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13 April 2012

USDA Feed Outlook - April 2012

There are numerous, mostly offsetting changes this month to global coarse grain production and trade. Revised corn use for China for 2010/11 and 2011/12 combines to reduce corn ending stocks.

China’s corn feed use for 2010/11 is increased 4 million tons to 128 million, reflecting strong demand for meat. However, China’s 2011/12 corn feed use is reduced 3 million tons to 131 million due to the strong increase in wheat feeding and ongoing animal disease problems, especially in pigs. These changes in use leave China’s projected ending stocks down 1 million tons to 57 million. Due to reduced production prospects, corn stocks are also reduced this month for Argentina, South Africa, and Mexico.

US Feed Grain Average Prices Received by Farmers

Domestic Outlook

Domestic Supply and Use Unchanged From Last Month

Projected U.S. feed grain supplies for 2011/12 remain at 358.4 million metric tons this month, unchanged from last month’s projection but down 5.8 percent from 2010/11. Total use of the four feed grains for 2011/12 is expected to be 335.5 million metric tons, 3.7 percent lower than last marketing year. With 2011/12 production plus imports less than demand, ending stocks are projected at 22.9 million metric tons, 29 percent below last marketing year, and the lowest carryout since the 1995/96 marketing year.

The 2011/12 feed and residual use projection for the four feed grains plus wheat is increased by 0.9 million metric tons from last month due to higher forecast feed wheat use. At 127.2 million metric tons, it is projected 3.6 million below the 2010/11 total of 129.9 million. Grain consuming animal units (GCAUs) in 2011/12 are projected at 93.65 million units, 0.3 percent below last month’s projection. Feed and residual use per animal unit is 1.36 metric tons, slightly higher than last month and 0.04 million metric tons less than the 2010/11 marketing year.

Food, Seed, and Industrial Use

Projected 2011/12 industrial use of corn other than for ethanol is unchanged this month in total, but shifts among types of sweeteners and starch were made based on the latest indications. Projected corn used for high fructose corn syrup (HFCS) was reduced to 495 million bushels on lower shipments during the first half of the 2011/12 crop year. U.S. Census data indicate shipments of HFCS to Mexico have been slower than expected. Corn use for HFCS in 2010/11 was estimated at 521 million bushels. Projected corn use for glucose and dextrose was adjusted upwards this month, to 300 million bushels, reflecting increased shipments during the first half of the marketing year. Corn use for glucose and dextrose was estimated at 272 million bushels in 2010/11. Corn use for starch was reduced by 10 million bushels to 250 million. Use for starch during 2010/11 was estimated at 258 million bushels.

Corn used to produce ethanol in 2011/12 is projected at 5 billion bushels, unchanged again this month. The latest monthly data from the Energy Information Administration (EIA) indicate that average daily ethanol disappearance fell to a 23- month low in January while production reached the second-highest monthly level, pushing ethanol stocks to a new record high. Weekly EIA ethanol production data suggest average daily ethanol production during February and March has continued to fall, hitting its lowest level since early fall 2011. High ethanol stocks occurring as consumption approaches the E-10 (10-percent ethanol / 90-percent gasoline) blend wall level suggest continued production declines in the near future. However, recent progress toward E-15 (15-percent ethanol / 85-percent gasoline) implementation may sustain ethanol refiners in the long run although numerous hurdles still exist before E-15 consumption could occur on a widespread basis, such as liability, warranty, and infrastructure limitations. Furthermore, while ethanol exports continue to absorb supplies, reduced shipments in January may indicate a shift in export levels.

Corn Feed and Residual: Comparison of First Half of Year vs Second Half of Year

Grain Stocks Report Confirms Tight Carryout

The Grain Stocks report, issued by USDA’s National Agricultural Statistics Service (NASS) on March 30, 2012, shows relatively tight stocks for each of the feed grains. Corn stocks on March 1 were set at 6 billion bushels, down 8 percent from the previous year. Stocks were below most trade estimates, but close to USDA expectations.

Feed and residual use in the second half of the marketing year (March-August), projected to be 1.2 billion bushels, is expected to represent 26.3 percent of the 4.6 billion bushel marketing year total. In April 2011, USDA projected second-half feed and residual disappearance for 2010/11 at 29.5 percent of the marketing year total and below trade expectations at that time. Once September 1 stocks and final use for other categories were known, second-half 2010/11 feed and residual fell to 24.3 percent of the marketing year total, the lowest share since at least 1975. The two key factors expected to limit corn feed and residual use in the second half of 2011/12 are increased use of wheat in feed rations and, with early planting, the increased use of new-crop corn in August 2012.

In absolute terms, feed and residual use in the second half of the 2011/12 marketing year is expected to be the third lowest since 1975, behind last year and the drought year of 1983. It is also forecast below the 1.6 billion bushels estimated for 1995/96. Since 1995/96, corn used for ethanol is up more than twelvefold, adding substantially to available supplies of feed byproducts.

US Corn: Central Illinois Cash and Average Farm Price, Monthly

Minor Changes to Feed Grain Prices

Projected price ranges were adjusted for all four feed grains. The 2011/12 projected range for the corn price received by farmers for corn was narrowed 10 cents on each end to $6.00 to $6.40 per bushel with no change to the mid-point. Similarly, the price range for sorghum was narrowed by 10 cents on each end, resulting in a range of $5.90 to $6.30 per bushel. Price ranges for barley and oats were narrowed by 5 cents on each end, resulting in a $5.25 to $5.45 per bushel range for barley and a $3.40 to $3.50 per bushel range for oats. For the second consecutive year, the corn and sorghum prices are record high.

March Prospective Planting Intentions Report Higher Than Expected

U.S. farmers intend to plant 95.9 million acres of corn in 2012, an increase of 3.9 million acres from last year. In February, USDA released the USDA Agricultural Projections to 2021 and forecast 2012 planted acreage at 94 million acres. Corn acreage increased the most in the Northern Plains region, comprised of Kansas, Nebraska, North Dakota, and South Dakota. Corn acreage increased by 1.7 million acres in the Northern Plains, compared with a 1.0-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 percent less than yields in the Corn Belt. Still, as a share of total area, Northern Plains corn plantings remain relatively small compared with those of the Corn Belt, and the increase yearon- year for the region is a relatively small share of total U.S. corn area.

Most corn-producing States show an increase in expected corn acreage, with the exception of Illinois, Colorado, and Texas. Illinois and Colorado have small declines. The 150,000-acre decline in Texas came on the heels of a shift to cotton last year. This season, Texas farmers are reducing cotton acreage and shifting corn and cotton acres to sorghum for 2012/13.

U.S. farmers plan to increase plantings of sorghum by 9 percent in 2012 to 5.95 million acres. Barley acreage is expected to surge 30 percent to 3.33 million acres with a recovering in area in North Dakota. In 2012, oat planting intentions are reported at 2.86 million acres, up 15 percent from the record low plantings of 2.50 million acres in 2011. If realized, this would still be the second-lowest acreage planted on record.

US Sorghum: Kansas City Cash and Average Farm Price, Monthly

US Barley Utilization

Barley Prices Received by US Farmers, Monthly

US Oats Utilization

International Outlook

South Africa's Corn Production, and Yield

Production Changes Mostly Offsetting This Month

Global 2011/12 coarse grain production is forecast to reach 1.1 billion tons, nearly identical to the amount projected a month earlier. Moreover, none of the seven grains (corn, barley, sorghum, millet, oats, mixed grain, and rye) have a significant change in world production. However, several production changes in individual countries will affect supply, use, trade, and prices.

The largest 2011/12 change this month is for coarse grain production in Mexico, down nearly 2.0 million tons to 25.8 million. Corn production is reduced 1.5 million tons to 19.0 million due to lower reported area. Low reservoir levels in and around Sinaloa forced producers to reduce corn area for winter-crop corn. Moreover, the main-crop corn area was smaller than expected because of a combination of late planting caused by the tardy arrival of spring rains and an early September freeze. Based on the main-crop harvest reports, average corn yield is increased slightly, but the reduced area dominates the production change. Sorghum production for Mexico is cut 0.475 tons to 6.125 million as both area and yields are reported falling short of the previous projections.

Egypt’s corn production in 2011/12 is projected up 1.7 million tons to 5.5 million. The lack of enforcement of acreage limits on rice has caused corn area to decline, but recent reports indicate the drop in corn area was less than half as large as previously forecast, falling from 850,000 hectares in 2010/11 to 700,000. Also, corn yield prospects in 2011/12 are fairly strong, higher than the previous 2 years but below yields reached from 2000/01 through 2008/09.

Global Ending Corn Stocks

China’s 2011/12 sorghum production is increased 0.75 million tons this month to 2.6 million. The Ministry of Agriculture reported higher sorghum yields, more than offsetting a slight reduction in area and boosting production for both 2011/12 and 2010/11 (up 0.7 million tons to 2.5 million).

Argentina’s projected coarse grain production for 2011/12 is cut 0.7 million tons to 29.9 million. Corn production prospects are down 0.5 million tons to 21.5 million, as harvest reports indicate greater-than-expected yield losses caused by dryness and excessive heat in December and January. Sorghum production is also reduced, down 0.2 million tons to 4.0 million because, though resistant to drought and heat, sorghum is not immune. Sorghum area is also reduced slightly this month.

Indonesia’s 2011/12 corn production is forecast 0.6 million tons higher this month at 8.7 million. The dry season in Indonesia for 2011/12 did have normal conditions despite the La Nina Pacific Ocean temperatures, helping corn yield prospects rebound to record levels, much improved over the previous 2 years when excessive rainfall depressed corn yields. Corn area is estimated slightly lower this month.

Venezuela’s 2011/12 coarse grain production is projected down 0.51 million tons to 1.49 million, with corn reduced 0.4 million to 1.4 million and with a smaller decline for sorghum. Government policies and unfavorable weather have combined to reduce area and yield for both crops.

South Africa’s 2011/12 corn production is cut 0.5 million tons this month to 11.5 million as warm temperatures and spotty rains during February and March trimmed yield prospects.

Cambodia’s 2011/12 corn production projection is revised up 0.4 million tons to a record 1.5 million as area is reported higher for both 2010/11 and 2011/12. Both corn area and yield are forecast at record levels in 2011/12.

Based on reports from USDA’s Foreign Agricultural Service, corn area for Laos is estimated lower for 2009/10, 2010/11, and the forecast area for 2011/12 is scaled back as well, leaving production down 0.25 million tons to 1.25 million for the current year. The 2011/12 yield is projected slightly higher, and while production is lower than projected last month, it is still record large.

Thailand’s and Colombia’s corn production are each reported up 0.15 million tons this month (to 4.3 million and 1.70 million, respectively) as record yields are reported.

Iraq’s 2011/12 corn production is increased 0.125 million tons to 0.250, mostly based on increased area planted. Smaller changes in coarse grain production this month include increased rye production in Turkey, reduced barley production (but a very small increase for corn) in Iran, increased millet output in Burma, increased corn in Saudi Arabia, reduced barley in Jordan and Japan, and small reductions for corn in Malaysia and the Philippines.

Reduced Beginning Stocks Tighten 2011/12 Supplies

World coarse grain beginning stocks for 2011/12 are reduced 4.3 million tons this month to 162.0 million, mostly due to changes estimated for 2010/11 in China. China’s corn beginning stocks are cut 4.0 million tons to 49.4 million because of increased feed and residual use estimated for 2010/11. Partly offsetting is an increase in China’s sorghum beginning stocks for 2011/12, up 0.3 million tons to 0.5 million based on a larger 2010/11 crop. Iran’s 2011/12 coarse grain beginning stocks are down 0.3 million tons due to reduced barley production estimated for 2010/11 (partly offset by a small increase for corn). India’s coarse grain beginning stocks for 2011/12 are reduced 0.2 million tons due to slightly increased 2010/11 corn and barley exports. Kazakhstan’s 2010/11 barley feed use is increased, trimming 2011/12 beginning stocks 0.15 million tons. A small reduction in 2010/11 corn production in Argentina reduced 2011/12 beginning stocks 0.15 million tons.

Coarse grain 2011/12 beginning stocks are increased this month for Brazil, up 0.5 million tons due to reduced corn exports estimated for 2010/11. Brazil’s barley beginning stocks for 2011/12 are increased slightly and sorghum decreased based on revised 2010/11 imports. Thailand’s coarse grain stocks are increased 0.2 million tons based on increased 2010/11 corn and sorghum production. Other changes to 2011/12 beginning stocks are smaller.

Coarse Grain 2011/12 Global Use Projection Down

World coarse grain use in 2011/12 is projected down 3.4 million tons this month to 1.1 billion. Increased wheat feeding to animals is limiting the use of coarse grains, with world wheat feed use up 6.8 million tons this month to 137.9 million. China’s 2011/12 corn feed use is projected down 3.0 million tons to 131.0 million, while wheat feed and residual is up 2.0 million to 19.5 million. With increased sorghum production, China’s FSI use of sorghum is projected up 0.4 million tons, with feed and residual up 0.2 million.

Mexico’s coarse grain feed use is down 0.85 million tons this month, constrained by reduced production and tight supplies. Projected 2011/12 sorghum feed use is cut 0.45 million tons and corn is trimmed 0.4 million, but wheat feeding is increased 0.3 million. Corn FSI is projected down 0.2 million tons as well, leaving forecast coarse grain use for Mexico down 1.05 million this month.

Saudi Arabia’s feed use of barley is reduced 0.5 million tons this month, with larger stock holding expected. India’s corn FSI is reduced 0.2 million tons this month as the strong pace of exports in 2010/11 limits availability for domestic use. Brazil’s corn feed use projection is reduced 0.5 million tons, but FSI is increased by an offsetting amount.

Increased corn production in Indonesia and Egypt is boosting projected 2011/12 feed use by 0.5 million tons and 0.4 million tons, respectively. Other changes to forecast coarse grain use are smaller.

Ending Stocks Projected Lower

Global coarse grain 2011/12 ending stocks are projected down 0.9 million tons to 157.0 million this month. The largest decline, 0.7 million tons to 1.9 million, is for Argentina, with reduced corn production and beginning stocks but strong domestic and export demand. China’s coarse grain ending stocks are forecast down 0.6 million tons to 58.0 million, as a 1.0-million-ton decline for corn stocks is partly offset by increased sorghum inventories. South Africa’s forecast coarse grain stocks are reduced 0.5 million tons due to lower corn production. Mexico’s coarse grain stocks are trimmed 0.25 million tons to 1.75 million, with most of the decline in corn. Iran’s coarse grain projected ending stocks are down 0.1 million tons this month, with reduced barley stocks more than offsetting slightly increased corn stocks. Syria’s corn 2011/12 projected ending stocks are down 0.1 million tons based on revisions to 2009/10 and 2010/11 stocks and use. Reductions in other countries projected stocks are smaller.

Indonesia’s 2011/12 ending corn stocks are forecast up 0.6 million tons this month to 1.4 million, supported by increased production prospects. Saudi Arabia’s coarse grain ending stocks are projected up 0.5 million tons to 2.6 million, with most of the increase in barley and small increases for corn and sorghum. Morocco and Egypt each have coarse grain ending stocks projected up 0.3 million tons this month to 1.0 million tons, but the increase for Morocco is in barley and for Egypt it is corn.

Projected World Corn Trade Nearly Unchanged

Global corn trade in 2011/12 (October-September trade year) is projected to reach 96.2 million tons, down 0.1 million from a month ago. The only change in expected exports is for Mexico, down 90,000 tons to 10,000 tons, as tight corn supplies in Mexico are expected to limit exports.

US Corn Exports by Month

Corn import forecast changes are mostly offsetting. Egypt, with increased production and a relatively slow pace of purchases, is reduced 1.0 million tons to 5.0 million. Thailand’s corn crop is also increased this month and corn imports are cut 0.4 million tons to 0.4 million. Colombia, with record corn yields, has imports reduced 0.2 million tons to 3.7 million. These changes are mostly offset by increased corn imports expected for Mexico, up 0.7 million tons to 10.5 million; for Indonesia, up 0.5 million tons to 2.0 million; and for Venezuela up 0.1 million tons to 1.7 million. Indonesia is expected to maintain large imports despite increased production prospects, based on the strong demand for corn reflected in the 2010/11 estimated imports and use.

U.S. corn exports for 2011/12 remain projected to reach 43.5 million tons (1.7 billion bushels for the local September-August marketing year). Census export data and Export Inspections indicate October through February 2011/12 corn exports exceeded the previous year’s 17.3 million tons by over 1 million. However, March 2012 export inspections were reported at only 3.1 million tons, down 1.4 million from a year earlier. Moreover, at the end of March, outstanding export sales of corn were down 25 percent compared to a year ago. The sluggish pace of corn sales and shipments during March and early April confirm the current U.S. export forecast.

World barley trade for 2011/12 October-September is forecast up slightly this month to 17.5 million tons. Based on recent sales and shipments, Morocco’s barley imports are doubled to 0.5 million, and there are smaller increases in imports for Algeria and Iran. Kazakh exports are increased this month.

Global 2011/12 sorghum trade is projected 0.2 million tons lower this month to 4.9 million, with most of the decline in Argentina, where reduced production prospects are expected to limit exports. Japan’s imports are reduced 0.1 million tons to 1.4 million. China’s exports are slightly increased, and imports reduced, but trade remains small.

The only change to 2011/12 October-September forecast world oats trade this month is a very small reduction (5,000 tons) in U.S. exports.

April 2012

Published by USDA Economic Research Service

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