USDA Feed Outlook April 2009

World 2008/09 corn trade is projected up 0.7 million tonnes this month to 76.1 million, says Allen Baker, Edward Allen, and Heather Lutman in the USDA's Economic Research Service (ERS) Feed Outlook report for March 2009.
calendar icon 13 April 2009
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USDA Economic Research Service

Corn Ending Stocks Lowered This Month

Corn ending stocks for 2008/09 are projected lower this month as March 1 stocks indicated higher feed and residual use in the second quarter than forecast earlier. With the slow/down in construction and sales of paper products impacting starch demand, corn used to make starch was much lower in the first half of the marketing year than the same period last year, resulting in a lowered use forecast for the year.

First-half feed and residual use for barley and oats, as indicated by the stocks report, was higher than expected and suggests higher marketing year use. World 2008/09 coarse grain production, consumption, and ending stocks are projected lower this month, but increased corn exports by Ukraine and Russia are boosting global corn trade. Marketing year average prices received by farmers are projected slightly higher this month.

Domestic Outlook

Feed Grain Use Prospects Down in 2008/09

Feed grain total supplies in 2008/09 remain unchanged this month at 374 million metric tonnes, down from 389.2 million in 2007/08. The year-to-year decrease was caused by lower corn production in 2008. Lower feed grain planted and harvested area more than offset a slightly higher average yield at 3.58 metric tonnes per acre, compared with 3.56 in 2007/08.

Forecast feed grain use for 2008/09 is expected to total 326.1 million metric tonnes, up 0.80 million from last month, but down from 344.1 million in 2007/08. Increases in feed and residual use are partially offset by small decreases in food, seed, and industrial (FSI) use and exports. Feed and residual use is projected 1.1 million tonnes lower this month. An increase in expected feed and residual use for corn was slightly offset by decreases for barley and oats. FSI use is lowered 0.3 million tonnes with lower expected use of corn. Feed grain exports are lowered 0.1 million tonnes on lower expected barley exports.

Feed and residual use for the four feed grains plus wheat converted to a September- August marketing year is up 1.63 million tonnes this month, which is partially explained by heavier expected steer and heifer weights. Grain-consuming animal units are projected at 93.12 million this month, down slightly from 93.4 million last month. This reflects lower poultry and hog inventories as producers continue to adjust to weakness in demand for meat products. Feed and residual use per animal unit is increased slightly to 1.58 tonnes, up from 1.56 tonnes last month.

Corn Use Down in 2008/09

Corn supplies for 2008/09 remain unchanged this month. Total corn utilization is projected up 40 million bushels to 12,040 million, down from 12,737 million in 2007/08.

This year-over-year decrease stems from decreases in exports and feed and residual use, which is partially offset by increased FSI use.

Feed and residual use for 2008/09 is forecast up 50 million bushels this month to 5,350 million, down from 5,938 million in 2007/08. This is as a result of the March 1 stocks that indicated higher-than-expected disappearance during the December- February quarter. Feed and residual use for the first half of the 2008/09 marketing year, September-February, totaled 3,569 million bushels, compared with 4,161 million bushels in the same period of 2007/08.

FSI use for 2008/09 is projected at 4,990 million bushels, down 10 million from last month with lower projected use for starch (other than for fuel and beverage alcohol) more than offsetting higher expected use for sweeteners. In first half 2008/09, corn used for high fructose corn syrup (HFCS) was down 6 percent from the 232 million bushels used in 2007/08. Corn used for HFCS is expected to increase seasonally over the next few months but end the marketing year down 4 percent from 2007/08.

Corn used to make glucose and dextrose was down 1 percent in the first half of the marketing year and is expected to be down a similar amount for the year. Corn used for starch is projected down 10 percent for 2008/09 as declining demand for construction materials and paper products reduce demand for starch. In first half 2008/09, corn used for starch totaled 116 million bushels, down from 133 million in 2007/08, equaling a 13-percent decline.

Projected corn use for ethanol is unchanged from last month at 3,700 million bushels for 2008/09. 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). Ethanol corn use for February was estimated using weekly EIA data for gasoline blended with alcohol and indications of ethanol plants currently operating. This February estimate combined with reported monthly ethanol production indicates that September-February corn use was up 31 percent from the 1.3 billion bushels used in first half 2007/08

Corn exports for 2008/09 are projected at 1,700 million bushels, unchanged from last month but down 736 million from the previous year. Although U.S. corn sales and shipments have strengthened during the past several weeks, U.S. exports remain under pressure from declining world feeding demand and large supplies of lowpriced wheat.

Corn ending stocks for 2008/09 are projected 40 million bushels lower at 1,700 million. This is up from 1,624 million bushels in 2007/08. The season average corn price is raised 10 cents on both ends of the range to $4.00 to $4.40 per bushel, compared with $4.20 per bushel in 2007/08

Sorghum Supply and Use Remains Unchanged

Sorghum supply and use remain unchanged for 2008/09. Feed and residual use for the first half of the marketing year, September-February, totaled 186 million bushels, compared with 141 million during the same period of 2007/08. During 2008/09, sorghum has been used as a lower priced substitute to corn. Strong export demand for sorghum in 2007/08 kept prices at premiums to corn.

This marketing year, sorghum has been discounted relative to corn. Prices received by farmers for sorghum in 2008/09 are expected to average $3.15 to $3.45 per bushel, compared with $3.05 to $3.35 last month. This is well below the record $4.08 in 2007/08.

Barley Use Prospects Lowered

Barley supplies remain unchanged this month. Total use in 2008/09 is forecast down 6 million bushels, to 249 million. Feed and residual use is down 5 million bushels to 65 million, but up from 32 million in 2007/08. This decline in feed and residual use is based on lower-than-expected December-February disappearance as indicated by the March 1 stocks. Exports are projected down 1 million bushels to 14 million. Projected ending stocks are raised 6 million bushels to 89 million. This is up from 68 million bushels in 2007/08.

Prices received by farmers for barley in 2008/09 are expected to average $5.20 to $5.30 per bushel, compared with $5.10 to $5.30 last month. Barley prices are up sharply from the record $4.02 in 2007/08. Prices received by farmers reflect prices for both malting barley and feed barley. Marketings for 2008/09 reflect a largerthan- normal share of higher priced malting barley.

Oats Feed and Residual Use Declines

Oats supplies remain unchanged this month. Total use in 2008/09 is forecast at 198 million bushels, a decrease of 5 million from last month due to lower expected feed and residual use based on lower-than-expected December-February disappearance.

Ending stocks are also projected up 5 million bushels, at 72 million. Prices received by farmers are projected at $3.10 to $3.20 per bushel, compared with last month’s range of $3.05 to $3.25 and $2.63 received in 2007/08.

International Outlook

Revisions Trim 2008/09 Global Production

World coarse grain production in 2008/09 is projected to reach 1,097.6 million tonnes, down 2.5 million this month. The largest decline is for sorghum, down 1.3 million, tonnes followed by declines of 0.7 million for barley and corn. Millet production is up slightly, but oats is down slightly.

The largest reduction this month is for Ethiopia, where the statistical production series since 2002/03 was changed for several crops due to a reorganization of government statistics. The new historical series has lower production levels, but the year-to-year changes are similar to those in the old series. Ethiopia had bumper coarse grain crops in 2008, but the current estimate is down 1.9 million tonnes from last month’s forecast, which was based on the old historical series. Sorghum is cut 0.7 million tonnes to 2.6 million, barley is reduced 0.6 million to 1.5 million, corn is down 0.5million to 4.6 million, and millet is trimmed slightly to 0.5 million.

Sorghum production prospects in Argentina are down 0.7 million tonnes this month to 2.3 million due to hot dry weather during most of March that reduced yield prospects. Other sorghum production changes include a 0.2-million-tonne increase to 1.8 million tonnes in Burkina Faso, with improved yields; a 0.2-million-tonne reduction in China’s production to 1.8 million as area is reported to have continued its historical decline in 2008/09; a 0.1-million-tonne increase in Mexico to 6.3 million due to an increase in reported area; small increases in Eritrea and Niger; and a decline in Somalia.

Brazil’s corn production for 2008/09 is projected 1.0 million tonnes higher this month to 50.5 million. Corn yields reported for the main-season crop are better-thanexpected given the hot, dry conditions during reproduction in the largest producing state of Parana. There were better rains further north in Brazil.

Corn production for 2008/09 in Chile, Vietnam, and Iran is down 0.5, 0.5, and 0.4 million tonnes, respectively, due to corn area not expanding as previously expected. Yields were also lower than expected in Chile and Vietnam Good yields boosted Thailand’s corn production 0.1 million tonnes. There were small increases reported this month for Philippines, Syria, Egypt, Angola, Saudi Arabia, and Cape Verde, as well as reductions for Tanzania, Colombia, Somalia, and Malaysia.

Good yields boosted millet production in Niger 0.2 million tonnes this month to 3.2 million.

Turkey’s oats area did not increase as expected in 2008/09, trimming production 0.1 million tonnes to 0.2 million, but its rye production increased slightly.

Changes to 2008/09 beginning stocks of coarse grains were mostly small and offsetting, leaving global carryin down 0.1 million tonnes to 159.6 million. However, it is worth noting that the historical series for China’s sorghum use and stocks was revised back to 2002/03 to reflect recent information on trends in sorghum use for alcoholic spirits, which raised sorghum food, seed, and industrial use for the country.

World Coarse Grain Use and Ending Stocks Prospects Trimmed

Global coarse grain consumption for 2008/09 is projected down 1.6 million tonnes this month to 1,071.1 million. U.S. use is projected up, but more than offset by lower foreign use, forecast down 2.4 million tonnes to 791.5 million. The largest reduction in projected foreign use is for barley, down 1.1 million tonnes, with a 0.7- million-tonne reduction each for corn and sorghum. World consumption would have been down more this month, but the changes to local marketing year exports and imports were not balanced. World coarse grain exports increased 1.1 million tonnes this month while imports increased only 0.1 million. This boosted global disappearance 1.0 million tonnes.

Barley consumption is down 0.6 million tonnes in Ethiopia due to the change in the statistical series. Barley feed use is projected down 0.5 million tonnes this month for Russia as government purchases boost stocks prospects.

Sorghum consumption is reduced 0.6 million tonnes in Ethiopia due to the change in the statistical series. Feed consumption is cut 0.4 million tonnes for Argentina due to the reduced crop. For China, sorghum use is projected up 0.35 million tonnes, but feed use is trimmed 0.05 million due to increases in estimated sorghum use for the production of spirits. Increased production is boosting sorghum use 0.1 million tonnes for Mexico, and by smaller amounts in Burkina Faso, Eritrea, and Niger. There are small reductions this month in projected sorghum use for India, Somalia, and Thailand.

Most of the decline in global barley production is due to statistical changes for Ethiopia. Other changes include a 0.1-million-tonne decline in China to 3.3 million with reduced area only partly offset by increased yields; a small increase for Japan; and a reduction for Iraq.

Foreign 2008/09 corn feed consumption is projected down 1.4 million tonnes this month to 341.4 million, partly because weak economies are dampening meat demand. Corn food consumption is cut 0.5 million tonnes in Ethiopia due to the change in the statistical series. Mexico’s corn feed use is cut 0.5 million tonnes due to slow corn imports, stagnant meat production, and increased sorghum feed use.

Indonesia’s forecast feed use is down 0.4 million tonnes this month, with slower imports, but with a 0.1-million-tonne increase in food use. Vietnam’s projected corn use is down 0.3 million tonnes, with a 0.1-million decline in feed use, due to reduced production. Reduced production is trimming corn use 0.2 million tonnes in Iran, 0.1 million tonnes in Chile, and by smaller amounts in Tanzania and Somalia. Corn use in Thailand is trimmed 0.1 million tonnes due to reduced imports and increased exports. Increased exports are reducing projected corn use slightly for Australia. Syria’s corn use is down slightly. Increased imports are boosting corn use 0.1 million tonnes for Venezuela, and slightly for Yemen. Increased production is supporting corn use for Angola and Cape Verde.

World coarse grain ending stocks for 2008/09 are down 1.1 million tonnes this month to 186.1 million, mostly due to U.S. changes. Foreign stocks are down only 0.3 million this month. Foreign barley stocks are projected up 0.5 million tonnes this month, while sorghum is forecast down 0.5 million and corn reduced 0.3 million. Russian government purchases are boosting barley stocks prospects. Sorghum ending stocks prospects are down 0.3 million tonnes for Argentina due to reduced production. Sorghum stocks are reduced 0.2 million tonne in Ethiopia due to revision of the statistical series.

Projected 2008/09 corn ending stocks include many mostly offsetting changes. Brazil’s ending stocks are up 1.0 million tonnes to 9.8 million because of increased production prospects. Corn stocks are forecast up 0.2 million tonnes this month for Mexico and Syria due to sluggish demand for feed. Smaller increases are forecast for Philippines, Egypt, and other countries. Corn ending stocks are reduced this month for Ukraine, down 0.5 million tonnes, and for Russia, down 0.4 million due to increased exports. Corn stocks prospects are reduced 0.2 million tonnes each this month for Iran and Vietnam, mostly due to reduced production. Numerous countries have small reductions in forecast corn ending stocks this month.

Global Corn Trade Increased, U.S. Export Prospects Unchanged

World 2008/09 corn trade is projected up 0.7 million tonnes this month to 76.1 million. Since changes to forecast imports were mostly offsetting, the increase in world corn trade is based on prospects for exports and is accommodated by an increase in the “unaccounted” import category.

Corn exports are raised 0.5 million tonnes to 4.5 million for Ukraine and 0.4 million tonnes to 1.0 million for Russia. Supplies of corn in these countries are ample, and export prices are made attractive by generally favorable exchange rates. Based on the pace of corn shipments, Croatia’s exports are up 0.2 million tonnes, Australia is up 0.1 million, and Chile, Tanzania, Pakistan, and Vietnam are increased slightly.

Corn export prospects for Brazil for October-September 2008/09 are reduced 0.5 million tonnes to 9.5 million. Port congestion and heavy shipments of soybeans receiving priority over corn exports may result in more local marketing year corn exports leaving Brazil after October 1, 2009. The local marketing year corn export forecast remains unchanged this month at 9.5 million tonnes.

Projected corn imports for Mexico are down 0.5 million tonnes this month to 7.0 million. Sluggish meat production prospects are limiting corn imports. Reduced feed use is cutting prospects for Indonesia’s corn imports 0.4 million tonnes to only 0.1 million. Thailand’s imports from neighboring countries have been slow, trimming forecast imports 0.1 million tonnes this month.

Reduced corn production this month supports increased imports for Chile and Iran, each forecast up 0.2 million tonnes this month, and for Vietnam, up 0.1 million. The strong pace of corn imports is boosting import prospects for Venezuela 0.2 million tonnes this month and supports small increases for Yemen and Tanzania.

U.S. October-September 2008/09 corn exports remain projected at 44.0 million tonnes this month (1.7 billion bushels for September-August). The pace of sales and shipments supports the forecast. Census corn exports for October 2008 through February 2009 were 16.7 million tonnes and grain inspections of corn in March reached 4.2 million, an increased pace. Corn shipments during the first half of the year nearly reached 21 million tonnes and have been stronger recently. As of April 2, 2009, outstanding export sales were 9.7 million tonnes, down sharply from the previous year’s exceptional pace, but fairly large compared with sales in most years. With reduced competition from Argentina’s drought-ravished corn crop in 2008/09, U.S. exports are expected to improve in the second half of the year.

No significant changes were made this month to projected world 2008/09 barley, sorghum, oats, or rye trade.

April 2009

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