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USDA Feed Outlook

17 June 2013

USDA Feed Outlook - June 2013USDA Feed Outlook - June 2013

Feed Outlook

The outlook for 2013/14 U.S. feed grain supplies is lowered this month as delayed plantings reduce yield prospects for corn. Corn production is projected 135 million bushels lower at 14.0 billion, with the average yield projected at 156.5 bushels per acre, down 1.5 bushels from last month. Forecast total use is down 70 million bushels to 12.9 billion. Feed and residual use is lowered 125 million bushels to 5.2 billion, but industrial use is raised 55 million. The projected 2013/14 season-average farm price for corn is raised $0.10 at both ends of the range to $5.20 to $4.40 per bushel, with a resulting midpoint of $4.80 per bushel. Prices are also raised for sorghum, barley, and oats. For 2012/13, corn imports and industrial use are increased, but exports are lowered, leaving forecast ending stocks up 10 million bushels. U.S. prices for old-crop corn are high compared with competitors, encouraging imports and discouraging exports. Brazil’s 2012/13 corn production is record large and raised again this month.

Domestic Outlook

U.S. Feed Grain Supplies Dip on Lower Forecast Corn Yield

Delayed planting and persistent rain in the Western Corn Belt and Northern Plains resulted in a 1.5-bushel-per-acre decline in the projected corn yield for the 2013/14 feed grain crop this month, lowering feed grain production by 3.4 million tons to 372.4 million. Projected feed grain supplies are 397.3 metric tons, 3.1 million tons below last month’s forecast. Supplies are nevertheless the highest since 2009/10 and 77.4 million tons over the 2012/13 estimate. Total projected use for 2013/14 is lowered 1.8 million tons from last month to 344.1 million as a reduction in feed and residual use more than offsets higher forecast food, seed and industrial (FSI) use. Projected exports are unchanged for 2013/14. Forecast ending stocks are lowered 1.4 million tons this month to 53.2 million tons.

For 2012/13, feed grain supplies are raised 0.7 million tons to 319.9 million due to higher forecast imports. FSI is raised 1.7 million tons to 160.2 million on increased corn use for ethanol production. Ending stocks edge up 0.3 million tons to 22.2 million, still the lowest since 1995/96.

Forecast Corn Yield Lowered as Wet Weather Delays Planting

According to the USDA, National Agricultural Statistics Service (NASS) June 10 Crop Progress report, as of June 9, 95 percent of the corn crop had been planted, compared with 100 percent at the same point last season and 98 percent for the 2008-12 average. Iowa, Minnesota, North Dakota, and Wisconsin were well behind the normal pace. Corn emergence statistics reveal more of the effects of cool, wet weather on this year’s corn crop, with only 85 percent emerged as of June 9 compared with 99 percent last season and 92 percent for the 2008-12 average. As would be expected, emergence was well behind normal in the same States where planting was significantly delayed. Corn rated good or better comprised only 63 percent of the 18-State total, compared with 66 percent at the same point last season.

Early-season crop condition ratings often provide little indication of final yields as rainfall and temperature over the next several weeks will ultimately determine this year’s production. The percentage of the crop rated good or excellent was 69 percent in 2011, 66 percent in 2012 for reporting weeks comparable to June 9 of this year. The U.S. corn yield in 2011 was 147.2 bushels per acre. The 2012 yield was 123.4 bushels per acre, 33.5 bushels below the 1990-2012 simple linear trend.

Supply and Use Both Forecast Lower This Month for 2013/14

U.S. corn supply projections for 2013/14 are lowered 125 million bushels this month. With acreage unchanged, the 1.5 bushel-per-acre decline in yield results in forecast production of 14.0 billion bushels and total supply of 14.8 billion. Forecast total use is down 70 million bushels this month to 12.9 billion. Feed and residual use is lowered 125 million bushels to 5.2 billion. Corn use for ethanol is increased 50 million bushels to 4.9 billion, reflecting expectations for favorable ethanol producer margins and high renewable identification number (RIN) prices, which will also impact production prospects for 2013/14. Changes in high-fructose corn syrup, glucose and dextrose, beverage and manufacture, and cereals and other products total 5 million bushels and result in a total FSI increase of 55 million bushels from last month’s projection. The resulting ending stocks are forecast 55 million bushels lower this month at 1.9 billion, compared with 769 million forecast for 2012/13.

Carryout for 2012/13 Raised 10 Million Bushels

Forecast U.S. corn supplies for 2012/13 were increased this month by 25 million bushels, reflecting a strong import pace. Total supply is expected to be 11,919 million bushels. Forecast domestic use is increased by 65 million bushels as corn for ethanol was raised 50 million bushels on favorable ethanol producer margins that boosted weekly production rates. As in 2013/14, other FSI categories are raised, up 15 million bushels this month. Forecast 2012/13 exports were lowered 50 million bushels to 700 million, the lowest since 1970/71. Changes in imports and use result in ending stocks being raised by 10 million bushels to 769 million, the lowest since 1995/96.

Feed and Residual Use up in 2013/14

The 2013/14 U.S. feed and residual use for the four feed grains plus feed wheat on a September-August year is projected at 142.9 million metric tons, a gain of 17.1 million tons from 2012/13. Feed and residual use per grain-consuming animal unit (GCAU) is projected at 1.57 tons in 2013/14, compared with 1.38 tons in 2012/13. Total GCAUs are projected down slightly on the year to 90.9 million. GCAUs are lowered this month because cattle inventories are expected to decline as animals are slaughtered in the face of high feed prices and tight hay supplies.

For 2012/13, feed and residual use for the four feed grains plus wheat are estimated at 125.8 due largely to reduced corn feeding.

Forecast 2013/14 Corn Price Raised this Month

The projected 2013/14 season average farm price for corn is raised $0.10 at both ends of the range to $4.40 to $5.20 per bushel, with a resulting midpoint of $4.80 per bushel. The price increase reflects tighter supplies due to lower yields and greater demand for ethanol. For 2012/13, the price is increased $0.05 on both the low and high ends of the range to $6.75 and $7.15 per bushel, with a midpoint of $6.95 per bushel.

Upcoming Data Releases

On June 28, NASS will update U.S. corn area in the Acreage report. This will be the first survey-based forecast for 2013 harvested area and provide an update for planted area from the farmer planting intentions reported in the March Prospective Plantings. In addition, NASS will also release its estimate of June 1 feed grain stocks in the quarterly Grain Stocks report. The July ERS Feed Outlook report will update feed grain supplies and use reflecting these latest survey-based forecasts and estimates. On August 12, NASS will release its first survey-based forecast of the 2013/14 U.S. corn crop in the Crop Production report.

Sorghum Plantings Approach 5-Year Pace

U.S. sorghum supply-and-demand estimates are unchanged for 2012/13 and 2013/14. The 2013/14 forecast remains reflective of significant increases in planted and harvest area as well as yields, compared with 2012/13 estimates. The June 11 USDA Weekly Weather and Crop Bulletin indicates that sorghum planting was limited in early May due to cool weather and wet fields in portions of the Great Plains. By mid-May, planting was underway but behind the 5-year average in Kansas. Fieldwork conditions improved in other sorghum-producing regions, however, planting progress across the U.S. continued to fall behind the 5-year pace.

Planting in Texas was essentially complete by the end of May and at the time of the June 2 NASS Crop Progress report, 52 percent of the sorghum crop had been planted, 23 points behind last year’s pace and 8 points behind the 5-year average. The June 10 Crop Progress report indicates that Kansas growers were able to capitalize on the 4.3 days suitable for field work in the previous 7-day period and planted 26 percent of their crop in the span of a week. Kansas, the largest sorghum-producing State, is still slightly behind pace with 54 percent of the crop planted, compared with the 5-year average of 60 percent. Planting in Texas, at 87 percent complete, is essentially on par with the 5-year average.

The June 10 Crop Progress report indicates that 69 percent of the sorghum crop is in the ground; this compares with the 5-year average of 72 percent. Continued mild weather in Kansas will assist growers there to complete their sorghum planting. Despite observed lags in planting, at this time, sorghum acreage and yields are not expected to diminish. Subsequently, production, exports, imports, and other supply-and-demand categories remain unchanged this month.

Recent increases in corn prices have pushed the sorghum season-average price forecasts for 2012/13 and 2013/14 slightly higher. The midpoint price for 2012/13 is raised $0.05 to $6.90 per bushel; the lower and higher end of the range are raised by a similar amount to $6.70 to $7.10 per bushel. The 2013/14 price is also increased as recent market developments suggest a slightly higher price. The range is raised $0.10 per bushel on each end to $4.00 to $4.80 per bushel with a midpoint of $4.40 per bushel.

Cool, Wet Conditions Inhibit Barley Planting

No changes are made this month to the 2012/13 and 2013/14 U.S. barley supply-and-demand estimates. Price estimates for the 2012/13 crop year are unchanged, with a season-average price of $6.40 per bushel. The 2013/14 farm price range is raised $0.05 per bushel on each end to $5.35 to $6.35 per bushel as the increase in corn prices boost price prospects for feed barley. The effect of planting delays in North Dakota and Minnesota on acreage and production forecasts will be examined following the release of the June 28 Acreage report, and any resulting adjustments will be reflected in ERS’s July Feed Outlook.

The most recent Crop Progress report indicates that barley planting is 68 percent complete in North Dakota (compared with the 5-year average of 92 percent) and 89 percent complete in Minnesota (compared with the 5-year average of 99 percent). Factors including prolonged rainfall, saturated fields, and cool temperatures have prevented seeding and postponed fieldwork, especially in the northeastern portions of North Dakota and central sections of Minnesota. On acres that have been planted, flooding and soil crusting are reported to be inhibiting emergence on some acres. In North Dakota, just 48 percent of the barley crop is reported to have emerged, relative to the 5-year average of 83 percent. Perhaps in response to concerns about malt barley availability and the protein content of the harvested malt crop, a limited number of new malting barley contracts are reported to have become available in North Dakota.

Despite delayed planting and emergence in several barley-producing States, collectively, the barley crop is in similar condition to the previous year’s crop, with 63 percent reported to be in good or excellent condition, compared with 64 percent at the same time in 2012.

Supply Concerns Contribute to Oats Price Increase

Minimal changes to U.S. oats supply-and-demand factors are made this month. Based on the pace of exports as indicated by U.S. Census Bureau data, the oats export figure is raised slightly from 1.0 million bushels to 1.2 million for 2012/13. Oats imports for 2012/13 are raised 3 million bushels and ending stocks for the same crop year are boosted 2.8 million bushels after accounting for the slight increase in exports. Beginning stocks for 2013/14 are correspondingly increased by 2.8 million bushels and, at this time, the ending stocks increase serves to bolster carryout by a similar amount.

In North Dakota and Minnesota, where oats are commonly grown for grain as opposed to forage needs, producers were able to get the majority (57 percent) of the oats crop seeded by May 5; however, this pace was fully 36 points behind the 2012 pace and lagged 19 points behind the 5-year average. Weather conditions in major oats-producing areas improved toward the end of the month, and the national planting pace edged closer to normal as 94 percent of the crop had been sown by June 2 according to the USDA-NASS Planting Progress report. In the week that followed, weather and soil moisture conditions in Minnesota, North Dakota, and Wisconsin facilitated additional sowing and served to boost the planted percentage 2 points over the week previous to 96 percent.

Oats emergence is slightly behind the 5-year pace with 92 percent of the crop having emerged compared to 100 percent in 2012 and 96 percent over the last 5 years. Approximately 34 percent of the crop has reached the heading stage, compared with the 5-year average of 42 percent. Nationally, 56 percent of the oats crop is rated as good to excellent and 13 percent very poor or poor compared with 73 percent good to excellent in 2012 and 5 percent very poor or poor in the same year. Improvements in weather and soil moisture conditions may serve to enhance the overall health of the crop and help producers get the last of their oats crop seeded.

Winterkill Losses Put Pressure on Forage Supplies

In areas of Minnesota, Wisconsin, the Dakotas, and Iowa, alfalfa winterkill is widespread. Agronomy professor Dan Undersander of the University of Wisconsin estimates that at least 1 million acres of alfalfa in Wisconsin and 0.75 to 1 million additional acres were winterkilled in Minnesota and the Dakotas. For comparison, in the 2012/13 crop year, Wisconsin harvested 1.45 million acres of hay-including alfalfa, Minnesota harvested 1.75 million acres, and the Dakotas combined to harvest 5.29 million acres. Thus the loss of established alfalfa stands in these States represents a significant setback to local growers and is likely to create challenges for local dairies looking to procure forages for their herds.

In an effort to increase hay availability, the USDA, National Resources Conservation Service office in Wisconsin announced that it is allowing producers to plant crops on acres classified as highly erodible land (HEL). Since replanting on approximately half of winterkilled fields is reportedly not recommended due to autotoxicity concerns, the opening of the HEL land to cultivation provides valuable acres on which to plant needed forage crops. For producers who are looking to plant and/or replant forage acres, oats and peas are commonly recommended as stands that can be established relatively quickly. However, industry sources have reported that oats, pea, and alfalfa seed is in relatively short supply, thus forage rations may need to be supplemented with corn silage or other feedstuffs.

International Outlook

Foreign Coarse Grain Production Prospects Little Changed for 2013/14

Global coarse grain production projected for 2013/14 is reduced 3.3 million tons this month to 1.25 billion, with nearly all the reduction in U.S. corn prospects. Foreign production is nearly unchanged, increasing 0.15 million tons to 877.5 million. For spring-sown crops in the Northern Hemisphere, planting is ongoing, and it is too early to modify last month’s projections. Southern Hemisphere crops are still unplanted and remain as previously forecast.

EU coarse grain production is increased 0.4 million tons this month to 151.9 million. Barley area in the UK is increased as spring barley is planted on land that was too wet for planting winter wheat and rapeseed last fall. EU barley production is forecast up 0.3 million tons to 55.6 million. EU corn production prospects are up 0.1 million tons to 63.9 million. A sharp reduction in Italy caused by flooding was more than offset by improved prospects in Hungary, Poland, France, and Bulgaria. Tunisia reported winter barley yields below previous expectations, with dryness in the south reducing production prospects 0.15 million tons to 0.375 million. Millet production in Ukraine is slightly reduced based on smaller planted area.

2012/13 Corn Production Cut for China, Boosted for Brazil

Government sources in China indicate corn production for 2012/13 at 205.6 million tons, down 2.4 million from the previous estimate. In some areas, the crop suffered from excess wetness, trimming both quality and quantity produced. However, the 2012/13 yield, though reduced from the previous estimate, remains record high.

Brazil’s 2012/13 second-crop corn is just beginning to be harvested, and the Brazilian government (CONAB) increased area harvested for grain in its latest report. Recent showers across Mato Grosso came after the dry season had set in, providing a boost to corn in the grain-fill stage. Corn production is up 1.0 million tons this month to a record 77.0 million.

Reduced 2013/14 Beginning Stocks Tighten Supplies

Beginning global coarse grain stocks for 2013/14 are cut 1.1 million tons this month to 153.3 million. Most of the drop is for China, down 2.4 million tons due to lower reported corn production in 2012/13. South Africa’s stocks are trimmed 0.1 million tons due to the strong pace of exports for 2012/13. Trade and consumption changes for 2012/13 reduce Mexico’s corn stocks and Nigeria’s sorghum stocks slightly. Partly offsetting the aforementioned declines are increased 2013/14 beginning stocks for Brazil, up 1.0 million tons due to increased corn production; Russia, up 0.2 million tons because of slowing 2012/13 corn exports; and Uruguay, up slightly due to strong 2012/13 barley imports.

Total world coarse grain supplies projected for 2013/14 are down 4.3 million tons this month to 1.40 billion, mostly due to reduced U.S. corn production. Foreign coarse grain supplies are down 1.2 million tons this month to 1.01 billion as reduced beginning stocks swamp a small production increase.

World Coarse Grain Use Projected Lower

Global coarse grain use for 2013/14 is projected to reach a record 1.22 billion tons, down 1.8 million this month, with the entire decline in the United States. Changes to foreign 2013/14 projected use are small and offsetting. India is projected to export more corn and use less corn domestically both in 2012/13 and 2013/14, as high protein meal and corn prices have reduced production of eggs and poultry. India’s 2012/13 corn domestic use is forecast down 0.8 million tons to 16.7 million, and the 2013/14 projection is cut 0.5 million to 17.9 million. However, corn use in Indonesia is raised 0.2 million tons for both years based on the strong pace of imports. Corn use in Russia is raised 0.1 million tons for 2012/13 and 0.2 million for 2013/14 as the pace of exports has slowed.

Additional changes to forecast corn use for 2012/13 include an increase of 0.6 million tons for Turkey based on the strong pace of recent imports. However, the pace of EU corn exports leaves less for domestic use, which is down 0.5 million tons. Japan’s 2012/13 corn imports and consumption are also reduced 0.5 million tons this month. Total foreign coarse grain use estimated for 2012/13 is reduced 1.9 million tons this month to 861.3 million.

Ending Stocks Projected Lower This Month

Global coarse grain ending stocks for 2013/14 are projected down 2.6 million tons this month to 183.6 million. Foreign countries account for slightly less than half the decline, down 1.2 million tons to 130.4 million. China’s corn ending stock prospects are cut 2.4 million tons, due to reduced 2012/13 production. Corn stocks for South Africa are projected down 0.1 million due to strong exports, and Tunisia’s barley stocks are forecast down 0.1 million tons because of reduced production. There are smaller reductions for projected coarse grain stocks in Mexico and Nigeria. Partly offsetting the reductions are increased coarse grain stocks for the EU, up 0.4 million tons to 12.1 million, mostly due to increased barley production. Indonesia’s corn stocks are projected up 0.1 million tons due to strong imports.

World Corn Trade Projected Higher for 2013/14

Global corn trade in 2013/14 (October-September) is projected to reach 102.4 million tons, up 0.6 million from the previous forecast and nearly as large as record corn trade in 2011/12. India’s corn export prospects are boosted 0.5 million tons to 3.5 million as domestic demand is not expected to be as strong as previously forecast, leaving more for exports. Also, South Africa’s corn exports are projected 0.1 million tons higher to 1.9 million, as the pace is expected to match the previous year. Indonesia’s imports are increased 0.3 million tons to 2.2 million based on strong consumption growth. Projected 2013/14 trade for the other coarse grains is unchanged this month.

U.S. 2012/13 Corn Export Prospects Cut Even as Global Trade Is Boosted

World corn trade in 2012/13 is forecast up 0.3 million tons this month to 97.8 million. India’s corn exports are forecast up 0.8 million tons to 4.8 million as domestic demand is reduced and the export pace has exceeded expectations. EU corn exports are increased 0.5 million tons to 1.5 million based on the pace of export licenses and shipments. South Africa’s exports are boosted 0.2 million tons to 1.9 million based on the pace of shipments. Mexico’s corn exports are increased slightly to 0.2 million tons based on the pace of recent shipments. However, the pace of Russia’s corn shipments has slowed, reducing forecast exports 0.3 million tons to 2.0 million.

The pace of U.S. corn exports and old-crop sales in recent weeks has been exceptionally slow. U.S. prices are high compared to competitors, and it is reportedly difficult to find uncommitted corn in big enough volumes to put together vessel-sized shipments for export. Forecast 2012/13 U.S. exports are cut 1.0 million tons this month to 18.5 million (for the September-August local marketing year, the export forecast is cut 50 million bushels to 700 million). Census data indicate corn exports of 10.7 million tons for October 2012 through April 2013. May export inspections were 1.4 million tons, and outstanding sales at the end of May were 3.4 million tons, less than half of the previous year. U.S. corn exports for the final 4 months of the trade year are forecast to average 1.6 million tons.

World barley trade in 2012/13 is forecast fractionally higher this month, with increased exports for India and small increases in imports for Syria, Uruguay, and Switzerland. Global sorghum trade for 2012/13 is reduced slightly this month, with Nigeria’s exports zeroed out and Niger’s imports reduced. Forecast world oats and rye trade for 2012/13 are unchanged this month.

June 2013

Published by USDA Economic Research Service

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