Competitive Commodity Insights

Commodity Insights

Competitive Commodity Information: 2017 and beyond in world commodity trends

10 year commodity trends sneak peak

When USDA releases its longterm agricultural sector outlook for the next ten years later this month, the projections through 2026 covering commodities, trade and aggregate indicators of the farm sector will give retailers a glimpse of the next decade's expectations. Once the agency makes it available, you can access the entire report here (Adobe Acrobat format). Until then, here are some highlights of what the report will show:

 

Less Land in Crops; Conservation Continues. As prices for most crops have fallen from highs of recent years, U.S. farmers have responded by planting fewer and fewer acres to the major field crops. That decline is expected to continue, as the acres planted for corn, sorghum, barley, oats, wheat, rice, upland cotton and soybeans is projected to remain below 250 million acres. Wheat, corn, and cotton account for most of the decline between these years. Much of that idled land will remain in the government program that compensates farmers for removing the most environmentally sensitive land from cropping use.

Plantings will gradually decine

Plantings will gradually decine

Corn Ethanol Use Remains Level. Ethanol production in the United States is projected to fall over the next decade. But even with the U.S. ethanol production decline, demand for corn to produce ethanol continues to have a strong presence in the sector. While the share of U.S. corn expected to go to U.S. ethanol production falls, it accounts for over a third of total U.S. corn use throughout the projection period. Use in feed to produce farm animals that produce your meat, milk and eggs remains the No. 1 use of this farm staple.

Corn use for ethanol will level off

 

U.S. Appetite for Meat will Stay Strong. Per-capita consumption of meat and poultry will continue, although more moderately than in the past, with chicken still leading the plate by almost double over beef and pork.

Meat consumtion will stabilize

U.S. to Continue as Meat-Growing Power. In order to feed both those domestic consumers and a growing international meat market, U.S. farmers will continue the upward trend in production of the major meats.

Meat production estimates

Increasing Animal Productivity. A theme illustrated in USDA's projected data: U.S. agriculture will continue to produce more and more food using fewer and fewer resources. Here's an example: The amount of milk put out by the average U.S. dairy cow is almost three times what it was compared to 30 years ago. That means the size of the nation's dairy herd will continue dropping, even as milk supply continues to climb.

Milk cows and their production

 

Competitive Commodity Insights: Holiday Meats

Turkey pricesTurkey. Although USDA preliminarily reports weekly production of turkey for the month of October was below year-earlier levels and that total production for the final quarter of the year has been cut by 30 million pounds, the average price for whole hens has not risen in anticipation of Thanksgiving's demand increase as much as they would in a normal year. USDA lowered its fourth-quarter forecast for frozen hen prices to $1.18 to $1.22 per pound, on the basis in part of stocks of tom turkeys that are at their highest level for a September in three years. In addition, exports that draw off the domestic supply and could contribute to increased prices remained well below levels seen during 2012 to 2014, when they were shut off by avian influenza.

Competitive Commodity Insights: Five more ideas to keep the grills going this winter

Five more ways to keep shoppers grilling

Of the 75 percent of American adults who own a grill or smoker, according to Virginia's Hearth, Patio & Barbecue Association, the trade group for grill manufacturers, 61 percent of them will use their grill or smoker year-round. If you're tapering off the grill promotions after Labor Day, you're missing out on a significant and growing segment, says the association. Need more evidence?

Competitive Commodity Insights: Have all the rules about meat demand changed?

Why aren't meat prices behaving as expected?

"Why is beef demand growing as per-capita income shrinks?" BEEF magazine editor Wes Ishmael pondered in a Jan. 2014 column written to cattle ranchers. The gap between rich and poor has widened, income growth at the bottom is stalled, and beef prices are leading nagging food inflation. "None of that should be positive news for commodity products with a high price compared to substitutes;" he noted, "beef vs. chicken and pork in this case." Yet Ishmael is surprised to point out that annual retail demand for beef has continued to defy expectations and to rise during those developments. "There’s no simple explanation for this paradox between dwindling domestic per-capita wealth overall in tandem with growing demand for pricier beef."

Now, a study scheduled for publication in the journal Applied Economic Perspectives and Policy by Oklahoma State ag economist Jayson Lusk and Kansas State ag economist Glynn Tonsor has attempted to explain and quantify that paradox.

Competitive Commodity Insights: Ho-hum! Another soybean shortage

Are we setting up for a soybean shortage?

The weather in South America this cropping season has been brutal, leading to what one commodities watcher called “massive reduction" in the continent's crop size for both corn and soybeans. Flooding contributed to both widespread declines in soybean production and shipping delays on what was produced in Argentina, even as drought in Brazil hurt production of both staple crops. South-American commodities expert Michael Cordonnierin, noting Brazil in mid-July was down to less than one week's supply, raised the possibility that country, the worlds second largest soybean producer, could actually run out of soybeans.

Meanwhile, with global demand, led by China, unabated, the tight supplies in the southern hemisphere could indirectly lead to a shortage here and around the world, as U.S. exports increase to fill the South American shortfall.

The world soybean supply is important to grocers because in addition to whole soybean food products and refined soybean oil products, like cookies, snack foods, cooking oils and margarine, soybeans are used in a wide variety of food, pharmaceutical and cosmetic products. They are also the second most common ingredient in U.S. animal feeds.

USDA reported in mid July the 2015-2016 U.S. export forecast is raised nearly 1 million tons, on top of last month’s 500,000-ton rise, currently standing at 48.9 million tons. In addition, the export forecast for 2016 and 2017 is raised to a record 52.3 million, 4 percent above the previous record set in 2014 and 2015.

South America is gobbling up all the soybeans

Those rocketing export levels will cut into the season-ending stockpiles of soybeans in this country, holding up prices above those observed in 2015. U.S. export bids in June averaged up $39 per ton from last month, at $444 per ton, the highest level in nearly 2 years.

However, it's important to note more than 66 million tons of soybeans in ending stocks are still available worldwide. That's down by 16 percent from 2014-2015's high of 78.4 million, but still higher than the low of 55.4 million in 2012-2013. So "shortage" may be premature. USDA's latest report on crop progress in this country shows the soybean crop in the states representing 95 percent of all production was 13 percent ahead of last year and 15 percent ahead of the 5-year average. Overall, 71 percent of the U.S. soybean crop was reported in good to excellent condition, unchanged from the week before but 15 percent above the same time last year.

Partners

Supported by the Nebraska Farm Bureau

The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.


Supported by the Nebraska Corn Board

The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.


In patnership with the Nebraska Grocery Industry Association

The Nebraska Grocery Industry Association was formed in 1903 by a group of Omaha grocery store owners, wholesalers and vendors to allow them to promote independent food merchants and members of the food industry, and to promote education and cooperation among its membership. NGIA continues to represent grocery store owners and operators, along with wholesalers and vendors located throughout Nebraska, by promoting their success through proactive government relations, innovative solutions and quality services. NGIA offers efficient and economical programs. NGIA also lobbies on both a state and national level, ensuring that the voice of the food industry in Nebraska is heard by our representatives.