US - CME analysts Steve Meyer and Len Steiner preview the expected conclusions of the USDA's monthly commodity supply/demand estimates (WASDE).
Corn farmers have just started to get the crop on the ground, with 4 per cent of the acres planted through week ending April 10 (same as the five year average).
The new corn supply/ demand balance table will not be released by USDA until the May report, however. The April report will largely focus on adjustments to ending stocks for the current year and, as part of that, updates to corn use for feed, ethanol and exports. Given the quarterly stocks survey, no major adjustments are expected.
As for the red meat and poultry estimates, we would urge you pay close attention to the changes in implied consumption.
Pork numbers will likely be revised following the results of the Hogs and Pigs survey but we do not expect major revisions to trade estimates but it will be interesting to observe how USDA perceives the trajectory for US meat trade in the coming months.
Futures, especially for lean hogs, certainly are less sanguine about pork export prospects into the summer.
One item that does not get as much attention but needs to be considered when analysing supply availability, is the flow of live cattle into the US market.
The supply/demand table that USDA issues breaks out the amount of beef and pork that gets traded but the effects from the trade of live animals are part of the meat production figure.
Today we will focus on cattle and cover live hog imports later in the week.
As the two charts show, in 2015 combined imports of Mexican and Canadian cattle in the US were 2 million head while total cattle slaughter last year was 28.8 million head. Cattle imports from Mexico are almost entirely feeder cattle.
Based on the USDA official annual statistics, imports of Mexican cattle in 2015 were 1.154 million head, 3 per cent larger than a year ago but 21.4 per cent lower than in 2012.
Imports of feeder steers were just a little over 1 million head, accounting for 88 per cent of the total number of cattle imported.
Imports from Mexico in the first two months of the year are down sharply from a year ago. Total imports in the first two months of the year were 136,649 head, down 45,445 head (-25 per cent) compared to a year ago.
Feeder heifer imports were down almost 16,500 head (-60 per cent), reflecting the tight female supplies in Mexico after many years of herd liquidation.
We expect cattle imports from Mexico in 2016 to be down as much as 17 per cent from a year ago. If this estimate is correct, it would imply a net annual reduction of almost 200,000 head.
This is an important consideration, especially when evaluating the supply of feeder cattle that will go into feedlots this spring.
Cattle imports from Canada are more balanced, with a mix of feeder cattle, fed cattle and cull cows coming into the US each year. Lower inventories and some modest herd rebuilding effort in Canada reduced the supply of cattle that came to the US in 2015 and we expect more of the same in 2016.
In 2015 US imports of all Canadian cattle were 830,479 head, down 413,407 head (-33 per cent) compared to the previous year.
Imports of fed cattle from Canada were down sharply in the second half of last year following the collapse of US fed cattle prices. We expect Canadian imports to be down another 100,000 head or so in 2016.
Imports of feeder cattle through the first three months of the year are down almost 89,000 head (-62 per cent).
Imports of feeder cattle in March (these are numbers that affect US March placements) were 36,401 head, down 29,118 head (-44 per cent) from last year.
Imports of fed cattle through the end of March were up almost 18,000 head (+30 per cent) while slaughter cow imports are down 4,400 head (-8 per cent). US cattle supplies are increasing but, as we evaluate the impact of the domestic supply increase, we also need to consider the effects of lower imports.
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