What is in this article?:
• Farm household debt levels appear to have stabilized despite increasing land values.
• While prospects generally look bright, recent sharp increases in prices for major crops are generating a range of concerns.
Domestic mill use
Domestic mill use for 2011/12 is estimated at 3.5 million bales, down slightly from 2010/11 levels. Exports are forecast to decline 5 percent to 15 million bales, reflecting the larger global supplies. Ending stocks are forecast to increase by 1.0 million bales to 2.9 million but remain at a relatively tight 16 percent of total use.
As a result, prices are anticipated to remain high. The season average price paid to producers is estimated at a record $1.10 per pound, which, if realized, would exceed this year’s near record price of 81.5 cents per pound, by 35 percent.
Livestock and livestock products
Total U.S. production of meat and poultry is forecast to remain flat in calendar year 2011, with slight growth forecast in supplies of pork and poultry but reduced supplies of beef. Stable production, increased exports and some recovery in domestic demand should help maintain livestock prices near last year’s historic highs.
For livestock and poultry producers, increasing feed costs will be an important component of producer production decisions in the upcoming year. In January, the price-feed cost ratios for cattle, broilers, hogs and milk, as reported by NASS, were all well below year ago levels.
While livestock prices are expected to remain strong and further improvement in milk prices is likely in the months ahead, higher feed costs could lead to below average margins for livestock and dairy producers in 2011.
Cattle prices forecast record high.
Commercial cow slaughter maintained a high pace during all of 2010. Cow slaughter was the largest in well over a decade, even though the U.S. cow herd on January 1, 2010 was the smallest since 1949. While cattle marketings for the last half of 2011 are expected to be lower year-over-year, large net placements in feedlots during late 2010 and January 2011 will likely maintain beef supplies during the first half of 2011 near previous year levels. For all of 2011, beef production is currently forecast to decrease 1.5 percent, following a 1.4 percent increase in 2010. Steer prices are expected to average a record $102-$109 per cwt. this year, compared with $95 per cwt. in 2010.
Total North American cattle inventories are at their lowest levels in decades. With smaller Canadian and Mexican inventories expected in 2011, U.S. cattle imports are forecast at 2.1 million head for the year, down from 2.3 million in 2010.
Pork production to increase slightly.
Pork production in 2011 is estimated to increase by 0.4 percent after falling by 2.4 percent in 2010. While hog prices were up 34 percent in 2010 and are expected to average higher in 2011, increases in feed costs are expected to temper expansion over the next several months.
The Quarterly Hogs and Pigs report released by USDA on December 27, 2010, showed lower swine inventories and lower farrowing intentions for the first half of 2011. During the first-half of 2011, sow farrowings could be about 1.4 percent lower than in the same period last year.