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USDA Feed Outlook

13 June 2014

USDA Feed Outlook - 13 June 2014USDA Feed Outlook - 13 June 2014

Feed Outlook

World Coarse Grain Production, Trade, and Stocks Increased This Month

Global corn production is raised this month for both 2014/15 and 2013/14. Ukraine’s corn production prospects for 2014/15 are increased as recent trade data indicate a continued strong expansion in the use of imported hybrid seed. Corn production for Russia is also raised, reflecting strong year-to-year increases in hybrid seed imports. Favorable planting conditions and establishment boost EU 2014/15 corn production prospects. For 2013/14, good rains for second-crop corn in Brazil boost production prospects, and South Africa production rises with larger reported deliveries of corn to elevators. World corn trade for 2013/14 is raised 1.1 million tons to a record 119.4 million, while trade for 2014/15 is projected up 0.5 million to 118.4 million. Projected 2014/15 global coarse grain stocks are up 2.1 million tons this month to 212.6 million, the highest in 15 years.

There are only minor changes to feed grain balance sheets this month. Acreage, yield, and production are steady for the four feed grains. Small upward revisions are made in 2013/14 imports for sorghum, barley, and oats, reflecting the year-to-date pace of trade. An increase in barley exports and a reduction in oats exports also affect 2013/14 carryout slightly. Projected farm prices for 2014/15 are unchanged. For 2013/14, the average farm price for corn and sorghum are lowered at the midpoint of the projected range by 10 cents per bushel to $4.55 and $4.30, respectively. Barley prices are lowered 5 cents to $6.05 per bushel, and oats are raised 3 cents to $3.73 per bushel, based on prices reported to date.

Domestic Outlook

Feed Grain Balance Sheets Nearly Unchanged

Projected 2014/15 corn yield and production are unchanged this month as emergence reached 92 percent on June 8, ahead of the average for the previous 5 years. Early-season crop conditions are also the best in several years, particularly in the Corn Belt. The only supply changes for 2014/15 were in barley and oats. Projected feed grain supplies are 403.3 million metric tons, up slightly from last month due to a slight bump in beginning stocks caused by adjustments in 2013/14 barley and oats trade. Forecast feed grain supplies are 7.7 million tons higher than the 2013/14 estimate. Forecast use is unchanged from last month and 7.3 million tons lower than last year. This month’s small change in forecast 2014/15 ending stocks reflects the 37,000-ton increase in carryin from 2013/14.

For 2013/14, estimated feed grain supplies are raised slightly on larger sorghum, barley and oat imports. Exports of barley increased and oats slipped, but otherwise, supply-and-use projections are unchanged, resulting in an increase in ending stocks of just 37,000 tons.

Corn Feed and Residual Use

Feed and residual use for the four feed grains plus wheat on a September-August year is projected at 142.5 million tons for 2014/15, compared with 141.4 million estimated for 2013/14. Total grain consuming animal units (GCAUs) are projected 0.85 million units higher than last month at 90.1 million due to higher estimated cattle on feed. The increase in feeder cattle inventory is partly offset by lower broiler and layer numbers. GCAUs per ton of feed and residual are projected at 1.58 tons per GCAU in 2014/15, down slightly from last month and incrementally higher than in 2013/14.

Forecast Corn Yield Unchanged as Planting Progresses

According to the USDA National Agricultural Statistics Service (NASS) June 9 Crop Progress report, 92 percent of the U.S. corn crop had emerged as of June 8, compared with 83 percent at the same point last season and 90 percent for the 2009-13 average. Indiana, Missouri, Illinois, South Dakota, Iowa, and Nebraska were ahead of their normal pace. In the Corn Belt, only Wisconsin, Michigan, and Minnesota remained below normal. Crop condition is substantially improved over the previous season, with 75 percent of the 18-State crop reported as good to excellent, compared with 63 percent last year.

Corn Balance Sheet Unchanged From Last Month

Forecast U.S. corn supply for 2014/15 remains at 15,111 million bushels, unchanged from last month’s projection and 330 million greater than the 2013/14 estimate. Disappearance for 2014/15 remains projected at 13,385 million, and is 250 million below the 2013/14 forecast, mostly due to reduced feed and residual use and export prospects. Ending stocks are projected at 1,726 million bushels, 580 million over the 2013/14 forecast. 

The projected season average corn price for 2014/15 is also unchanged from last month, with a range of $3.85 to $4.55 per bushel for a midpoint of $4.20. The forecast 2013/14 average price is lowered 5 cents on the low end and 15 cents on the high end of the range for a midpoint of $4.55 per bushel, reflecting prices reported to date and recent declines in nearby cash and futures prices.

Sorghum Price Projected Lower in 2013/14; Export Pace Remains Strong

Prices received by U.S. producers for sorghum in 2013/14 are forecast slightly lower this month at $4.20 to $4.40 per bushel, down 10 cents at the midpoint to $4.30 per bushel. Lower corn prices support the downward movement in sorghum prices expected during the summer. The projected season-average price range for 2014/15 remains unchanged this month at $3.60 to $4.30 per bushel.

Sorghum marketings remain strong and are bolstered by robust demand from China. In late May, the press office of the U.S. Agency for International Development announced a U.S. commitment of nearly $300 million in humanitarian aid intended to “help the people of South Sudan who have been placed at risk by the conflict that began last December.” Export demand continues to support sorghum prices at a premium to corn at U.S. ports. However, tight old-crop supplies are expected to limit additional exports for 2013/14, at least until the arrival of new-crop supplies later this summer. The onset of timely and substantial rains in Texas and parts of Kansas is likely to contribute to the robustness of the 2014/15 crop and could ultimately enhance available supplies of new-crop sorghum.

Barley Imports and Exports Increased for 2013/14

U.S. imports of barley for 2013/14 are increased by 1.1 million bushels this month. The change results from increased imports attributed to gradual improvements in grain transportation in Canada. Barley exports are increased by 1.9 million bushels, resulting in a net 0.8-million-bushel reduction of 2013/14 ending stocks. Carryin and total supply for 2014/15 are reduced by an identical amount.

The forecast 2013/14 all-barley farm price is reduced by 5 cents this month to $6.05 per bushel based on declining feed barley prices. The all-barley price for 2014/15 is unchanged this month at the $4.85-per-bushel midpoint, with a range of $4.45 to $5.25 per bushel.

Oats Imports, Domestic Price Increased for 2013/14

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 reduced from 2.0 million bushels to 1.5 million for 2013/14. Oats imports for 2013/14 are raised 3.2 million bushels to 93.2 million. After accounting for the resultant net increase in supply, ending stocks for the same marketing year are boosted 3.7 million bushels. Beginning stocks for 2014/15 correspondingly rise 3.7 million bushels, bolstering projected carryout by the same amount.

The oats farm price for the 2013/14 marketing year is forecast at $3.73 per bushel, up 3 cents from the May projection. The 2014/15 projection, at $2.70 per bushel on the low end and $3.30 per bushel on the high end of the range, remains unchanged this month.

Upcoming Data Releases

On June 30, NASS will update U.S. corn area in the Acreage report. This will be the first survey-based forecast for 2014 harvested area and will 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 on June 30. The July 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 2014 U.S. corn crop in the Crop Production report.

International Outlook 

Increased Production and Stocks Boost 2014/15 Supplies

Global coarse grain production is projected to reach 1,258.7 million tons in 2014/15, up 1.5 million this month. Corn production is forecast 2.0 million tons higher, and millet is increased 1.0 million, but barley prospects are cut 1.5 million, with prospects for sorghum, oats, mixed grain, and rye unchanged.

The largest increase in projected coarse grain production is for India, up slightly more than 1.0 million tons for 2014/15. Millet production prospects are raised 1.0 million tons to 12.0 million. The government’s 3rd Advance Estimate of 2013/14 crops boosted millet production 0.9 million tons to 11.5 million, with record yields of 1.25 tons per hectare reported. In 2014/15, average yields are expected to basically match the previous year’s level, boosting projected production. The 3rd Advance Estimate is also the basis for a 1.2-million-ton increase in 2013/14 corn production to 24.2 million tons. Sorghum for 2013/14 is reported down 0.3 million tons to 5.3 million. Barley is a Rabi or winter crop, and the report increased production slightly for both 2013/14 and 2014/15.

Ukraine’s 2014/15 corn production prospects are raised 1.0 million tons to 27.0 million, supported by improved yield prospects. The pace of hybrid corn seed imports is up significantly this year, and high-yielding imported seed likely cover more than half the planted area. This is an indicator that Ukrainian corn producers are not cutting back on inputs as much as previously expected. However, the projected yield is still down year over year. Despite heavy spring rains, the 2014 corn planting progressed in a timely fashion, and although current crop conditions are favorable, the critical growth stages are still ahead.

In the EU, May rainfall was abundant across most of the region, allaying some concerns about dryness in Poland, Germany, and parts of France. Corn production prospects are raised 0.6 million tons to 65.2 million, with increased expectations for Hungary, Austria, Czech Republic, and Germany more than offsetting a reduction in Italy, where there are reports of corn land in the Po Valley shifting to soybeans. EU barley prospects for 2014/15 are up 0.2 million tons to 55.9 million, with increases for the UK, Italy, Romania, Hungary, Bulgaria, and Czech more than offsetting a decline for Spain, where spring rain stopped early, trimming yields. Outside the EU, but in the region, rains were excessive in Serbia and Bosnia, with flooding damaging corn in some areas.

Nepal’s corn yields for 2013/14 are reported higher, boosting production 0.2 million tons to 2.3 million. Corn production prospects for 2014/15 are also boosted 0.2 million tons as yield increases are expected to be maintained.

Turkey’s barley production for 2014/15 is cut 1.8 million tons to 4.0 million due to drought and winter-kill striking small grains production in breadbasket Central Anatolian Plateau.

Corn production changes for 2013/14 are significant for Brazil and South Africa. For Brazil, late rains for second-crop corn grown in the dry season increased yield prospects, boosting production 1.0 million tons to 76.0 million. Most of the second crop is harvested in June, July, and August, leaving this “old crop” mostly still in the fields. In June, Brazil’s Ministry of Agriculture, CONAB, boosted its forecast of second-crop corn. South Africa’s corn production is up 0.5 million tons to 14.5 million based on reported deliveries to elevators.

Increased Beginning Stocks Contribute to Supplies

Beginning stocks for 2014/15 are the same as ending stocks for 2013/14, so changes to 2013/14 supply and demand are often reflected in those stocks. While several changes are partly offsetting, global coarse grain beginning stocks for 2014/15 are raised 0.8 million tons this month to 204.6 million. Combined with the 1.5-million-ton increase in production, 2014/15 coarse grain supplies are up 2.3 million tons this month.

Argentina’s corn stocks are raised 0.5 million tons to 3.5 million as the slow pace of farm marketing trims 2013/14 export prospects. Brazil’s increased second-crop corn production prospects are partly offset by increased local marketing year exports, but stock prospects are also increased 0.5 million tons to 15.5 million. Corn stocks for Turkey are raised 0.5 million tons as anticipated winter grain production problems are causing an increase in 2013/14 corn imports. India’s coarse grain stocks are up 0.4 million tons to 2.7 million as increased estimated 2013/14 production boosts corn, millet, and barley stocks. Imports are increased for both Egypt and Colombia for 2013/14, boosting stocks 0.4 million tons each to 2.2 million and 0.9 million, respectively.

Reduced 2013/14 ending stocks for several countries partly offset the afore-mentioned increases. Ukraine’s 2013/14 corn exports are raised 1.0 million tons this month as the pace of shipments has been strong, cutting stocks 1.0 million to just 2.2 million. China’s corn imports for 2013/14 are reduced 0.5 million tons to 4.0 million as import data indicate that blocked shipments from the United States have not been offset by increased shipments from other origins. This trims ending stocks prospects 0.5 million tons to 77.2 million. For South Africa, strong 2013/14 exports and domestic use more than offset increased corn production, trimming ending stocks 0.3 million tons to 3.1 million. Kenya’s corn imports for 2013/14 are sharply down from expectations, mostly reducing estimated food use but also trimming stocks 0.1 million tons to 0.3 million.

Estimated 2013/14 Consumption Increased, 2014/15 Slightly Higher

World coarse grain use estimated for 2013/14 is raised 2.7 million tons this month to 1,237.4 million tons, while projected 2014/15 consumption is increased only 0.2 million to 1,250.7 million. Several changes to forecast 2014/15 use are mostly offsetting.

Turkey’s coarse grain use is projected to change in 2014/15 due to a sharply reduced barley crop. Coarse grain use is expected to decline 1 percent year to year instead of growing as previously expected, leaving forecast 2014/15 coarse grain use down 0.6 million tons this month. However, with reduced barley production and tight world supplies supporting prices, barley use is projected down 1.6 million tons, with feed use dropping to 4.3 million. Barley imports are up just 0.2 million. Competitively priced corn is expected to replace barley, boosting Turkey’s corn feed use 1.0 million tons to 6.4 million tons.

India’s coarse grain use is changed this month due to production revisions. For 2013/14, coarse grain use is up 0.95 million tons to 37.4 million. Millet consumption is increased 0.8 million, with 0.3 million of the increase for feed and 0.5 million for food. Corn use is estimated up 0.4 million tons, all in feed. However, with reduced production, sorghum use is trimmed 0.25 million tons, with a slight (0.05 million) reduction in feed. The net change is up 0.3 million tons for coarse grain food use and 0.65 million for feed. The 2014/15 projected consumption reflects increased millet prospects, boosting food use 0.5 million tons.

For Ukraine, projected 2014/15 corn supplies are unchanged this month with increased production offset by reduced beginning stocks. However, the pattern of estimated use and stocks for 2013/14 indicates the corn market in Ukraine is comfortable with a lower level of working stocks than estimated previously. This provides supplies to boost domestic feed use 0.5 million tons, supporting ongoing growth in meat production.

Russia’s increased 2014/15 corn production and expanding meat production boost corn feed use 0.3 million tons to 8.0 million. However, for 2013/14, increased exports are constraining internal corn feed use, down 0.3 million tons to 6.9 million.

Egypt’s strong corn import pace for 2013/14 supports a 0.1-million-ton increase in corn feed use for both 2013/14 and 2014/15.

Kenya’s corn food use in 2013/14 is cut 0.5 million tons to 2.8 million, as the sluggish import pace has not offset the small crop. A small increase in sorghum food use is marginally offsetting. For 2014/15, tight beginning stocks will limit corn food use, projected down 0.1 million tons this month to 3.3 million.

For the EU, 2014/15 coarse grain use is unchanged, but corn feed is projected up 0.5 million tons while barley feed is cut by the same amount. Increased exports and the need to maintain reasonable stocks will limit barley feed use. For 2013/14, corn feed use is estimated up 1.0 million tons to 57.0 million due to strong imports and the competitive price of corn, compared with that of other grains.

South Africa’s 2013/14 corn food use is estimated up 0.3 million tons to 6.3 million, supported by increased production. Philippines 2013/14 estimated corn feed use is raised 0.1 million tons, reflecting imports.

World Coarse Grain Stocks Forecast Higher

Global 2014/15 coarse grain ending stocks are projected up 2.1 million tons this month to 212.6 million. With only a small increase in projected use, increased production and beginning stocks mostly expand forecast ending stocks. Corn stocks are up 0.9 million tons this month to 182.7 million, millet stocks are increased 0.6 million to 1.0 million, barley is up 0.5 million to 18.8 million, and oats and sorghum are up slightly.

The largest change in projected coarse grain ending stocks is for India, up 0.95 million tons to 2.5 million. Most of the increase is for millet, up 0.6 million tons, but corn is also up 0.3, and barley is up slightly. EU 2014/15 coarse grain ending stocks are forecast up 0.5 million tons to 12.2 million, with barley up 0.4 million and corn increased 0.1 million.

Argentina’s corn stocks are boosted 0.5 million tons to 4.5 million as increased beginning stocks are rolled into ending stocks. Producers are expected to continue to find holding commodities an alternative store of value compared to local currency. Brazil’s projected corn stocks are also increased 0.5 million tons to 13.8 million, supported by increased beginning stocks. Conversely, China’s and Ukraine’s corn ending stocks are cut 0.5 million tons each, to 78.1 million and 2.2 million, respectively, reflecting lower beginning stocks. South Africa’s reduced beginning stocks are cutting projected corn ending stocks 0.3 million tons to 3.0 million.

Corn ending stocks for Colombia and Egypt are increased 0.4 and 0.3 million tons, respectively, as strong 2013/14 imports boost 2014/15 beginning stocks.

World Trade up for 2013/14 and 2014/15, but U.S. Exports Unchanged

World coarse grain trade for October-September 2013/14 is forecast 1.1 million tons higher this month to a record 149.5 million, and 2014/15 is projected close behind, up 0.8 million tons to 149.1 million. Corn accounts for the increase in 2013/14 trade, while 2014/15 corn trade is up 0.5 million tons this month to 118.4 million.

Turkey’s 2014/15 corn imports are projected up 0.5 million tons to 2.0 million due to a shortfall in barley production. Barley imports are projected up 0.2 million tons to 0.5 million. Corn supplies are abundant in nearby exporting countries while barley markets are relatively tight with Saudi Arabia’s purchases supporting prices.

Brazil’s 2014/15 corn exports are raised 0.5 million tons to 22.0 million, supported by an increase in 2013/14 second-crop corn production, mostly marketed during the 2014/15 October-September trade year. Reduced corn production in Serbia trims export prospects 0.2 million tons to 2.1 million, while increased 2013/14 production in South Africa supports a 0.2-million-increase in export prospects to 2.5 million for the October-September 2014/15 trade year.

U.S. corn export prospects for 2014/15 remain projected to reach 43 million tons (1.7 billion bushels for the September-August local marketing year). As of May 29, 2014 export sales for the new marketing year reached 3.0 million tons, down from 4.8 million a year ago for the 2013/14 marketing year.

World corn trade in 2013/14 is forecast to reach a record 119.4 million tons, up 1.1 million this month. EU corn imports are projected up 1.0 million tons to 14.0 million. The pace of import licenses reveals the EU appetite for attractively priced corn imports. While meat production in the EU is fairly stable, corn has been increasing its share in feed rations. Turkey’s 2013/14 corn imports are forecast up 0.5 million tons to 1.5 million based on the strong pace of recent purchases. The shortfall in expected winter grains production provides an incentive to boost imports. Egypt’s corn imports are increased 0.5 million tons to 7.0 million, and Colombia’s imports are increased 0.4 million to 4.5 million, both supported by the strong pace of purchases and demand from the poultry sector. The Philippines pace of recent corn imports boosts the forecast for 2013/14 0.1 million tons to 0.7 million.

However, China’s 2013/14 corn imports are cut 0.5 million tons to 4.0 million as the rejection of U.S. corn shipments has not been offset by a significant increase in imports from other origins. Also, Kenya’s corn imports are cut 0.6 million tons to only 0.2 million. Corn supplies are tight, and the recent short-season rains were far below normal, limiting the upcoming harvest. Corn prices in Kenya reflect the tight supplies, but no significant imports have been reported. The government has announced the intention of permitting imports from neighboring countries with surplus supplies, but there is no evidence that arrangements will be made to move large volumes before the end of the 2013/14 trade year.

Corn export prospects for 2013/14 are adjusted for several countries based on the pace of recent sales and shipments. Ukraine’s corn exports are increased 1.0 million tons to 20.0 million as shipments have not slowed as much as expected. Political problems have not disrupted export shipments, and the exchange rate makes exporting attractive. Ukraine appears willing to draw stocks down to low levels to maximize exports. The pace of corn export shipments also supports increases for India, up 0.5 million tons to 3.5 million; Russia, up 0.3 million to 3.8 million; and South Africa, up 0.3 million to 2.3 million. However, sales and shipments from Argentina and Brazil have been relatively sluggish, reducing forecast exports 0.5 million tons each to 9.5 million and 20.5 million, respectively.

U.S. corn exports remain forecast to reach 48.0 million tons (1.9 billion bushels for the local marketing year). May 2014 corn export inspections reached 4.9 million tons, confirming the strong pace of shipments in recent months. At the end of May, outstanding export sales for 2013/14 were 12.4 million tons, up from 3.4 million a year ago.

Published by USDA Economic Research Service

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