* U.S. wheat production seen down 12 percent this year
* U.S. cotton production seen rising to 16 million bales
* Total plantings likely to drop by 3.3 million acres
* Poor U.S. corn quality hurting livestock growth -JBS CEO
(Adds comment from JBS CEO on corn quality)
By Michael Hirtzer and Roberta Rampton
WASHINGTON, Feb 19 U.S. wheat production will
fall 12 percent this year to 1.945 billion bushels as farmers
sow more corn and soybeans as large world wheat stocks weigh on
prices, the U.S. Agriculture Department said on Friday.
In a sign of strong economies worldwide, U.S. cotton
production was forecast to rise to 16 million bales, compared
with 12.4 million bales last year, the USDA said at its annual
China, the world's largest cotton buyer, will likely see
its worldwide cotton imports grow by 1 million bales to 10
million bales in the coming year as its economy continues to
USDA said world cotton trade would expand by 3 million
bales to 37 million bales. Cotton prices have also been on the
rise on prospects of strong demand next year.
"Continued economic recovery, especially in developing
countries, will boost world consumption growth modestly above
the long-run average of about 2 percent," said the USDA. It
projected world cotton use at 118.5 million bales, up 2.6
Meanwhile, total U.S. plantings of wheat, corn and soybeans
were projected to drop by 3.3 million acres. Total plantings of
the eight major crops were seen down 1.6 million acres.
"Given the still-existing, relatively high profitability in
grain production, I think the trade will be reluctant to
embrace those kinds of area declines," said Rich Feltes, senior
vice president of MF Global Research.
"Where are these lost acres going to go?" Feltes asked in
an interview, noting he believes corn and soy plantings have
room to grow.
On Thursday, USDA released its plantings and production
estimates for corn and soybeans. [ID:nN18195225]
If the forecasts hold, farmers will harvest a record 13.2
billion bushels of corn, eclipsing the record set in 2009, and
3.26 billion bushels of soybeans, the second-largest crop ever,
trailing only the 3.36 billion bushels of 2009.
But the quality of U.S. corn after a rain-soaked harvest
this year is a worry for livestock producers, according to the
chief executive of JBS USA (JBSS3.SA), which owns the country's
largest cattle feeding operation.
"This for sure will be a problem. We don't know the size of
the issue," Wesley Batista told Reuters at the Outlook Forum.
Cattle and hogs have been slower to gain weight in recent
months because of poor-quality corn, which means they take
longer for producers and feedlots to get them to market.
Feltes, of MF Global Research, said he expects corn exports
to be lower than USDA projections of 2.1 million bushels.
"I'm not sure the full magnitude of this mammoth South
American feed grain crop is dialed into here," he said.
"If we get more corn acres than this, if the export demand
is less than this, I would say this corn supply situation is
going to be more than adequate."
Soybean export forecasts also look high at 1.325 million
bushels, he said, noting his estimates are 1.175 million and
some analysts' forecasts are even lower.
"I think soybean rallies are going to be sold, particularly
out in the new-crop November contract," he said.
Soybean oil used for biodiesel was forecast to rise to 2.8
million lbs from 2.2 million for the current year.
That projection looks high, said Al Ambrose, vice president
of risk management for CHS Inc's oilseed processing division.
"I just don't see the profitability in that business,"
A $1-per-gallon tax credit for biodiesel expired at the end
of 2009 and Congress has not yet renewed it, creating
uncertainty for biodiesel makers who say they need it to keep
U.S. sugar output was forecast to fall 7.915 million short
tons from 7.972 million last year -- but up from previous
estimates of 7.741 million.
American sugar imports were projected at 2.932 million
short tons, and assume that the minimum amount is allowed under
World Trade Organization commitments.
The stocks-to-use ratio for sugar was forecast at 9.1
percent, down from the projected level of 10 percent for the
current fiscal year.
(Writing by Russell Blinch, reporting by Charles Abbott,
Christopher Doering and Roberta Rampton; editing by John
Picinich and Jim Marshall)
(Washington commodities desk, 202 898 8376)