will decline through 2017/18. Tightening U.S. fundamentals generally affect both global prices and the prices of other crops competing for the same acreage, according to RaboResearch.

Here are the main impacts of the tightening corn balance sheet:

At only 88 million planted U.S. corn acres, price risk is much more sensitive to U.S. or global yield issues compared to the past three years.
The probability of sustained bullish prices increases significantly with any prevented or planting or acreage shifts out of corn. Increased prices will benefit farm-level economics, which have been struggling over the past three years.
Futures price volatility is likely to increase through June and potentially extend through August, depending on weather conditions during pollination.
Additional new fund money is expected to flow into futures contracts with any sign of production disruption.
As the most significant variables in the 2018 corn balance are supply-oriented, the U.S. production cycle is likely to be a reasonably good guide for the timing of significant market volatility.

Read More: Don’t Fall Asleep Behind the Risk Management Wheel: Modelling the Price Risk for Corn by RaboResearch

Jerry Gulke: Grain Markets Watered Down with Uncertainty

Thu, 22 Sep 2022 02:38:17 GMT

As mentioned in my weekly radio overview with Sara Schafer, the major market factors are centered on the following:

China buying corn with 300,000 mt announced and more likely.
Soybean news was silent as South America begins to export a good crop in Brazil and an excellent one in Argentina.
Flooding in America’s growing regions from Canada to Missouri and from Nebraska to Indiana is putting the best laid plans of the important acreage mix now up to Mother Nature and not necessarily Economics 101 (profit/loss).
African Swine Fever in China is cutting pork (good for U.S. exports—bad for protein and feed-grain consumption).
While U.S. hog consumption of feed-grain and soymeal is more important than China, the ramifications of lower global needs is another headwind to deal with on top of still uncertain tariff outcome.
All this make for uncertainty of the supply-and-demand fundamentals but as the charts below show, the technical aspects of price discovery, not matter how distorted in this political environment, are still very important to price discovery/outlook and risk management.

CORN

The trading pattern along with resistance and support areas, and with the help of proprietary buy/sell signals not shown, reflect what is now obvious. The price of $3.70 proved to be value and a place to remove (lift hedges) looking at $3.82 as a meager upside objective and perhaps too small an objective for some in the media to pay attention to. However, you can readily see corn blew right through $3.82.

(click images to enlarge)

So now what does the media analyst do that advised buying a put or just fighting margin calls do? Does he or she now blow out of hedges at $4.00 or just watch like deer in the headlights? What do the heavily short funds do now that $3.70 held just about the time water/floods fell on the corn belt and China buys corn? Does he run for cover or not?

The answer lies in knowing when to hold ‘em (accept risk) and knowing when to fold ’em (hedge off price risk). If you haven’t accepted the value of technical analysis along with a pro-active understanding of market fundamentals and market psychology in the past months, then I have failed to make a dent in the mindset of serious marketers.

What is said about corn can be extrapolated to soybeans and even stock market equity associated with commodities like the Tyson chart below.

SOYBEANS

Note the importance of the former uptrend line from September to February, ending when South American weather and crop relatively insured in spite of a new thrust by China to buy soybeans. Now there appears to be another crossroads as the important $9 support is threatened by an overhead resistance that soybeans have yet to crack. Will it make any difference if China buys more or not given the increased uncertainty of planting weather? The future of chart action will point the way!

LIVE HOGS

A picture is worth 1,000 words. Again, what was not obvious to some in mid-February was the collapsing thrust below support dating back to mid-August when futures left behind a months’ worth of trading in June hogs below $74. While the upside explosion and its extent were not known nor, the signal to get out of hedges, therefore being intrinsically long in the pen, was the key. What is supposed to be a profitable business tied to either cut-out price or some sort of formula that basically isolates the packer from some risk while the producer carries it, is now futher exasperated by the possibility of ASF appearing in the U.S.

Producers are at risk under any type of contractual agreement but being open for the last $22 speaks for itself. Fundamentally traders got impatient and full of apathy waiting for something to happen while being discouraged at prices falling $12 under the Chinese dilemma not understanding that timing and market psychology was as important as believing hog supplies were going to drown the price prospects. You probably read them all? The Cattle On Feed report was not present at this writing, but could have consequential effects on meats in general and live cattle in particular.

FINALLY let’s look at a publically traded equity like Tyson to view price discovery in a somewhat unbiased form with a technical focus as an aid may prove interesting. All the negative, or not, fundamentals regarding Tyson’s balance sheet can be research through any brokerage/research firm, but projecting what Tyson did under our current environment is not. Note the Christmas gift of the collapse in the stock market gave an opportunity to own Tyson at a price level that was below anything on the chart. That collapse was a gift from a risk standpoint as price dropped $35 from $50 high to $30. Odds were that one wouldn’t lose another $35!

With the ASF in mind and regardless of whether pork eaters would believe that a dead hog with ASF was not harmful to humans may be a stretch. China was in process of buying chicken from other sources as well. Tyson is famous for chicken. One of the first moves Ag Secretary Purdue did when the $12 billion support was announced was to buy chicken for school lunch and other programs. Tyson is known for pork as well. If there was a China “deal” to buy pork, would not Tyson benefit. Do corporations support both political parties? If there was a China pork and maybe a chicken deal would not Tyson benefit at least somewhat? Would it not be naïve that we would see a stock related to such activity start to appreciate before the actual Chinese buying would result from negotiations?

Is it a mere coincidence that Tyson has appreciated nearly 40% since the Christmas gift? Is it a coincidence that stocks often gain back 50% of what is lost in a post-bottom? Isn’t it interesting that Tyson is now back up to 50% of the total loss from December 2017 to Christmas 2018? Just seems too obvious does it not? It is more important it seems to be on the right side of a move rather than overanalyzing details and get lost in the forest of trees rather than seeing daylight. The chart of Tyson’s last three months response to the situation at hand is worthy of one’s time.

Good technical analysis is worthy of your time and expense. It is an investment in being able to lower the risk of making a “big-bad” . We all make errors, as that is how we learn. But especially in the farming business, we can’t afford to make a big error. I suspect the miss-calculations by major firms in 2016 that missed the price appreciation as well as the miss-calculation of the drop in soybean prices nearly a year ago betting that the tariff wouldn’t/couldn’t last long, were big errors. Missing the extent of a bull market is rather immaterial to a price collapse. Anyone can make money in an up market as it is just some that make more than others. However, in a bear market, especially in the current environment, a small drop can wipe out all the profitability; that is net taxable income. “That” is an error few can afford for any length of time.

THE UPSHOT

There is obviously more to price analysis than what might look like a simplistic view presented here. But I hope it peaks your mind and makes you think out of the box. I’ve seen market analysts come and go in the past 30 years and there may be one or two yet in the business that I would trust with the marketing of my farming.

We have a lot of “plant managers” in the business who are supported by nearly every commodity organization in the country opting to dwell on growing more production while ignoring what missing a dollar drop in soybeans or 50¢ in corn does to the bottom line. Bankers for the most part are unconcerned with marketing and wish to stay that way. Universities do a paltry job of education of real marketing; selling at a break-even isn’t a strategy. Price outlook with due diligence leaves a lot to be desired, just read the internet or listen to the media. Worse yet, I fear a simple understanding of the basics of price discovery and the merits of price movements are still at the bottom of the list of “to-do” things and certainly not on many “bucket lists”.

Good Marketing,
Jerry Gulke, President Gulke Group

Contact Jerry ag info@gulkegroup.com or leave your contact info or call 480-285-4745 or 707-365-0601.

Read more from Gulke at AgWeb.com/Gulke

WASDE: Corn Ending Stocks Jump, Soybeans Drop

Thu, 22 Sep 2022 02:34:33 GMT

WHEAT: The outlook for 2019/20 U.S. wheat this month is for lower supplies, higher domestic use, larger exports, and reduced stocks. Supplies are reduced as a smaller carry-in is not completely offset by higher production. Forecast 2019/20 U.S. wheat production is raised 18 million bushels to 1,921 million. The all wheat yield is forecast 1.3 bushels per acre higher at 50.0 bushels. Winter wheat production is raised to 1,291 million bushels with increases in all winter wheat classes this month. The first 2019/20 survey-based production forecasts for other spring wheat and Durum are both lower than last year, mainly on reduced harvested area at 572 and 58 million bushels, respectively. Domestic use is higher this month on increased feed and residual use as wheat is expected to be more competitively priced with feedgrains in 2019/20. Exports are projected at 950 million bushels, up 14 million from the revised 2018/19 exports. Exportable supplies for several major exporters are significantly reduced on lower 2019/20 production forecasts. As a result, the United States is expected to improve its export competitiveness, especially in the latter stages of the 2019/20 marketing year. Ending stocks for 2019/20 are projected 72 million bushels lower than last month at 1,000 million. The projected season-average farm price is $5.20 per bushel, up $0.10 from last month on reduced stocks.

Foreign 2019/20 wheat supplies are decreased 10.5 million tons primarily on lower production in several major exporting countries. The production declines are led by a 3.8-million-ton reduction for Russia due to extremely high temperatures and below-average precipitation in June during winter wheat grain fill. Russia’s production of 74.2 million tons is still the second largest on record. Both the EU and Ukraine are also lowered on hot and dry conditions during June, which are expected to reduce yields although production in both countries remains well above last year. Australia and Canada are lowered as well, mainly on reduced area, based on recent government reports. Global 2019/20 exports are lowered 2.3 million tons on decreased supplies. Russia’s exports are reduced 2.5 million tons and Australia and Ukraine are lowered 1.0 million and 0.5 million, respectively. These export reductions are partially offset by a 0.5 million ton increase for the EU and a 1.4 million increase for the United States. World consumption is lowered 2.9 million tons, primarily on reduced feed and residual use. With global supplies declining more than projected use, world ending stocks are reduced 7.9 million tons to 286.5 million but remain record large.

COARSE GRAINS: This month’s 2019/20 U.S. corn outlook is for larger production and beginning stocks, greater feed and residual use, lower food, seed, and industrial (FSI) use, and increased ending stocks. Corn beginning stocks are raised 145 million bushels, reflecting lower use forecasts for 2018/19. Exports are reduced based on current outstanding sales and shipments to date, with export inspection data for June the lowest for the month since 2013. Feed and residual use is down based on indicated disappearance during the first three quarters of the marketing year in the June 28 Grain Stocks. FSI is lowered with forecast declines in several categories of non-ethanol industrial use.

For 2019/20, corn production is projected 195 million bushels higher based on increased planted and harvested areas from the June 28 Acreage report. Excessive rainfall prevented planting at the time of the Acreage survey, leaving a portion of acres still to be planted for corn in a number of major producing states. In July, USDA’s National Agricultural Statistics Service (NASS) will collect updated information on 2019 acres planted, and if the newly collected data justify any changes, NASS will publish updated acreage estimates in the August Crop Production report. The national average corn yield is unchanged at 166.0 bushels per acre. Silking as reported in the Crop Progress report is behind the recent historical average, thus for much of the crop the critical pollination period will be during late July into early August. Projected feed and residual use is raised 25 million bushels, reflecting a larger crop. FSI is lowered 20 million bushels, reflecting lower projections for non-ethanol industrial use. Small revisions are made to historical trade and utilization estimates based on the 13th month trade data revisions from the Census Bureau. With supply rising more than use, stocks are raised 335 million bushels to 2.0 billion. The season-average corn price received by producers is lowered 10 cents to $3.70 per bushel.

This month’s 2019/20 foreign coarse grain outlook is for larger production and trade, and slightly lower stocks relative to last month. Ukraine corn production is raised, reflecting increased area. Barley production is raised for Canada but lowered for Ukraine and India. For 2018/19, Argentina corn production is higher based on harvest results to date. Major global trade changes for 2019/20 include higher corn exports for Ukraine, with increased imports for Zimbabwe. For 2018/19, corn exports are raised for Argentina and Brazil reflecting higher-than-expected shipments during the month of June. Foreign corn ending stocks are virtually unchanged from last month.

OILSEEDS: This month’s U.S. soybean supply and use projections for 2019/20 include lower beginning stocks, production, exports, and ending stocks. Beginning stocks are reduced with higher 2018/19 residual use more than offsetting lower crush and seed use. Residual use for 2018/19 is raised based on indications in the June 28 Grain Stocks report combined with crush and export data through May. Soybean production for 2019/20 is projected at 3.845 billion bushels, down 305 million based on lower planted and harvested area in the June 28 Acreage report and on lower projected yields. Harvested area, forecast at 79.3 million acres, is down 4.5 million from last month. With planting progress significantly behind in many states, USDA’s National Agricultural Statistics Service (NASS) will collect updated information on 2019 area planted, and if the newly collected information justifies changes, updated acreage estimates will be published by NASS in the August Crop Production report. The soybean yield is forecast at 48.5 bushels per acre, down 1 bushel based on delayed planting progress throughout the major producing states. Soybean exports are reduced 75 million bushels to 1.875 billion reflecting reduced supplies and increased competition from South American exporters. With crush unchanged, soybean ending stocks for 2019/20 are projected at 795 million bushels compared with 1.045 billion last month.

The 2019/20 season-average price for soybeans is forecast at $8.40 per bushel, up 15 cents from last month. The soybean meal prices are forecast at $300 per short ton, up 5 dollars. The soybean oil price forecast is unchanged at 29.5 cents per pound.

The 2019/20 global oilseed supply and demand forecasts include lower production and stocks compared to last month. Global oilseed production is projected at 586.0 million tons, down 11.7 million mostly on lower soybean production for the United States. Soybean production is also reduced for Canada and Ukraine. Rapeseed production is reduced for the EU, Australia, and Canada. Hot, dry weather during June has reduced yield prospects for the EU. Production is reduced for both Australia and Canada on lower harvested area. Other production changes include lower sunflower seed production for Russia, higher cottonseed production for India, and lower peanut production for the United States. Global oilseed exports for 2019/20 are projected at 175.0 million tons, down slightly from last month. Lower soybean exports for the United States are offset with increases for Brazil, Argentina, and Uruguay. Global oilseed ending stocks for 2019/20 are reduced 10.7 million tons to 119.5 million, mainly on lower soybean stocks for the United States, Argentina, and Brazil.

LIVESTOCK, POULTRY, AND DAIRY: The 2019 red meat and poultry production forecast is raised from last month as higher forecast pork and broiler production more than offsets lower beef and turkey production forecasts. The beef production forecast is reduced primarily on lighter carcass weights and slightly lower third-quarter steer and heifer slaughter. USDA will release the Cattle report on July 19th, providing a mid-year estimate of U.S. cattle inventory as well as producer intentions regarding retention of heifers for beef cow replacement. Forecast pork production is raised from last month on higher-than-expected second-quarter commercial hog slaughter. In addition, the Quarterly Hogs and Pigs report, released on June 27th, indicated a first-half pig crop 4 percent above 2018 which supported a higher second-half production forecast. Second-quarter broiler production is raised on slaughter data, but no change is made to the outlying quarters. Turkey production is lowered slightly on second-quarter production data.

For 2020, the red meat and poultry production forecast is raised on higher forecast pork production. Although producers indicated intentions to farrow about the same number of sows in the second half of 2019, growth in pigs per litter will help support higher numbers of pigs for slaughter in 2020. Beef, broiler, and turkey forecasts are unchanged from the previous month. The beef import forecast is raised for 2019, but the export forecast is lowered from the previous month on recent trade data. The 2020 beef trade forecasts are unchanged from last month. The pork export forecast for 2019 is lowered on recent trade data, but no change is made to the 2020 export forecast. The 2019 broiler export forecast is raised on recent trade data and stronger expected global demand in the second half of the year, while the turkey export forecast is little changed. No change is made to the 2020 broiler and turkey export forecasts. Cattle price forecasts for 2019 are lowered from last month, reflecting current prices. For 2020, forecasts are unchanged from the previous month. Hog price forecasts are lowered on recent prices and pressure from increased pork production in late 2019. Hog prices for 2020 are reduced slightly on increased supply pressure. Broiler price forecasts are lowered for 2019 on current price weakness and continued slow demand. No changes are made to 2020 broiler price forecasts. Turkey price forecasts are raised for 2019 and 2020.

The milk production forecast for 2019 is unchanged, but the forecast for 2020 is reduced on slower expected growth in milk per cow. USDA’s Cattle report, to be released on July 19th, will provide a mid-year estimate of the dairy cow inventory and producer intentions regarding retention of heifers for dairy cow replacement. For 2019 and 2020, the fat basis import forecasts are raised from the previous month on higher expected imports of butterfat products. Fat basis exports for 2019 are reduced on slower expected shipments of butterfat products. The 2020 fat basis export forecast is also reduced on expectations that U.S. butter exports will continue to be less competitive globally. The skimsolids basis import forecasts for 2019 and 2020 are unchanged from the previous month. However, skim-solids basis exports for 2019 and 2020 are reduced from the previous month on lower exports of lactose, whey products, and other dairy products. The 2019 cheese and nonfat dry milk (NDM) price forecasts are increased from the previous month while butter and whey price forecasts are reduced. The 2020 cheese price forecast is raised fractionally as demand is expected to improve, but the butter price forecast is lowered. The whey price forecast is also reduced as export prospects remain relatively weak. The NDM price forecast is unchanged. The 2019 Class III price is raised as the higher cheese price more than offsets a lower whey price, and the Class IV price is raised as a higher NDM price more than offsets the lower butter price. The 2020 Class III price forecast is unchanged as the fractionally higher cheese price is offset by a lower whey price. The Class IV price forecast reflects a lower butter price. The 2019 all milk price is forecast higher at $18.20 per cwt, but the all milk price forecast for 2020 is slightly lower than the previous month at $18.85.

Read the full report here.

Shrinking Global Stocks Create Bullish Story for Corn Prices

Thu, 22 Sep 2022 02:34:29 GMT

A few important factors are at play that could keep corn prices on an upward trajectory for the next year. Declining U.S. corn acres, a slow start to corn planting and stable domestic consumption are all painting a rosy picture for corn, according to a new report from RaboResearch .

“Of the major global grain and oilseed crops, corn seems most susceptible to elevated prices primarily because global stocks have declined over the past year,” says Sterling Liddell, vice president and senior global analytics specialist with RaboResearch. He is featured in the new report, “Don’t Fall Asleep Behind the Risk Management Wheel: Modelling the Price Risk for Corn.”

Both global corn and soybeans stocks are expected to decline during 2017/18, by 14.5% and 6.6%, RaboResearch reports. Four of the largest exporters’ reserves of corn will all shrink.

Therefore, with USDA’s planting intentions of 88 million acres , the 2018 season is increasingly likely to see U.S. corn stocks-to-use fall below critical points. That should create increased bidding for corn.

“This 88 million acres of corn drops below what we call an equilibrium point, where the balance sheet remains neutral,” Liddell says. “At 88 million acres, that means we are below equilibrium, which starts to increase the probability that we’ll actually deplete stocks this years as opposed to keeping the same or growing.”

Since the U.S. is the largest exporter with the most available corn stocks, global stocks will decline through 2017/18. Tightening U.S. fundamentals generally affect both global prices and the prices of other crops competing for the same acreage, according to RaboResearch.

Here are the main impacts of the tightening corn balance sheet:

At only 88 million planted U.S. corn acres, price risk is much more sensitive to U.S. or global yield issues compared to the past three years.
The probability of sustained bullish prices increases significantly with any prevented or planting or acreage shifts out of corn. Increased prices will benefit farm-level economics, which have been struggling over the past three years.
Futures price volatility is likely to increase through June and potentially extend through August, depending on weather conditions during pollination.
Additional new fund money is expected to flow into futures contracts with any sign of production disruption.
As the most significant variables in the 2018 corn balance are supply-oriented, the U.S. production cycle is likely to be a reasonably good guide for the timing of significant market volatility.

Grain and Livestock Futures Shake Off Election, Tariff Fears and Soaring Dollar

Grain and livestock futures closed mostly higher except for wheat.

Darren Frye, Water Street Solutions, says it was an impressive close especially for soybeans which were down 18 cents overnight in reaction to former President Trump’s election win and the possibility of increased tariffs on China and other export customers and another trade war.

However, the grains were also able to shake off a sharply higher dollar.

It may be tied to hopes export business will pick up before January 20.

“It could be the fact that we have an export window now until January until Trump takes office and there will be a lot more buying up until then. It could be that the commercials are seeing that exports aren’t going to be that bad. We kind of thought they were going to be zero if he got elected but with their economy isn’t in as good a shape as four years ago and maybe they can’t take his harassment or tariffs. Maybe they have to play nicer,. Maybe they’re going to do some business with us,” he says.

Or Frye says the market may sense that exports won’t be as bad as feared, as these low price levels have stimulated demand.

The key will be for the grain markets to see follow through buying on the strong closes.

“That’s the million dollar question. I mean the charts really look good going home Wednesday. You saw a huge range in soybeans a huge shadow on the candle stick chart. You saw corn close through some key resistance areas. Closing above the $4.24 to $4.25 areas was really important on December corn so we should get some follow through but as always time will tell,” he adds.

Frye was surprised by the strength and new highs in the stock market in reaction to the election.

“I expected the market to be higher but not 1,500 points on the DOW and 500 on the NASDAQ. I mean everything was up small caps, large caps, mid caps. Bit coin was up over $6000 a coin,” he says.

The rally in the financial markets spilled over to help support the livestock futures as well, despite the higher dollar and the trade and tariff fears.

Trump has also talked about raising tariffs on Mexican imports if the president does not provide help with the immigration and border issues.

Mexico is a top customer for U.S. pork and especially hams and so tariffs could hurt the export dependent hog market.

The big week continues with the FOMC decision on Thursday and the WASDE on Friday.

Frye says the bond market is pricing in a .25 point cut in interest rates but the last time Jerome Powell spoke he was a bit hawkish and with the run up in the stock market that may signal inflation is going to reignite.

“So it will be interesting to see what the Fed does with that,” he says.

As far as Friday’s WASDE, Frye isn’t looking for much change in yield, production or ending stocks for corn or soybeans.

“I think they got things pretty close to the mark. Many people were wrapping up harvest, they had a lot of the plots in the October report,” he says.

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