By TIM ALEXANDER
Illinois Correspondent WASHINGTON, D.C. — The USDA’s quarterly grain stocks report for Dec. 1, 2009 – issued Jan. 12 – reflects increases in U.S. corn, soybean and wheat stocks. The report has sparked cautious optimism for lower feed prices in 2010, according to representatives for the National Pork Board (NPB) and the Illinois Beef Assoc. (IBA).
The National Agricultural Statistics Service (NASS) report shows that corn stored in all positions on Dec. 1 totaled 10.9 billion bushels, a 9 percent increase from the previous year’s stock. Though off-farm stocks were down 3 percent at 3.49 billion bushels, on-farm corn storage increased by 15 percent to 7.45 billion bushels. Increases were also shown in soybeans (3 percent) and all wheat stocks (24 percent).
The report was encouraging for the “profit prospects of 2010,” according to Steve R. Meyer, Ph.D., an economics consultant to the NPB. “After the worst two-year period in history (for the pork industry), any light is welcome.
“Each 10 cent per-bushel drop in corn price reduces break-even costs by about 50 cents per cwt. (hundredweight), or 67 cents per cwt. carcass weight, so (Jan. 12’s) reduction helped the profit picture by about $1.50 cwt. live or $2 per cwt. carcass,” he said.
Meyer cautioned that a “flip side” to lower costs is the incentive for producers to reduce output. “And I think we need to reduce the U.S. sow herd by another 4 to 6 percent to put the business in a good profit situation. Even with the corn price declines, 2010 is projected, based on futures market prices for hogs, corn and soybean meal, to be little better than a break-even year,” he said. “That beats the roughly $20 per head that has been lost over the past two years.”
Meyer also warned if 2010 is a strong year for demand, prices could escalate quickly. “Exports will be better and H1N1 is hopefully behind us, but will that be enough? I don’t think so. I think we have to reduce output some more, but anything helps beleaguered producers at the moment, and I’m thankful,” Meyer concluded.
Cimeron Frost, director of industry programs for the IBA, called the report’s grain stock numbers “optimistic” and “maybe a little high,” but said the ripple created by the report is already welcome news to members of the IBA.
“As far as the beef industry goes and the cost of our feed, we’ve already seen costs driven down on the market. It will be positive for us,” said Frost, a farmer from Petersburg. “Prices came down the day the report was announced.”
A possible downside to the news, said Frost, is the fact that in Illinois most beef producers are also corn growers.
“It’s a double-edged sword for our guys, but it is good for the cattle feeders, and really the cow-calf guys, as well. A lot of them use corn silage for winter feed, and its value is based on the price of corn,” he said.
The Jan. 12 grain stocks report charts supplies by position and month for corn, sorghum, oats, barley, all wheat, durum wheat and soybeans. Stocks from farms, mills, elevators, warehouses, terminals and processors are tabulated for the report, which is issued by the Agricultural Statistics Board, NASS and the USDA.
For a direct link to the entire grain stocks report, visit http://usda/current/GraiStoc/GraiStoc-01-12-2010.pdf |
