January 12, 2001

USDA has increased the projected price of wheat for 2000-01 to $2.55-2.75 per bushel, a 5-cent increase at both the low and high ends of the range. U.S. 2000/01 ending stocks of wheat have been decreased in the latest report by 48 million bushels because of higher domestic use. Projected feed and residual use is up 50 million bushels because of lower- than-expected Dec. 1 stocks.

Projected 2000/01 world wheat production and use are down slightly from the December report largely because preliminary official estimates for Russia and Ukraine show smaller crops than forecast. Projected global imports are up marginally from last month as increases for Ukraine and a few other countries more than offset a reduction for China.

For feed grains, projected U.S. 2000-01 ending stocks of corn were increased 52 million bushels from last month as reductions in use exceeded reductions in supply. The corn crop is estimated at 9.97 billion bushels, down 86 million from last month but still more than 500 million bushels greater than the 1999 crop. Projected feed and residual use was decreased 75 million bushels from last month because the Dec. 1 stocks indicate smaller-than-expected use in the September-November quarter. Projected exports are 50 million bushels below last month because of increased competition from Argentina and Brazil. The projected price range for corn is unchanged at $1.65-$2.05 per bushel.

Global 2000/01 feed grain supply and use are down slightly from last month, largely due to changes for the United States. Foreign production is up slightly as larger crops in Russia (barley and oats) and Ukraine (barley, corn, and oats) more than offset reductions in Mexico's and Argentina's corn crops and China's barley and millet crops.

U.S. oilseeds production for 2000-01 is forecast at a record 85.3 million metric tons, down about 400,000 tons from last month but up 2.9 million tons from last year. Soybeans account for nearly half of the decline this month, with smaller reductions for peanuts, cottonseed, and sunflowerseed. Rapeseed production expectations were increased slightly. Soybean production is estimated at 2.77 billion bushels, off only 7 million bushels from the previous forecast as a decline in harvested area is nearly offset by a gain in yield. Missouri and Kansas account for much of the production drop. Reductions in forecast peanut and cottonseed production are concentrated in Texas, following extremely dry weather throughout the growing season and poor harvest conditions.

Projected U.S. season-average soybean prices for 2000-01 are off slightly from last month to $4.50- $5.00 per bushel.

USDA's projection for total meat production this year was reduced slightly from last month. Pork production is slightly lower because the Dec. 28 hogs and pigs report indicated that producers intend to farrow fewer hogs in March-May than previously expected, lowering expected hog slaughter in the last quarter of the year. Poultry production in 2001 is reduced due to a smaller broiler hatching flock and fewer expected egg sets in 2001. Beef is forecast slightly higher as weather disruptions at the end of 2000 resulted in a shift of production into the first quarter of 2001. The cattle report will be released on Jan. 26.

Prices for cattle and hogs were stronger in fourth quarter 2000 than forecast, primarily due to year-end weather conditions. For 2001, annual average cattle and hog prices are unchanged from last month. However, hog prices are expected to be slightly weaker in the first quarter as heavier hog weights increase pork production and slightly stronger in the fourth quarter because of reduced expectations for hog slaughter.

The milk production forecast for 2000-01 is lowered slightly this month as recent data point to continued slowing in the rise of milk cow numbers and milk per cow. Class III prices are raised slightly, averaging $9.50-$10.00 per cwt. Cheese prices are expected to increase gradually from their October-December lows. Class IV prices are lowered to $11.75-$12.45 per cwt due to lower near-term butter prices. Although currently volatile, butter prices are expected to decline sharply from their October-December highs and then increase gradually later in the year. The all milk price was increased 5 cents per cwt.