By Lou Lamoreux, co-chair

The USMEF Feedgrain and Oilseed Caucus met May 26 at the USMEF Board of Directors Meeting and Product Showcase in St. Louis. The meeting focused on an unexpected turnaround in grain markets, potential record corn and soybean harvests and the value U.S. red meat exports deliver for the corn and soybean industries.

USMEF Chair Roel Andriessen’s opening remarks included a brief history of the U.S. meat packing industry – how Japan and other Asian countries came into play in the late 1970s and early 1980s – and a cautiously optimistic look at the future of international agriculture trade.

“Looking forward, TPP (Trans-Pacific Partnership) will be a great advantage with improved access, especially for pork in Japan, and we will see a different product mix that will benefit the industry which will contribute to the bottom line,” Andriessen told caucus members. “But direct access to China is still a big problem.”

John Anderson, economist for the American Farm Bureau Federation, provided a U.S. livestock and grain outlook. He noted a huge run in the soybean market since March. Corn has also been gaining momentum, Anderson noted, but not to the same degree as soybeans.

“It is expected that soybean ending stocks will come down from 400 million bushels to 305 million bushels, with 8 percent stocks to use,” Anderson explained.

Record corn and near-record soybean production is possible in 2016, Anderson said, adding that USDA forecasted the planting of 93.6 million acres of soybeans. He said he suspects that number could be high – an opinion shared by most of the caucus members in attendance.

To summarize the oilseed and grain markets, Anderson reiterated, “They are in better shape than 10 weeks ago.”

On the livestock side, Anderson relayed forecasts that estimate U.S. pork production to be up about 2 percent for the year. He also said that beef production is well above last year’s levels.

“We have a current situation in feedlots, good exports and good retail sales, which is good for the short run,” Anderson said. “But long term isn’t looking as strong – some hesitancy. The hog market is about the same as last year, with cutout about the same. For 2017, production in beef and pork will both have increases.”

David Gregg and Dave Juday of World Perspectives, Inc. revealed findings of their study, “Value of Red Meat Exports to Corn,” which was commissioned by USMEF to quantify the value delivered to U.S. corn producers through exports of beef, pork and lamb. The study projects livestock feed use to grow 17 percent over next 10 years. In that same time period, red meat exports are projected to grow 26 percent.

The study finds that in 2015, red meat exports accounted for:

• 355 million bushels (or 2.1 million acres) of corn
• $1.3 billion in value to corn
• 1.48 million tons of distiller’s dried grains with solubles (DDGS)
• $205.4 million in value to DDGS
• 11.7 million tons (or 3.1 million acres) of combined corn and DDGS fed

“2015 was not a great year for U.S. beef and pork exports, yet they still brought $1.3 billion to the corn sector,” Juday explained. “Looking back at last year, if there were no red meat exports at all and that corn was added to carryover stocks, instead of a season average annual price of $3.60 per bushel, the price would have been about $3.15 per bushel without the contribution from meat exports. That’s a loss of 45 cents per bushel, which would have amounted to about $6 billion to the corn industry last year.”

Looking ahead, red meat exports’ positive impact on the corn sector looks even stronger. The study projects that indirect exports of corn through red meat exports will grow from 355.5 million bushels in 2015 to 482.4 million bushels in 2025 – an increase of nearly one-third. Indirect exports of DDGS would jump from 1.48 million tons in 2015 to 2.14 million tons in 2025 – a 44 percent increase.

“Over the next 10 years, the value of red meat exports to corn is estimated to be about $16.1 billion,” Juday said.

On the soybean side, a study entitled “The Value of Meat and Poultry Exports to U.S. Soybean Producers” by Decision Innovation Solutions, shows that over the past 11 years, pork exports contributed 15.818 million tons worth $5.5 billion to the soybean industry. In the next 12 years, pork exports are projected to contribute 23.674 million tons worth $7.7 billion to the soybean industry.

Philip Lobo, representing the United Soybean Board, presented similar findings. He told caucus members that 80 percent of U.S. soybean meal consumption is accounted for by swine and poultry.

“Meal is now at about 75 percent of a soy processor’s revenue, and about 97 percent of that meal is used in animal feed,” said Lobo. “Over the next 12 years, meat and poultry exports are forecast in increase 24 percent, raising soybean meal consumption.”

Zechariah Henderson, international trade specialist with USDA’s Foreign Agriculture Service (FAS) informed caucus members that USMEF retains a “highly effective” rating for its annual United Export Strategy (UES). He explained the FAS process of reviewing UES submissions and how funding priorities are established.

Providing an internal look at FAS, Henderson said structural changes in the agency have left upper-level positions unfilled, as a change in the administration looms with the November election.

Lou Lamoreux produces corn, soybeans, oats and hay near Lanark, Illinois, and represents the feedgrain producing sector on the USMEF Executive Committee. He co-chairs the Feedgrain and Oilseed Caucus with John Hagenbuch, a soybean, corn and pork producer from Utica, Illinois. Hagenbuch represents the oilseeds producing sector on the USMEF Executive Committee.

We will have our final committee report from St, Louis – from the USMEF Exporter Committee – in an upcoming edition of the Export Newsline.