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USDA Feed Outlook

13 March 2013

USDA Feed Outlook - March 2013USDA Feed Outlook - March 2013

Projected corn feed and residual use for 2012/13 is boosted by 100 million bushels this month as imports are forecast to rise to a new high of 125 million bushels and exports are expected to fall to a 41-year low of 825 million bushels.
Feed Outlook

Corn Feed and Residual Use Boosted With Higher Imports and Lower Exports

Total corn supplies for 2012/13 are increased as forecast imports are raised 25 million bushels to keep up with the year-to-date pace. As projected, corn exports would be the lowest level since the 1971/72 marketing year. Trade changes increase the domestic supply of corn available for livestock feeding and boost expected 2012/13 feed and residual use to 4.55 billion bushels. Strong meat production, especially poultry, is supporting feed demand for corn. Total feed grain supplies are increased by 549,000 metric tons on higher projected corn imports; however, the gain is curbed slightly by a lower projection for oat imports. Feed grain ending stocks are cut by 36,000 metric tons. Both the corn and sorghum farm prices are projected lower. Barley and oats farm prices are unchanged at the midpoint.

Competitive prices for Argentine corn indicate increased corn exports, just as Brazilian corn shipments are expected to slow as port capacity shifts to soybeans. This month, global coarse grain production, consumption, ending stocks, and trade for 2012/13 are forecast down slightly.

Domestic Outlook

Higher Feed Use More Than Offsets Reduced Export Prospects

U.S. feed grain supplies are increased by 549,000 metric tons on higher projected corn imports, slightly offset by a lower projection for oat imports. The strong pace of corn imports to date supports the import change. Feed grain use is raised by 585,000 tons as a 2.272-million-ton increase in feed and residual use more than offsets a 1.687-million-ton decline in exports. Total feed grain use is projected to reach 299.9 million tons in 2012/13, down from 330.7 million in 2011/12. Corn export prospects are down due to sluggish sales and shipments. Sorghum exports are edged up, indicating a stronger-than-expected pace of exports to Mexico. Oats exports are moved downward, resulting in total feed grain exports of 23.2 million tons. Food, seed, and industrial use forecasts are unchanged, and feed grain ending stocks are projected at 18.9 million tons, 36,000 below last month.

Feed and residual use for the four feed grains plus wheat on a September-August marketing year basis is projected at 128.8 million metric tons this month, up from 126.5 million last month. Grain-consuming animal units (GCAUs) are projected at 91.8 million this month, up from last month's estimate of 91.7 million. The 2013 forecast of total red meat and poultry production is raised from last month as higher beef, broiler, and turkey production is expected to more than offset lower forecast pork production. Feed and residual use for the four feed grains plus wheat per animal unit is 1.40 tons per GCAU this month, up slightly from 1.38 tons last month. This compares with 1.41 tons in 2011/12.

Corn: Historic Import Pace Boosts Total Supply

Projected U.S. corn supplies for 2012/13 are increased to 11,894 million bushels as forecast imports are raised 25 million bushels to keep up with the year-to-date pace. Shipments from Brazil surged in November and December 2012 and January 2013. The pace of over 15 million bushels per month is historically high and supports a record import forecast of 125 million bushels for the marketing year. Higher import volume from Mexico accounts for some of the gain. September 2012-January 2013 import volume was 65 million bushels, up from 7 million during the same period a year earlier.

Corn Exports Projected To Be Lowest Since 1971/72, Feed and Residual Use up Sharply

The extremely slow pace of U.S. corn shipments to date is expected to continue due to high prices, stronger expected competition from South American corn, and competitively priced feed quality wheat. September 2012-January 2013 export volume was 329 million bushels, compared with 721 million bushels during the same period in 2011/12. These factors support a reduction in projected exports of 75 million bushels to 825 million, the lowest level in more than 40 years. In 1971/72, the last time exports were lower than the current forecast, export levels plunged to 782 million bushels. Stocks are forecast unchanged at 632 million bushels. The increase in imports and reduction in exports supports a 100-million-bushel increase in projected feed and residual use to 4,550 million bushels. Corn demand for feeding poultry is supported by higher expected production of poultry meats.

Based on farm prices reported to date, estimated marketings, futures prices, and current cash market price data, the U.S. average projected corn price received by producers was lowered $0.20 cents per bushel on the high end of the range and unchanged on the low end. The resulting midpoint is $7.10 per bushel, $0.10 lower than last month’s midpoint projection.

Sorghum Feed and Residual, Farm Price Lowered

Industry reports of declining cattle numbers in Texas and Kansas and, subsequently, reduced livestock feeding in these leading sorghum-producing States contribute to a 10-million-bushel downward revision of the sorghum feed and residual estimate. With 90 million bushels allocated to this use category, sorghum feed and residual estimates for 2012/13 remain the second lowest since 1975. No changes are made to other domestic use categories this month. Exports are increased by 10 million bushels from 70 to 80 million based on trade data indicating a stronger-than-expected pace of exports to Mexico. Sorghum exports now account for approximately 32 percent of total disappearance. The expansion in projected sorghum exports in 2012/13 offsets the reduction in feed and residual and results in no net change to the total use category.

Sorghum ending stocks remain tight. The current forecast of approximately 21 million bushels is the lowest since 1951 when the ending stocks figure was estimated at 18 million. The lack of available supplies may inhibit the appeal of utilizing sorghum in place of corn for ethanol production.

A downward revision to corn farm prices this month supports a similar, $0.10 per bushel adjustment to the sorghum average farm price. The midpoint price for 2012/13 sorghum is $7.05 per bushel; the projected range of prices received by farmers in 2012/13 is reduced by $0.20 on the high end, resulting in a sorghum price range of $6.70 to $7.40 per bushel.

Modest Adjustments to Barley Exports and Ending Stocks

For the second consecutive month, U.S. Census Trade Bureau data provide support for a 1-million-bushel downward revision of the U.S. barley export projection. At 8 million bushels, the updated 2012/13 export forecast is approximately 9 percent lower than the 2011/12 estimate and is reflective of an international feed barley marketplace in which the United States faces strong competition from Australia and Ukraine. In accordance with the export reduction, ending stocks are increased by 1 million bushels.

With the majority of the barley crop now marketed, month to month cash market price fluctuations are less influential on the seasonal average farm price than at earlier points in the marketing year. Consequently, observed slight increases in cash malt prices and modest decreases in feed barley prices do not, collectively, warrant a revision of the midpoint barley price forecast of $6.40 per bushel. The barley price range is increased by $0.10 to $6.25 per bushel on the low end and reduced by $0.10 to $6.55 on the high end.

Oats Imports and Ending Stocks Lowered

The U.S. oats import forecast is lowered by 5 million bushels this month in response to the slow pace of Canadian shipments. Reduced imports have squeezed domestic supply which, in turn, has been cut by 5 million bushels.

The 2012/13 oats export forecast is also revised downward. The 1-million-bushel reduction lowers the export figure to 1 million bushels, the lowest level since 1994 when exports were estimated to be 989,000 bushels. Reflective of the very tight supply situation, ending stock are also lowered this month. A 4-million-bushel cut reduces carryout to just 42 million; the lowest level on record.

The midpoint of the projected range for the 2012/13 oats price received by farmers is unchanged this month; however, the range is narrowed by $0.10 on both the high and low ends to $3.70 and $3.90 per bushel. The release of the Grain Stocks report by USDA’s National Agricultural Statistics Service (NASS) on March 28th will provide a clearer picture of the grain supply and use situation as of March 1, 2013.

Influential Reports Due Out at Month’s End

In addition to providing a national accounting of March 1 stocks, the Grain Stocks report will feature the amount of various grains stored by position and State as of March 1. The detailed stocks estimates provided therein will be compared with USDA projections and will help inform any forthcoming changes to the various grains balance sheets and the April Feed Outlook report.

Also on March 28th, USDA-NASS will release the Prospective Plantings report. Though intentions can change as planting decisions become finalized over the next few months, the report will give the first survey-based indication of expected plantings for the 2013/14 marketing year. Weather and crop comments are also included.

International Outlook

World Coarse Grain Production Trimmed This Month

Global coarse grain production in 2012/13 is projected down 0.8 million metric tons this month to 1,123.4 million tons. Corn production prospects are reduced 0.3 million tons to 854.1 million, sorghum is cut 0.5 million to 58.8 million, and barley production is increased slightly.

Corn production is reduced 0.5 million tons each for Argentina and South Africa. In both countries growing conditions have been mixed, with some regions showing increases and others having significant problems. Argentina’s corn production is still projected to be record high, at 26.5 million tons, but problems have reduced production potential. Rainfall was above normal during planting, and extended dryness in the heart of the corn area (northern Buenos Aires Province, southern Cordoba, and southern Santa Fe) through December and January caught corn reproducing or in grain fill. Above-normal rains returned in February, limiting damage. Crop conditions and early-harvested yields vary depending on soil types, local rain coverage, and the timing of scattered rainfall. Enough of the crop is in good shape to support the second-best average corn yield but not to meet earlier expectations.

In South Africa, rainfall has been favorable in eastern growing regions, but to the west, rainfall in January and February was significantly below normal. The projected yield is reduced 4 percent this month to 3.9 tons per hectare, nearly matching that of the previous year. With the harvested area forecast unchanged this month but up year-to-year, production is down 4 percent month-to-month but still up 5 percent over that of a year earlier.

Peru’s 2012/13 corn crop is forecast down slightly this month on lower reported area.

Declines are partly offset by increases for India and Nepal. India’s corn production is raised 0.4 million tons this month to 21.0 million based on increased Rabi crop planted area. The reported yield for India’s barley, mostly harvested a year ago, is also increased slightly. Nepal’s corn production for 2010/11 and 2011/12 is revised upwards, revealing larger area and higher yields and boosting expectations for 2012/13. The forecast is raised 0.4 million tons to 2.1 million.

Australia’s 2012/13 sorghum production is projected down 0.5 million tons this month to 1.7 million. The late arrival of summer rains caused some producers to switch to other crops, and the temperatures during much of the growing season have been extremely hot, cutting yield prospects.

Revisions to the previous year’s coarse grain supply and demand trimmed global beginning stocks for 2012/13 by 0.2 million tons to 164.2 million. Combined with the lower projected production, the global coarse grain supply is down 1.0 million tons to 1,287.6 million. Most of the reduction in beginning stocks is caused by increased 2011/12 barley consumption estimated for Saudi Arabia, trimming stocks 0.3 million tons. The publication of Australia’s barley export data by country for 2011/12 resulted in numerous small, mostly offsetting changes in barley beginning stocks for 2012/13. Sorghum stocks are also down slightly this month due to increased Australian exports for 2011/12. However, world corn beginning stocks for 2012/13 are increased 0.2 million tons as a reduction of 0.3 million tons for Brazil caused by higher 2011/12 exports is more than offset by a same-sized increase in corn stocks for South Africa and smaller increases for Nepal, Peru, and others.

Projected World Coarse Grain Use Trimmed Slightly

Global coarse grain use in 2012/13 is forecast down 0.4 million tons this month to 1,141.8 million. The large increase (2.3 million tons) in U.S. use is more than offset by reduced foreign consumption and the effect of trade changes on disappearance. While global coarse grain local marketing year exports are reduced 1.6 million tons this month, imports are increased 0.6 million. The imbalance between world exports (115.1 million tons) and imports (122.9 million) is increased 2.2 million tons this month, reducing global use by that amount. See the November 2012 International Outlook for more information on the effects of changes in the sum of local marketing year imports and exports on world consumption.

Changes to foreign countries’ 2012/13 coarse grain use are mostly small and offsetting this month. For corn, production increases support an increase in projected use of 0.5 million tons for India and 0.4 million for Nepal, while the poultry production expansion boosts consumption expected in Malaysia by 0.2 million tons. A shift in South Korea to feed-quality wheat cuts forecast corn use 0.5 million tons, and reduced production limits consumption 0.4 million in Argentina and 0.3 million for South Africa. Sluggish imports support trimming expected corn use 0.1 million tons for Tunisia, and Georgia’s corn use is reduced slightly.

Global barley use for 2012/13 is down slightly this month, with increased exports reducing EU domestic use 0.2 million tons and India use slightly. Saudi Arabia’s consumption is projected down 0.2 million tons due to tighter beginning stocks. However, barley use is forecast slightly higher this month for Algeria, Jordan, and Croatia. Foreign sorghum use changes are mostly offsetting, with Australia cut 0.45 million tons due to reduced production, Mexico up 0.4 million, and Saudi Arabia up 0.1 million because of increased import prospects (U.S. sorghum use is reduced this month).

Ending Stocks Forecast Slightly Lower This Month

Projected world 2012/13 coarse grain ending stocks are reduced 0.6 million tons this month to 145.7 million as expected supplies are reduced more than demand. Most of the stocks reduction is in foreign countries, down 0.5 million tons to 126.8 million. Brazil’s ending stocks are reduced 0.3 million tons this month due to tighter beginning stocks, while Malaysia is trimmed 0.2 million because of increased feed use. Corn stocks prospects are trimmed 0.1 million tons each for Argentina (reduced production) and India (strong use), with smaller reductions for Croatia, Tunisia, Peru, Jamaica, and Trinidad and Tobago. Small increases are forecast this month for corn ending stocks in South Africa, Nepal, Ecuador, Georgia, and Kyrgyzstan. Numerous, mostly offsetting, small changes are forecast for foreign barley ending stocks, mostly caused by revised beginning stocks.

Global corn ending stocks are forecast to decline 10 percent year-to-year in 2012/13 to 117.5 million tons. Foreign corn stocks are projected to decline 4 percent, while China’s stocks increase slightly, leaving China’s projected corn stocks accounting for 51 percent of the world total.

US Corn Export Prospects Cut as Sales Remain Sluggish

U.S. October-September 2012/13 corn export prospects are cut 1.5 million tons to 22.5 million (down 75 million bushels to 825 million for the September-August local marketing year). Projected U.S. exports are the lowest in over 40 years as several years of sustained relatively high corn prices have encouraged foreign countries’ production and exports. Also, corn prices have been high enough relative to wheat prices to encourage some feed compounders to include more wheat in feed rations.

In recent weeks, with corn harvest under way, Argentina’s corn prices have dropped compared to U.S. and Brazilian export quotes. Brazil’s corn exports remained strong in February 2013, at 2.3 million tons, but are expected to drop off in the next several months as port capacity is shifted to soybeans. However, Argentina appears ready to increase corn exports as Brazil cools its record pace. U.S. corn export sales and shipments remain at minimal levels as domestic users continue to pay more for corn than prevailing world prices.

According to the U.S. Census, corn exports for October 2012 through January 2013 were 6.0 million tons, down from 15.2 million the previous year (and 2011/12 was the lowest in 14 years). February U.S. grain export inspections came in at 1.3 million tons, down sharply from 3.3 million a year ago. Moreover, corn export sales continue to flounder, reaching only 5.1 million tons on February 28, 2013, down from 10.3 million a year earlier.

Argentina’s corn export sales have been strong. Farmers are selling corn at a rapid pace, and the government’s need to collect export taxes means it is less likely to interfere with corn exports. Argentina’s trade year 2012/13 corn exports are increased 0.5 million tons to 20.0 million. Even though production prospects are reduced, Argentina is poised to export more corn before October 2013, though local marketing year (March 2013 through February 2014) export prospects remain unchanged (19.0 million tons). Georgia’s corn export prospects are also increased slightly.

World corn trade in 2012/13 is projected down 1.0 million tons this month to 96.5 million. South Korea’s corn exports are cut 0.5 million tons to 7.5 million as imports of competitively priced feed quality wheat are expected to replace corn. Tunisia’s corn import prospects are cut 0.15 million tons to 0.75 million as political and economic problems are limiting the pace of corn purchases. Croatia’s corn imports are forecast down slightly this month due to limited supplies in neighboring countries, but that is partly offset by a small increase in imports for Nepal, where data revisions for previous year’s show higher routine imports.

US Corn Imports at a Record Pace

The pace of U.S. corn imports during December 2012 and January 2013 was over 0.4 million tons per month, supporting an increase in trade year 2012/13 of 0.5 million tons to 3.0 million. Most recent imports have been from Brazil to the U.S. East Coast where there are large poultry and hog operations. These feeders normally source corn supplies out of the eastern Corn Belt, but drought and heat sharply reduced supplies available from this region for 2012/13. High freight costs for moving grain from the western Corn Belt make Brazilian corn attractive.

US Sorghum Exports Forecast Higher

The pace of U.S. sorghum export sales and shipments supports an increase in projected exports for the 2012/13 trade year of 0.4 million tons to 2.1 million. Despite tight U.S. sorghum supplies, Mexico has been buying and taking shipment. From October 2012 through January 2013, Census sorghum exports reached 0.8 million tons, up from 0.5 million a year ago. February 2013 grain inspections of sorghum were three times those of a year earlier. Moreover, as of February 28, 2013, outstanding sales were 0.2 million tons, up from 0.1 million a year before. Mexico’s forecast sorghum imports are also raised 0.4 million tons this month. Saudi Arabia has bought Argentine sorghum, boosting its projected 2012/13 imports 0.1 million tons to 0.1 million.

March 2013

Published by USDA Economic Research Service

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