CME: 2010 Per Capita Consumption Adjusted Down

US - As was reported in yesterday’s DLR, EPA yesterday announced that it would allow an ethanol blend rate of up to 15 per cent for cars and light trucks made from 2007 to date — if retailers want to sell it, write Steve Meyer and Len Steiner.
calendar icon 14 October 2010
clock icon 4 minute read

That last statement underscores the fact that this is an allowance, not a requirement. EPA also said it will propose new labeling requirements for gasoline pumps to help consumers decide which fuel to use in their cars. 2010-crop corn futures fell by 8-1/4 to 9-3/4 cents per bushel yesterday, primarily on profit-taking. The declines indicate, we think, that either the market had already fully incorporated this announcement or that the market thinks the change will make little difference since it requires nothing and ethanol made from $5-plus corn will not be competitive with gasoline made from $83-$86 oil. Ethanol futures fell by 1.3 to 2.7 cents per gallon with the nearby November contract closing at $2.199/gal., down 1.3 cents/gal. for the day. Note that November ethanol futures rose by nearly 21 per cent from Monday, 4 October through Tuesday, 12 October with the bulk of that gain coming on Friday after the October WASDE report release.

USDA adjusted its estimates for 2010 and 2011 domestic per capita meat and poultry consumption in Friday’s WASDE report. The chart below shows actual data for 1988—2009, current USDA estimates for 2010 and forecasts for 2011.

Some key pointsof the charts and last week’s changes are:

  • 2010 beef consumption was increased slightly but 2011 was reduced by 0.3 lbs. /person from the September estimate to 57.5 lbs./ person. Both are notably lower than 2009’s 61.1 lbs./person and continue the downtrend that began in earnest in 2008. The primary driver of lower 2011 consumption will be lower beef output (614 million lbs. or 2.3 per cent).

  • 2010 US per capita pork consumption was adjusted down slightly from September to 46.5 lbs. while the 2011 forecast was dropped by 0.4 lbs. to 46.4. Both of those are the lowest figures for US per capita pork consumption since the 45.5 lb. figure of 1976. The 2011 decline in per capita pork consumption comes in spite of a predicted 1.5 per cent increase in US pork production as exports are forecast to reach record levels in terms of both total tonnage and share of domestic production (see yesterday’s DLR for more details on pork exports).

  • Broilers are the only meat/poultry species for which per capita consumption is predicted to grow in 2011, increasing from 82 lbs. this year to 82.8 lbs. next year. That 82.8 figure, though, is 0.7 lbs. lower than USDA’s September estimate as USDA scaled back its production estimate for 2011 from 36.926 billion lbs. to 36.678 billion lbs. ready-to-cook (RTC) weight.

  • USDA’s forecasts for both 2010 and 2011 turkey consumption remained constant in October but the two forecasts indicate and continued downtrend for turkey consumption, driven primarily by falling production. Slightly higher exports in 2010 and 2011 cause domestic consumption to fall as well.

We hope readers see the common elements in all of the discussions above — domestic “consumption“, whether in total or per capita, is driven by production in the short run. Further, remember that “the short run“ depends on context. We recall the now-foggy lectures of our college professors saying that “the short run is a time period long enough for some input factors to change but not long enough for all to change“ — or something like that. For livestock and poultry species, the key input factor for output is the size of the breeding herd or flock and changing those can take a long time, depending on the species. Year-to-year changes in per-capita consumption say very little about consumer-level demand or tastes and preferences. To draw any inferences regarding those factors one must look at consumption AND prices. We eat whatever we produce and do not or cannot export.

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