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Recent Highlights from USDA’s Economic Research Service, U.S. Agricultural Economy

The USDA’s Economic Research Service (ERS) noted in its Feed Outlook report this week that, “A 75-million-bushel increase in forecast 2014/15 corn use for ethanol boosts expected supplies of distillers’ grains reducing the outlook for feed and residual use and leaves ending stocks 50 million bushels lower this month…Higher reported cattle inventories increase grain consuming animal units. The midpoint of the projected range for the corn price received by farmers is unchanged at $3.65 per bushel.

And in its chart of the day report on Friday, ERS explained that, “Strong feeder cattle prices and declining feed costs are supporting high returns for cow-calf producers. The price of 750-800 lb. feeder steers at the Oklahoma National Stockyards exceeded $220 per hundredweight at the end of 2014, up $65 since January and over $100 since May 2013. At the same time, the price of corn (a major component of cattle feed) fell from above $7.00 per bushel in mid-2013 to under $4.00 per bushel by December 2014, reflecting a record 2014 crop projected at 14.4 billion bushels. Despite weaker demand, beef prices are at record high levels due to tight supplies and historically low cattle inventories. Expanding the cattle herd is a long-term process due to the time it takes cattle to mature, and requires holding some heifers off market for breeding purposes.”

ERS added that, “Recently released data from USDA’s Cattle report suggests that inventories are beginning to grow, and cattle prices have begun to retreat. With corn prices forecast by USDA to average around $3.50 per bushel for the 2014/15 marketing year, returns to cow-calf operators should remain favorable into 2015.”

In its Oil Crops Outlook this week, ERS stated that, “Last fall, high meat prices encouraged livestock and poultry producers to keep more breeding animals. The expected expansion of livestock and poultry output would boost 2014/15 domestic soybean meal consumption to 30.5 million short tons, compared to 30.2 million last month.”

With respect to soybean oil, the report noted that, “Despite a higher soybean crush, 2014/15 soybean oil production is forecast up only marginally from last month. Extraction rates for soybean oil this year have been below average and could fall to a 5-year low for the whole season. A brisk processing pace and lower oil content of this year’s soybean crop are responsible for the reduction in oil yields.”

In its Wheat Outlook report this wee, ERS pointed out that, “U.S. wheat ending stocks for 2014/15 are projected 5 million bushels higher as reduced exports more than offset an import reduction. Projected imports are lowered 20 million bushels to 160 million on pace to date. Projected exports are lowered 25 million bushels to 900 million due to increased competition from the European Union (EU) and the recent strengthening of the dollar (which makes U.S. exports less competitive). Ending stocks are increased to 692 million bushels. The season-average farm price is lowered 5 cents on the low end and 15 cents on the high end to $5.85 to $6.15 per bushel. The reduction reflects prices received to date as well as a loss of competitiveness for U.S. wheat.”