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Feed Outlook - April 2011

by 5m Editor
14 April 2011, at 12:00am

The recent grains stocks report confirms that supplies are tight, according to Tom Capehart and Edward Allen in the latest report from the USDA Economic Research Service.


The Grain Stocks report issued by USDA’s National Agricultural Statistics Service (NASS) at the end of March shows relatively tight March 1 stocks for each of the feed grains. US corn feed and residual use is lowered 50 million bushels due to the recent run-up in corn prices and increased prospects for wheat feeding this summer. Corn used to producer ethanol is increased by 50 million bushels this month as ethanol production continues at near-record levels. The midpoints of the forecasts of the marketing year average prices received by farmers for corn, sorghum and oats are unchanged this month but the price ranges were narrowed. World coarse grain production and consumption are increased, especially for Sub-Saharan Africa, boosting global ending stocks prospects slightly.

Figure 1. US feed grain average prices received by farmers
Source USDA, National Agricultural Statistics Service, Quick Stats

Domestic Outlook

Domestic supply and use of feed grains unchanged from last month

US feed grain supplies for 2010/11 remain at 380.3 million metric tons this month, unchanged from last month’s projection but down 4.4 per cent from last year. Total use of the four feed grains is projected to be 359.4 million metric tons. With demand exceeding supply, ending stocks are expected to be drawn down to 20.9 million metric tons, the lowest level since the end of the 1995/96 marketing year.

Feed and residual use for the four feed grains plus wheat on a September-August marketing year basis decreased by about 0.7 million metric tons from last month to 143.8 million. Grain-consuming animal units (GCAUs) are projected at 93.0 million this month, down slightly from last month's 93.3 million. Feed and residual use per animal unit is unchanged this month at 1.54 tons, the same as last year.

Grain stocks report confirms tight stocks situation

The Grain Stocks report, issued by USDA’s National Agricultural Statistics Service (NASS) on 31 March 2011, shows relatively tight stocks for each of the feed grains. Corn stocks on1 March were pegged at 6,523 million bushels, down 15 per cent from the previous year. Stocks were considerably lower than most trade estimates but about what USDA was expecting. Within a few days of the Grain Stocks report, May corn futures rose more than $1.00 a bushel, and prices exceeded the previous all-time high for the nearby contract, providing evidence that more price rationing needs to occur. With incentives to feed wheat this summer

Figure 2. Corn feed and residual: comparison of first half of year versus second half of year
Source USDA, World Agricultural Outlook Board, WASDE

due to favourable wheat prices relative to corn, corn feed and residual use is lowered by 50 million bushels to 5,150 million bushels, offset by an increase in wheat feeding expected this summer.

Feed and residual use in the second half of the marketing year, forecast to be about 1,517 million bushels, is expected to be only 29.5 per cent of the 5,150 million bushel marketing year total. This would be the lowest share since at least 1975. Feed and residual use in the second half of the year is expected to be the second lowest in absolute terms since 1975, behind the drought year of 1983. It would be down slightly from the 1,571 million estimated for 1995/96. Since 1995/96, corn used for ethanol is up more than 12-fold, adding substantially to available supplies of feed byproducts.

Projected sorghum feed and residual is increased by 10 million bushels this month and oat feed and residual is decreased by 15 million bushels, reflecting feed and residual use to date as indicated by the March 1 stocks. Feed and residual use for barley remains unchanged from last month.

Corn and sorghum used for ethanol is increased

Corn used for ethanol is projected up 50 million bushels from last month at 5,000 million bushels for 2010/11. Sorghum used for ethanol is increased by five million bushels from last month. Ethanol production data are incomplete for the first half of the marketing year, as February data have not been released by Energy Information Administration (EIA). Monthly ethanol production for January 2011 (the latest available data) was record high at 1,181 million gallons. Ethanol corn use for February likely declined from January based on weekly EIA data for ethanol production. Weekly production data also suggest corn use for ethanol during March will be nearly as high as in January.

Figure 3. US corn: Central Illinois cash and average farm price, monthly
Sources: USDA, Agricultural Marketing Service, Weekly Grain Market News Summary, and USDA, Economic Research Service, Feed Grains Database

Figure 4. US sorghum: Kansas City cash and average farm price, monthly
Sources: USDA, Agricultural Marketing Service, Weekly Grain Market News Summary, and USDA, Economic Research Service, Feed Grains Database

Combining the February estimate with reported monthly ethanol production indicates that September-February corn used for ethanol was up 14 per cent from the first half of 2009/10.

Corn export for 2010/11 are projected at 1,950 million bushels, unchanged from last month but down 37 million from the previous year. Sorghum exports are lowered 10 million bushels to 140 million bushels due to the slow pace of sales and shipments caused by tight US supplies.

Even with record-high prices, total disappearance of corn is expected to be record high, pushing corn ending stocks for 2010/11 to 675 million bushels, a 15-year low. The corn stocks-to-use ratio is projected to fall to five per cent, matching the record low set at the end of the 1995/96 marketing year. This level translates into about an 18-day supply of old-crop corn at the beginning of the 2011/12 marketing year; however, some new-crop corn is usually harvested and available for use before the September 1 start of the new marketing year.

Minor changes to feed grain prices

The season-average corn farm price for 2010/11 is expected to hit a record level, averaging between $5.20 and $5.60 per bushel. The $5.40 mid-point is unchanged from last month but the range is narrowed by 10 cents. Price ranges are also narrowed for sorghum, barley and oats but the midpoints are unchanged at $5.40, $3.80 and $2.45 a bushel, respectively. The sorghum farm price forecast is a record high.

Figure 5. US barley utilisation
Source USDA, World Agricultural Outlook Board, WASDE

Figure 6. Barley prices received by US farmers, monthly
Source USDA, National Agricultural Statistics Service, Quick Stats

Figure 7. US oats utilization
Source USDA, World Agricultural Outlook Board, WASDE

Figure 8. US oats: average farm price, monthly
Source USDA, National Agricultural Statistics Service, Quick Stats

March prospective planting intentions report confirms USDA’s initial projections

US farmers plan to plant 92.2 million acres of corn this year, an increase of four million acres from last year. In February, USDA released the USDA Agricultural Projections to 2020 and forecast 2011 planted acreage at 92 million. Corn acreage increased the most in the Northern Plains region, comprised of Kansas, Nebraska, North Dakota and South Dakota. Corn acreage increased by 1.9 million acres in the Northern Plains, compared with a 1.1-million increase in the Corn Belt States (Illinois, Indiana, Iowa, Missouri and Ohio). The big year-to-year increase for the Northern Plains as compared with the Corn Belt has implications for the national average yield as yields in the Northern Plains are about 15 per cent less than yields in the Corn Belt.

Figure 9. Change in corn planted area from 2010 to 2011 (1,000 acres), USDA farm production regions
Source USDA/National Agricultural Statistics Service Prospective Planting, 31 March 2011

Almost all corn-producing States show an increase in expected corn acreage, with the exception of a 150,000-acre decline in Texas. Texas farmers indicate cotton will provide a much better return, increasing plantings by 548,000 acres.

US farmers also plan to increase plantings of sorghum and barley in 2011, up marginally for both crops from last year at 5.645 million acres for sorghum and 2.952 million acres for barley. Oat plantings are expected to decline to 2.839 million acres.

International Outlook

Global coarse grain supplies boosted this month

World coarse grain production and beginning stocks forecasts for 2010/11 are increased this month, boosting supplies 6.3 million tons. Production is up 4.5 million tons to 1,084.1 million, led by a 2.2-million-ton increase for sorghum, a 1.4-million-ton boost for millet and a 1.2-million-ton increase for corn. Global barley production is reduced 0.4 million tons this month, with rye, oats and mixed grain virtually unchanged.

Most of the increased global sorghum and virtually all the millet production increase are in Sub-Saharan Africa. Although some locations in the region have suffered excess dryness or floods, in general, rains and temperatures have been favourable across most of the region. Sorghum production is up 2.0 million tons for the region to 29.1 million.

There were numerous changes to coarse grain production as all Sub-Saharan countries in the database were reviewed this month but the most dramatic increases are for Niger, up 1.5 million tons to 5.5 million; Sudan, up 1.0 million to 5.9 million; Uganda, up 0.7 million to 3.4 million; Burkina, up 0.7 million to 4.2 million; and Chad, up 0.3 million to 1.6 million. These are all countries where sorghum and millet are used primarily for human consumption, especially among lower income groups, so the economic implications of the increased production are significant.

Although corn production in the region is projected up only 0.4 million tons this month to 54.7 million tons, reduced prospects in South Africa partly offset increases in several other countries. South Africa’s corn production is projected down 0.5 million tons to 12.0 million as dryness during February in the high-yielding eastern part of the Maize Triangle (Mpumalanga) hit corn during grain fill and reduced yields. Area was reported slightly lower as well. With large corn stocks and transportation problems limiting exports, the incentives to plant corn have not been strong enough to maintain area.

Figure 10. South Africa's corn production and yield
Source USDA, World Agricultural Outlook Board, WASDE

Figure 11. Brazil's corn production and yield
Source USDA, World Agricultural Outlook Board, WASDE

Important corn production changes are made this month to forecasts for several countries outside Sub-Saharan Africa. Brazil’s corn production projection is increased 2.0 million tons to 55.0 million. Harvest reports indicate the first-crop production was larger than expected as harvesting conditions were favourably dry in the south. Moreover, second-crop area planted exceeded expectations despite excessive rains and harvesting delays for soybeans in Mato Grosso and Mato Grosso do Sul. High corn prices and well-drained soils have supported corn planting despite excess rain. Good growing conditions supported increased corn production prospects this month for Paraguay, up 0.4 million tons; Cambodia, up 0.3 million; are Saudi Arabia, Thailand, Peru, Ukraine and Jordan, smaller increases.

Corn production prospects are reduced this month for Indonesia, down 1.3 million tons to 6.8 million. Excess rains and high input costs are limiting production. Forecast corn production in Egypt is cut 0.5 million tons to 6.5 million as both area and average yields are reduced. Iran’s production is reduced 0.3 million tons to 1.7 million as area and yields are reported similar to those of the past two years. There are smaller reductions in corn production for Colombia, Russia, Syria, Yemen and Malaysia.

Sorghum production prospects for Australia are up 0.2 million tons this month to 2.4 million as favorable moisture boosted area and yield prospects.

Syria’s barley production for 2010/11 is revised down 0.9 million tons to 0.8 million as area and yield are reported to have been similar to 4 of the last 5 years (much better than in 2008/09). The Syria revision and small changes to several other countries more than offset increased barley prospects for Iran, up 0.4 million tons, and smaller increases for China, Afghanistan, and Russia.

Coarse grain beginning stocks for 2010/11 are up 1.8 million tons this month to 196.9 million. There are small revisions for numerous countries causing changes in beginning stocks of less than 0.1 million tons, but these are offsetting. The largest change is for Iran, with beginning stocks increased 1.3 million tons, with corn up 0.8 million and barley increased 0.5 million. Revisions to historical production back to 2007/08 boosted estimated stocks for corn and barley. Indonesia’s corn stocks are boosted 0.2 million tons to 0.7 million due to reduced use estimated for 2009/10. Russia’s barley beginning stocks for 2010/11 are up 0.2 million tons because of small production revisions for several years of history. There are also increases in 2010/11 coarse grain beginning stocks of 0.1 million tons this month for Saudi Arabia, Peru and Benin. The largest decline in beginning stocks was a 0.2-million-ton decline for China’s barley due to reduced production estimated for 2009/10.

World coarse grain use projected higher

Global coarse grain consumption in 2010/11 is projected up 5.4 million tons this month to 1,125.4 million. Most of the increase, 3.3 million tons, is in Sub-Saharan Africa with increased human food consumption facilitated by increased production. China’s corn consumption is projected 2.0 million tons higher to 164.0 million tons. Half the increase is in feed and residual use and half in food and industrial use. Corn prices in China reflect strong demand supported by economic growth. Brazil’s increased corn production and growth in poultry production supports a 0.5-million-ton increase in feed use. Thai corn feed use is also up 0.5 million tons this month as more is being used domestically and less exported. This month there are increases of 0.3 million tons or less in projected coarse grain use for Iran, Cambodia, Russia, Ukraine, Peru and the EU.

Coarse grain consumption prospects are reduced this month for Syria, down 0.5 million tons due to reduced barley production. Egypt’s corn use is cut 0.5 million tons because of reduced production, with more than half the reduction in food and industrial use. There are also reductions of 0.1 million tons in projected corn use for Colombia, Israel, Saudi Arabia and Indonesia.

Global coarse grain stock prospects increased slightly

World coarse grain stocks for 2010/11 are projected 0.8 million tons higher to 155.7 million tons. Most of this month’s increased supplies are expected to be used, as demand remains strong despite high prevailing prices in most countries. Coarse grain ending stocks in the Sub-Saharan region are projected up 1.2 million tons this month to 11.3 million due to increased production prospects. Iran’s 2010/11 ending stocks are up 1.2 million tons because of increased beginning stocks. Ukraine’s coarse grain ending stocks are up 0.4 million tons this month mostly due to reduced barley export prospects. Saudi Arabia’s coarse grain stocks prospects are up 0.2 million tons due to increased corn stocks and reduced expected barley use. Cambodia’s ending stocks of corn are up 0.2 million tons because of increased production.

Reduced 2010/11 coarse grain ending stocks are projected for China, down 1.4 million tons, due to strong demand for corn. Syria’s coarse grain ending stocks are cut 0.5 million tons, mostly because of reduced barley production. Canada’s ending stocks are trimmed 0.4 million tons as corn import prospects are reduced. Other changes in projected ending stocks were less than 0.1 million tons.

World corn trade boosted slightly; US corn exports unchanged

Global corn trade in 2010/11 is projected to reach 92.4 million tons, up 0.3 million this month. Imports are up 0.9 million tons to 2.0 million for Indonesia as production prospects there are cut. China’s imports are boosted 0.5 million tons to 1.5 million supported by high prices in China relative to the United States in the first half of March. These increases are partly offset by reductions for Canada, down 0.4 million tons to 1.2 million due to the slow pace of purchases, and by reductions of 0.1 million tons each for Israel and Peru.

Corn export prospects are boosted 1.0 million tons for Brazil to 11.0 million due to increased production prospects and the strong pace of exports during the first months of the 2010/11 October-September trade year. These are record-large corn exports for the trade year. Brazil’s March-February local marketing year exports are raised 1.5 million tons to 8.5 million. Paraguay’s corn export prospects are up 0.2 million tons to 1.6 million due to increased production.

Corn export prospects are reduced this month for Thailand, down 0.5 million tons to 0.2 million, the lowest in five years, as domestic use has been strong. South Africa’s exports are trimmed 0.3 million tons to 2.2 million as transportation costs are limiting exports despite large stocks. Rail transport is not working as well as in the past, pushing exporters to truck more corn to ports.

Figure 12. US corn exports by month
Source USDC US Census Bureau

US corn exports remain projected to reach 50.0 million tons in 2010/11 (1.95 billion bushels for the local marketing year). Census data indicate October-February shipments of 17.3 million tons, down one per cent from a year earlier. March corn export inspections were 4.5 million tons, down three per cent from a year ago. However, outstanding export sales as of31 March 2011, were 13.5 million tons, up 37 per cent from the previous year. Strong shipments are expected in the last half of 2010/11 but the 2010/11 outstanding sales carried over to the next year are also expected to be exceptionally large.

US sorghum export prospects reduced

US sorghum exports for 2010/11 are reduced 0.2 million tons this month to 3.6 million – for the local marketing year, down 10 million bushels to 140 million – due to tight US supplies and increased domestic use. The early-season shipment pace has been slow, with Census exports for October-February of 1.3 million tons, down 32 per cent compared to the previous year. March inspections showed some turnaround, reaching 0.54 million tons, up from 0.36 a year ago. But as of 31 March 2011, outstanding sales were 0.70 million tons, down from 0.75 million tons a year earlier.

Global sorghum trade is projected slightly higher this month, with the US export reduction more than offset by an increase for Australia. EU imports were increased 0.1 million tons to 0.8 million based on strong purchases to date. World barley trade is reduced slightly this month to 15.6 million tons, with reductions in exports from the Ukraine due to the extension of export restrictions through the end of 2010/11. Imports by Saudi Arabia are also trimmed.

Further Reading

- You can view the full report by clicking here.

April 2011
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