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USDA Feed Outlook

15 May 2012

USDA Feed Outlook - May 2012USDA Feed Outlook - May 2012

As of May 6, 71 percent of the US corn crop had been planted, compared with an average of 47 percent in 2007-11 and 32 percent in 2011/12.
Feed Outlook

Corn Planting Progress and Emergence Raise Yield Prospects for 2012/13

As of the same date, 32 percent of the expected crop had emerged, compared with an average of 13 percent in 2007-11 and 6 percent last year. Early planting boosts the projected yield for 2012/13 to 166.0 bushels per acre, compared with last year’s weather-reduced yield of 147.2. Rapid planting and emergence is also likely to affect supplies during the last quarter of the 2011/12 marketing year, resulting in reduced prospects for the June-August quarter feed and residual disappearance.

Corn production for 2012/13 is projected at a record high 14,790 million bushels, 20 percent over last year’s crop. With carryin of 851 million bushels and imports of 15 million, supplies are projected at 15,656 million bushels. Total use year-to-year is projected to gain 1,120 million bushels on higher feed and residual and export demand. Ending stocks for 2012/13 are expected to be up 1,030 million bushels.

Record foreign coarse grain production and the huge US corn crop boost 2012/13 global coarse grain supplies to record levels; however, with foreign coarse grain use increasing faster than production and less competition from low-priced wheat, prospects for US corn and sorghum exports are also raised.

Domestic Outlook

Record Feed Grain Production Projected for 2012/13

US feed grain production for 2012/13 is projected at 390 million metric tons, up from 324 million in 2011/12. An anticipated large corn crop augmented by recovering production for sorghum, barley, and oats boosts the production outlook. Acreage is projected higher for the four feed grains, and yields are projected up for all but barley.

For the four feed grains combined, US planted area is up 5.6 million acres. Planted area is based on producer intentions reported in the March 30 Prospective Plantings. Projected harvested area is based on historical relationships to planted acreage, and yields are based on trend models, except for corn, which takes into account early May planting progress. Harvested area is projected at 98.3 million acres, up from 91.1 million last season.

Beginning feed grain stocks are projected at 24.2 million tons in 2012/13, the lowest since 1996/97. Total 2012/13 feed grain supply is projected at a record high 416 million tons.

Total US feed grain use is expected to increase by 30.9 million tons to 365 million tons in 2012/13 due to higher feed and residual use and exports. Year-to-year feed and residual use is projected up 23 million tons, and exports are projected 7 million tons higher. Food, seed, and industrial (FSI) use is up slightly. There is no change in feed grains used for fuel. Ethanol production is steady as the slowly increasing share of ethanol in gasoline is offset by stagnant gasoline consumption. Increasing US poultry and hog inventories and lower prices are expected to boost demand for feed.

The residual component of feed and residual is expected to be much larger in 2012/13 as production expands sharply. Ending feed grain stocks are projected to advance 27 million tons year-to-year from 2011/12. Average farm price in 2012/13 is expected to decrease 24 percent from the 2011/12 record high levels, as supplies grow.

Feed and Residual Set To Recover in 2012/13

The 2012/13 feed and residual use for the four feed grains plus wheat on a September-August year is projected at 149.3 million metric tons, up about 21.7 million tons from 2011/12. Total grain-consuming animal units (GCAUs) are projected less than 1 percent lower year-to-year at 92.9 million. GCAUs are expected higher because of increased forecast production of broilers and hogs.

Changes to the 2011/12 Balance Sheets

Projected corn feed and residual was reduced by 50 million bushels this month to 4.55 billion, reflecting lower June-August feed and residual use expectations. Attractive winter wheat prices and abundant supplies are expected to result in increased wheat feed use. Also, the early planting and emergence of corn indicates there will likely be early harvest and use of new-crop corn before the September 1 beginning of the 2012/13 marketing year, boosting old-crop ending stocks. As a result, ending stocks are increased to 851.1 million bushels from last month’s 801.1 million. There were no changes to the sorghum, barley, and oats balance sheets.

This month’s 2011/12 farm corn price range was reduced 5 cents on the low end of the range and 15 cents on the high end of the range, leaving the projected range at $5.95 to $6.25 per bushel. Marketings of new-crop corn late in the 2011/12 marketing year are likely to put downward pressure on prices during the final quarter (June-August) of the marketing year. The projected sorghum farm price range was reduced 5 cents on the low end and 15 cents on the high end for a projected range of $5.85 to $6.15 per bushel as lower corn prices are expected to be reflected in other feed grain markets. The barley farm price was lowered 5 cents to $5.30 per bushel. Abundant supplies of barley from Canada, reduced demand for malting barley in beer, and lower corn prices are behind the decrease. The oats price was unchanged at $3.45 per bushel.

Increased Area and Rapid Planting Drive a Record Corn Production Forecast

The 2012/13 US corn crop is projected at a record 14,790 million bushels, up more than 2.4 billion bushels from a year earlier. The year-to-year gain reflects a 75-year high in planted area and prospects for record yields with the rapid pace of planting and emergence by early May. The current record for US corn production is 13.1 billion bushels in 2009/10.

Planting proceeded at an unprecedented pace this spring with 71 percent of the corn crop in the ground by May 6. Area planted, as indicated by the March 30 Prospective Plantings report, is 4 million acres higher year-to-year at 95.9 million acres. Harvested acreage, at 89.1 million acres, is based on projected demand for silage, reflecting forecast roughage-consuming animal units (RCAU), projected silage yields, and historical abandonment. The yield projection is based on the simple linear trend of the national average yield for 1990-2010 (164 bushels per acre) adjusted upward 2 bushels per acre to reflect the rapid start to this year’s crop.

As of May 6, 2012, 71 percent of the US corn crop had been planted, compared with 32 percent last season and the 5-year average (2007-11) of 47 percent. Extremely warm weather in April combined with dry spells resulted in record mid-April plantings and early May emergence.

Beginning corn stocks for 2012/13 are forecast at 851.0 million bushels, the smallest since the 1995/96 crop and 277 million below 2011/12. Total supply is expected to be 15,656 million bushels, up 2,150 million from 2011/12.

Total corn use for 2012/13 is projected at 13,775 million bushels, 1,120 million higher than the estimated 12,655 million in 2011/12 and 709 million higher than the record high in 2009/10. Use is up on higher feed and residual and exports. Projected feed and residual is 5,450 million bushels, 900 million above 2011/12 due to higher expected pork and poultry production, lower corn prices, and increased residual disappearance associated with a larger supply. Exports, at 1,900 million bushels, are projected 200 million higher reflecting abundant supplies, lower prices, and higher expected demand from China. The export forecast is constrained by large global supplies. Sweetener and starch use advanced while corn for fuel is unchanged at 5 billion bushels.

Ending stocks of corn for 2012/13 are projected at 1,881 million bushels, 1,030 million higher than the 2011/12 projection. At 13.7 percent, the stocks-to-use ratio has recovered after very low levels for the past 2 years, mostly due to the large projected increase in production.

The 2012/13 season-average farm price for corn is projected at $4.20 to $5.00 per bushel, compared with $5.95 to $6.25 forecast for 2011/12. Lower prices are due to increased expected production, only moderately higher use, and abundant global supplies.

Sorghum Production Set To Rebound

The 2011/12 US sorghum crop is projected to be 335 million bushels, up from 214 million in 2011/12. Yields are expected to return to normal levels, and the March 30 Prospective Planting report indicates planted acreage is expected to increase by 469,000 acres to 5.95 million. The projected yield is up 10.4 bushels from 2011/12.

Sorghum beginning stocks for 2012/13 are forecast at 26.9 million bushels, down 0.6 million. Total supply for 2012/13 is projected to be 362 million bushels, up from 242 million in 2011/12, due to higher production levels.

Total sorghum use is expected to surge by 105 million bushels for 2012/13. Exports are projected 80 million bushels higher at 140 million, and feed and residual is projected 25 million higher at 90 million. FSI use is projected unchanged at 90 million bushels.

Ending sorghum stocks are projected at 42 million bushels for 2012/13, an increase of 15 million over the 2011/12 projection of 27 million bushels. The 2012/13 season-average farm price is projected at $3.85 to $4.65 per bushel, compared with the record $5.85 to $6.15 per bushel projected for 2011/12.

Barley Production Advances in 2012/13

The 2012/13 US barley crop is projected at 200 million bushels, up from last season’s 156 million due to higher acreage moderated by slightly lower expected yields. Planted acreage for 2012/13 is projected at 3.3 million acres, 774,000 acres higher than the 2.6 million in 2011/12. Harvested acres are projected 661,000 higher than in 2011/12. Barley planted area is from the Prospective Plantings report, and harvested area is based on the 2007-11 average relationship between harvested and planted area. The barley yield is based on the 1960-2011 trend, adjusted for rounding in production.

Barley beginning stocks for 2012/13 are projected at 45.1 million bushels, half the level of a year earlier. Imports for 2012/13 are increased by 5 millon bushels due to projected increased supplies in Canada. Total supply is 260 million bushels, just 5 million greater year-to-year.

Feed and residual use for 2012/13 is projected down by 10 million bushels to 30 million. FSI is unchanged at 160 million bushels. With projected exports holding steady at 10 million bushels, total use is down by 10 million to a projected 200 million bushels.

Ending stocks for barley in 2012/13 are projected at 60 million bushels, 15 million over 2011/12. Prices received by farmers for barley are expected to average $5.10 to $6.10 per bushel, compared with the 2011/12 average price projection of $5.30 per bushel.

Oats Production in 2012/13 Recovers From Last Year’s Record-Low Crop

Projected US production of oats in 2012/13 is up nearly 21 million bushels at 75 million. Planted acreage, based on Prospective Plantings, is set to increase 367,000 acres to 2.9 million as yields return to trend levels at an expected 65.2 bushels per acre. Harvested area is based on the 2007-11 average relationship between harvested and planted area. The oats yield is projected based on 1960-2011 trend, adjusted for rounding in production.

Forecast oats beginning stocks are 62 million bushels for 2012/13, 6 million below 2011/12. Imports are projected at 100 million bushels, down 10 million from 2011/12. The total 2012/13 oats supply is 237 million bushels, 6 million greater than 2011/12.

Total 2012/13 oats use is projected at 169 million bushels, unchanged from 2011/12. Feed and residual use is projected at 90 million bushels, unchanged from 2011/12. FSI , also unchanged, is projected at 76 million bushels. Exports are projected at 3 million bushels. Ending stocks are expected to be 68 million bushels, up 6 million. Oats farm prices for 2012/13 are projected at $2.40 to $3.00 per bushel, compared with a record $3.45 per bushel for 2011/12.

Hay Stocks Slip

As of May 1, US hay stocks were 21.4 million tons, nearly 1 million below levels a year ago. All hay production in 2011/12, at 131.1 million tons, is down 10 percent from the previous year. RCAUs for 2011/12 are down just over 2 percent and are expected to slide further in 2012/13. All hay stored on farms May 1, 2012, totaled 21.4 million tons, down 4 percent from a year ago. Disappearance from December 1, 2011, through May 1, 2012, totaled 69.3 million tons, compared with 79.9 million tons for the same period a year ago. This is the smallest disappearance during the 6-month period since 1985. Hay disappearance per RCAU for the entire 2011/12 hay marketing year (May 1 through April 30) fell to 1.947 tons, down from the 2010/11 estimate of 2.082 tons.

Compared with last year, hay stocks as a share of production increased across much of the Northern Tier and in many Eastern States. Mild temperatures coupled with limited snowpack left many pastures and ranges accessible to livestock herds for longer periods of time during the winter, enabling producers to feed less hay. Similarly, beneficial rainfall throughout much of the spring and summer boosted pasture growth in many Atlantic Coast States, delaying the need for supplemental feedstuffs as winter approached.

Elsewhere, on-farm stocks declined from levels of a year ago in a number Great Plains States, as prolonged drought conditions hampered pasture growth and forced many livestock producers to feed an increased amount of hay to their herds.

Corn silage production is estimated at 108.9 million tons in 2011, compared with 107.3 in 2010. Silage yield in 2011 is estimated at 18.4 tons per acre, below the record 19.3 tons in 2009 and 2010. Acreage harvested for silage, at 5.9 million acres, advanced from 5.6 million a year ago.

International Outlook

Global 2012/13 Coarse Grain Output Projected Up 7 Percent

World coarse grain production in 2012/13 is forecast up 85.6 million tons from the previous year to a record 1,228.0 million. Much of the increase is attributed to US corn being boosted by the potent combination of expected record yields and a 75-year high in intended plantings. However, foreign producers are also expected to respond to the sustained high coarse grain prices of recent years with production projected up 19.5 million tons to a record 838.2 million. For most countries, trend yields are assumed because planting and growth have not progressed enough to justify a departure from trend. For some coarse grains, especially winter barley and rye planted in the Northern Hemisphere, yield forecasts are adjusted to account for favorable or unfavorable conditions. The average foreign yield for 2012/13 is lower than a year earlier for barley and oats, just slightly lower for corn, and increased for sorghum, mixed grain, millet, and rye.

Foreign coarse grain harvested area in 2012/13 is projected up 2 percent to 279.5 million hectares over 2011/12, as attractive prices around the world support expansion and a shift towards corn in many countries. However, by the time Southern Hemisphere countries plant, corn prices are expected to be lower, limiting the incentive to plant coarse grains, especially when compared with incentives to plant oilseeds. Foreign corn area is projected up 3.5 million hectares to 138.4 million year over year, barley area is forecast up 1.0 million to 50.0 million, sorghum is up 1.0 million to 37.5 million, and rye is up 0.2 million to 5.2 million. Over the same period, millet is reduced 0.5 million to 34.2 million, mixed grain is trimmed 0.3 million to 4.0 million, and oats stay nearly unchanged at 10.3 million.

The Biggest Foreign Producers Expect Record Corn Crops in 2012/13

Foreign corn production in 2012/13 is projected to reach a record 570.1 million tons, up 13.6 million tons from the year before. China is expected to produce a record corn crop of 193.0 million tons, as expanded area more than offsets a return to trend yields after the 2011/12 record. Corn prices and government support in China have been strong enough to increase corn area for 10 consecutive years to a record 34.0 million hectares in 2012/13. A return to normal growing conditions is expected to limit corn yields in China, keeping production growth to less than 1 percent.

Brazil, the second largest foreign corn producer at 67.0 million tons, is projected to match 2011/12 record corn production in 2012/13. By late in calendar year 2012, when Brazil is planting first-crop corn, prices are expected to favor soybeans over corn, and first-crop corn area is expected to decline. However, this decline will likely be more than offset by an increase in second-crop corn area following soybeans in states like Mato Grosso. While first-crop corn yields are expected to increase in 2012/13, following drought in some areas in 2011/12, that is expected to be more than offset by second-crop yields returning to trend levels following the 2011/12 record.

The EU is forecast to produce 63.1 million tons of corn in 2012/13, down 1.5 million year over year. While attractive corn prices will likely boost corn area 4 percent, yields are not expected to match the previous year’s record. Spain’s corn area may be reduced by insufficient water for irrigation in the South.

Corn production in Sub-Saharan Africa is projected up 2 percent in 2012/13 to 56.6 million tons. A return to trend yields in South Africa, the region’s largest producer, is expected to boost that country’s production 1.5 million tons to 13.0 million.

In Southeast Asia, corn production is expected to reach 30.0 million tons in 2012/13, up 3 percent over the previous year. Indonesia’s corn production is forecast down 2 percent to 8.5 million tons despite a small increase in area, as a return to trend yields implies a reduction from last year’s record high. Vietnam’s corn production is forecast up 7 percent to 5.3 million tons, and Thai corn production is projected to increase 5.0 percent to 4.5 million tons. For both countries, prices support a small area increase and trend yields imply another record high. Small increases in corn production are anticipated for Laos, Cambodia, and the Philippines in 2012/13.

Argentina is projected to have a record corn crop of 25.0 million tons in 2012/13, up 3.5 million over last year. While high soybean prices compared with corn prices and government policies are expected to combine to reduce corn harvested area 6 percent, a return to trend yields after drought increases yield prospects 23 percent.

Ukraine is expected to produce a record 24.0 million tons of corn in 2012/13, up 1.2 million over last year. Corn area harvested is forecast up 27 percent due to attractive corn prices and good returns to corn production for the last several years coupled with the replanting of failed winter crops (mostly wheat and rapeseed) with corn after unusually extensive winter-kill this year. However, a return to trend yields after last year’s record drops corn yield expectations 17 percent, limiting the production expansion.

India’s corn production is forecast up 3 percent in 2012/13 to 22.0 million tons over the previous year. While attractive corn prices are expected to boost area, corn yields are projected to nearly match those of the previous year, when monsoon rains were average.

Mexico is forecast to produce 21.0 million tons of corn in 2012/13, up 2.0 million from 2011/12, as area is expected to rebound 1.0 million hectares to 7.0 million. Lack of water in reservoirs in Sinaloa sharply reduced winter corn area in 2011/12, and some recovery in winter corn area is expected as reservoirs get replenished. Moreover, corn area for both main-crop and winter-crop in other regions is expected to expand, compensating for the incomplete recovery in Sinaloa. Corn production in Canada is forecast up 18 percent to 12.6 million tons as planting intentions signal a sharp increase in area to a record 1.4 million hectares and trend yields provide a small increase. Good corn prices at planting and the development of short-season varieties combine to encourage corn area expansion both in the traditional regions of Eastern Canada, mostly Ontario, and also into the Prairie Provinces, especially Manitoba.

A Small Increase Expected for Global Barley Production

World barley production is projected to reach 135.4 million tons in 2012/13, up 1.7 million from a year earlier. Though a small producer, the United States accounts for more than half the increase in global output, as foreign barley production is up only 0.7 million tons to 131.0 million. Strong prices are expected to support barley area in many countries, but severe winter weather has limited production prospects in some countries.

EU barley production is forecast up 2.1 million tons to 53.6 million for 2012/13. Barley production potential dropped significantly due to winter drought in Spain and low temperatures with inadequate snow cover in parts of Poland, Germany, and into the Balkans. Even with higher-than-average winter losses, EU barley harvested area is projected up 4 percent year over year. The average yield for EU barley in 2012/13 is projected slightly better than in 2011/12 when extensive spring drought across France and other countries reduced production potential, but 7 percent less than the record in 2004/05.

Russia’s 2012/13 barley production is projected at 16.5 million tons, down 3 percent from 2011/12. Most barley in Russia is spring planted, and with planting ongoing, both area harvested and yield are projections. Area is expected to expand 3 percent based on attractive prices and the success of 2011/12 exports. However, a return to trend yields across Siberia, the Urals, and the Volga cuts projected yields 5 percent from a year earlier.

Canada’s barley production is forecast up 16 percent in 2012/13 to 9.0 million tons. Wet soils in 2011/12 affected barley planting intentions, but a dry winter has left 2012 planting conditions more open for expansion. Barley area in Canada is expected to expand 18 percent. Favorable prices and some barley producers’ enthusiasm for additional marketing opportunities with the end of the Canadian Wheat Board’s export monopoly support the area expansion. Trend yields imply a 2-percent reduction from 2011/12.

Australia’s barley production in 2012/13 is projected to reach 8.0 million tons, down 0.5 million from a year earlier. Planting moisture and the economics of small grains production, including wheat and barley prices and exchange rates, are not expected to be as favorable in 2012/13 as was the case a year earlier. Barley area is expected to decline 5 percent, with trend yield down slightly from a year ago.

Ukraine’s barley production in 2012/13 is forecast down 1.6 million tons to 7.5 million from a year earlier. Most barley in Ukraine is spring planted, and with extensive winter-kill in winter wheat and rapeseed, spring barley can compete for the large area to be resown to spring crops. However, prices favor corn and sunseed compared to barley, and barley area in 2012/13 is projected to decline 2 percent. A return to trend in 2012/13 drops barley yields 16 percent.

Turkey’s barley production is expected to decline 11 percent in 2012/13 to 6.25 million tons. Area is expected to increase 3 percent as producers’ prices are attractive, but there has been no significant trend in barley yields in recent decades, so a return to average yields implies a drop of 14 percent from yields of a year ago.

Argentina’s barley production is projected to reach a record 5.4 million tons, up 1.4 million tons in 2012/13. Argentina’s barley area is expected to expand by 33 percent, mostly because barley prices to producers are more attractive than winter wheat prices. Argentina maintains an export quota for wheat but not for barley, and the quota has been used to reduce the wheat price to producers compared to the export price. A return to trend yields in 2012/13 implies a small increase over 2011/12.

Morocco, though a relatively small barley producer, is expected to see production fall to only 1.1 million tons in 2012/13, a drop of over 50 percent year over year. Barley is grown as a winter crop in Morocco, and it has been devastated by drought, cutting yield prospects.

World Sorghum Production to Grow at Double Digits in2012/13

Global sorghum production in 2012/13 is forecast up 13 percent to 61.7 million tons. While US production is up dramatically, foreign output is also increasing, up 4.1 million tons to 53.2 million. The largest producing region is Sub-Saharan Africa, where sorghum is projected to rebound to 23.4 million tons, up 1.6 million from 2011/12 when the monsoon rains fell to below average in many countries. With average rains projected for 2012/13, sorghum yields are expected to return to average. The largest increase is expected for Sudan, with production increasing 82 percent to 3.8 million tons. However, a return to trend yield drops Chad’s sorghum production 46 percent to 0.7 million tons.

Argentina’s sorghum production in 2012/13 is forecast up 0.8 million tons to 4.8 million. Argentine farmers have done relatively well marketing sorghum, so area is expected to increase 5 percent while a return to trend boosts yields 14 percent. Mexico’s sorghum production is projected to increase 0.7 million tons to 6.8 million, and sorghum production in India and Brazil is expected to increase 0.6 million tons each to 6.7 million and 2.8 million, respectively. All three countries are expected to expand sorghum area in 2012/13 and reach yields slightly higher than in 2011/12.

Global millet production in 2012/13 is forecast up 2 percent to 33.5 million tons over the previous year. An increase of 2.3 million tons to 18.1 million is expected for Sub-Saharan Africa, as yields return to trend. However, a reduction for India is partly offsetting as area is expected to shift to more profitable crops. World oats production in 2012/13 is projected to be stable year-to-year at 23.2 million tons. Declines in Russia (lower yield) and the EU (reduced area) are mostly offset by increases for the United States and Canada. Global mixed grain production is up 0.4 million tons to 15.1 million, and world rye production is projected up 0.5 million tons to 13.4 million due to increased production expected in the EU.

Beginning Stocks Boosted for 2012/13 This Month

Beginning stocks for 2012/13 are by definition the same as ending stocks for 2011/12, so although no supply and demand balance was done for 2012/13 in April, the 2011/12 coarse grains supply and demand included the 2012/13 beginning stocks as the 2011/12 ending stocks. These coarse grain stocks are revised up 4.2 million tons in May. The largest increase is 2.8 million tons for Brazil, boosted by sharply higher corn production estimated for 2011/12. US stocks are up 1.3 million tons this month. China’s stocks are up 1.0 million tons and EU stocks are up 0.4 million due to increased 2011/12 corn imports. Tanzania’s coarse grain stocks are boosted 0.5 million tons based on large increases in estimated production and consumption for several years. Russia’s coarse grain stocks are reduced 0.5 million tons this month mostly due to increased corn exports.

At 161.2 million tons, 2012/13 global coarse grain beginning stocks are just below the 162.4 million estimated for a year earlier but much lower than the 195 million reached 2 or 3 years earlier. Total world coarse grain supplies are projected reach record highs in 2012/13, up 84.3 million tons, or 6 percent, in 2012/13 over a year earlier due to expanded production. While US corn production accounts for most of the increase in global coarse grain supplies in 2012/13, foreign supplies are also at record highs.

World Coarse Grain Use Projected Up 5 Percent

Global coarse grain use in 2012/13 is projected to reach a record 1,204.3 million tons, up 5 percent from a year earlier. Ample supplies of coarse grains, especially corn, are expected to drive down prices, making wheat less attractive as an ingredient in animal rations. World coarse grain feed use is projected up 7 percent to 705.0 million tons in 2012/13. Global food, seed and industrial use (FSI) is expected to expand more slowly than feed and residual use, with significant FSI expansion in China but sluggish industrial use in the United States. Of the 60.6- million-ton coarse grain consumption increase, corn is expected to account for 53.7 million, sorghum for 5.5 million, millet for 0.7 million, barley for 0.5 million, oats for 0.2 million, and rye for 0.1 million.

US coarse grain use is projected to increase 23.8 million tons in 2012/13, much more than in any other country, illustrating why US supply-and-demand changes drive world prices. China’s coarse grain use is forecast up 12.5 million tons in 2012/13, with corn use for feed and FSI each increasing 6.0 million. FSI use is also expected to increase for sorghum and barley, supported by increasing consumption of alcoholic beverages. Brazil’s coarse grain use is projected up 2.9 million tons, with feed use up 2.4 million tons as meat production continues to expand. Canada’s coarse grain use is expected to increase 2.0 million tons as less low-quality wheat is likely to be available for feeding. EU coarse grain use is forecast up 1.9 million tons mostly due to a shift to coarse grains and away from feed-quality wheat in compound feed rations. EU coarse grain FSI is only up 0.25 million tons as most ethanol plants are expected to continue to use wheat. Sudan is projected to increase coarse grain use (mostly food use) 1.7 million tons as supplies recover from drought. Even with the rebound, Sudan’s use will fall short of 2010/11 levels.

Mexico is forecast to increase coarse grain use 1.6 million tons, with most of the increase supporting expanded meat production. India is expected to boost coarse grain use 1.45 million tons, with roughly a third of the increase boosting FSI, and most of the growth used to increase output of meat, eggs, and dairy. Russia is forecast to increase coarse grain use 1.2 million tons, the entire growth used to support meat production. Argentina is expected to boost coarse grain use 1.1 million tons, with 0.8 million tons of the increase in FSI as corn used to produce ethanol expands. Vietnam’s use of coarse grains is projected up 1.1 million tons, all in feed and residual, as the use of wheat for feed declines and compound feed production expands.

Most other countries are expanding coarse grain use by less than a million tons in 2012/13, but some are expected to have declines. With reduced barley production, Morocco’s coarse grain use is forecast down 0.9 million tons, with a third of the decline in FSI. For some countries the decline in coarse grain use is modest. For example, Ethiopia is down 0.4 million tons, but since the reduction is nearly all in FSI, it raises concerns. For all of Sub-Saharan Africa, coarse grain use is forecast up 3.4 million tons in 2012/13 to a record 100.5 million.

Increased 2012/13 Ending Stocks Concentrated in the United States

Global coarse grain ending stocks for 2012/13 are projected up 15 percent to 184.9 million tons, with US corn stocks accounting for the entire increase. Foreign coarse grain stocks are projected down 2 percent to 133.8 million tons. With ample supplies in the United States and declining prices, the incentive to hold stocks in the rest of the world is reduced.

EU 2012/13 coarse grain ending stocks are projected down 1.7 million tons. With virtually all stocks privately owned and price prospects declining, demand for coarse grains to replace wheat in compound feeds is expected to be strong. Iran’s coarse grain stocks are forecast down 0.6 million tons as economic sanctions make importing corn to feed to chickens more problematic. Malawi’s ending stocks are projected down 0.5 million tons as consumption levels are expected to be maintained, even with a smaller corn crop. India’s coarse grain stocks are expected to decline 0.5 million tons, as production of millet declines and demand for corn is strong. Some countries are expected to increase coarse grain stocks in 2012/13, mostly due to increased production. For example, Mexico is up 0.8 million tons, and Argentina is up 0.5 million. Other countries changes in projected stocks during 2012/13 are less than 0.5 million tons.

Increased Coarse Grain Trade Projected for 2012/13 on Record Corn Trade

Global coarse grain trade in 2012/13 is forecast up 5 percent to 128.1 million tons, less than 1 million tons below the record reached in 2007/08. Global corn trade is projected at over 100 million tons for the first time. Corn is expected to be cheaper than feed wheat as US corn prices decline and less low quality wheat is produced (assuming a more normal quality of wheat production, especially in Australia and Canada). Also, a rebound in sorghum trade is expected.

World corn trade in 2012/13 (October-September trade year) is forecast to reach a record 101.4 million tons, up 4.4 million as foreign consumption grows more rapidly than foreign production, boosting US export prospects. US corn exports are projected to reach 48 million tons (1.9 billion bushels for the September-August local marketing year), up 4.5 million tons, as US prices are expected to be highly competitive with a record crop. As of May 3, 2012, US corn sales for shipment in 2012/13 reached 4.4 million tons, up from 1.8 million a year earlier. However, US corn exports are expected to remain far below the record 61.8 million tons reached in 1979/80, or the 60 million plus exported in 1989/90 and 2007/08. Since 2007/08, several years of sustained strong corn prices have encouraged the expansion of corn production around the world, increasing competition for US exports. Most dramatically, Ukraine has emerged as a corn export powerhouse, challenging Argentina and Brazil as leading corn competitors. In aggregate, foreign corn exports in 2012/13 are projected to be 53.4 million tons, almost the same as the record 53.5 million a year earlier.

Argentina is projected to increase corn exports 1.0 million tons in trade year 2012/13, reaching 15.0 million. The large 2012/13 crop will be harvested mostly starting in March 2013, relatively late in the trade year, limiting how much Argentina can ship during 2012/13 but increasing competition for US exports in the latter half of the trade year. Ukraine, with a record corn crop and favorable shipping costs to markets in the Mediterranean and Middle East, is forecast to export 14.0 million tons, unchanged from the previous year. Brazil, with record corn production for the second consecutive year, is also expected to maintain corn exports at the previous year’s level of 10.5 million tons. India’s corn exports in 2012/13 are expected to decline 0.2 million tons to 2.2 million as strong domestic demand limits exports. EU corn exports are forecast down 0.5 million tons to 2.0 million as internal demand for feed grains is expected to be strong given the reduced wheat crop. South Africa’s corn exports are expected to increase 0.5 million tons to 2.0 million as production increases. Serbia’s exports are forecast up 0.1 million tons to 1.8 million due to increased production and relatively attractive EU prices. Paraguay’s 2012/13 trade year corn exports are forecast down 0.2 million tons to 1.6 million because the larger expected 2012/13 local year corn crop will be mostly exported in the 2013/14 trade year. Russia’s corn exports are expected to drop 1.0 million tons to 0.5 million as internal demand is growing.

Import demand for corn in 2012/13 is expected to be enhanced by declining prices and less competition from low-quality wheat. China is expected to import 7.0 million tons, up 2.0 million from the previous year. Corn prices in China are expected to remain higher than world prices, encouraging imports, but the availability of import quota may limit imports to about 7.0 million tons. South Korea’s corn imports are forecast up 1.0 million tons to 8.5 million as corn is expected to be cheaper than feed-quality wheat. EU corn imports are forecast up 1.0 million tons to 6.0 million as drought in Spain boosts import demand. Turkey’s corn imports are projected up 0.5 million tons to 1.0 million due to expanding feed demand. Israel and Vietnam are each expected to increase corn imports 0.3 million tons as corn prices become more competitive than wheat. Most other countries maintain or increase corn imports slightly to maintain or expand meat production. However, Mexico’s corn exports are projected to drop 1.2 million tons to 9.3 million as production increases and sorghum imports expand. Indonesia’s corn imports are forecast down 0.5 million tons to 1.5 million as production increases. Brazil, with ample corn supplies, is forecast to import 0.8 million tons of corn from its neighbors in 2012/13, 0.3 million less than a year earlier.

Sorghum Trade To Rebound in 2012/13

World sorghum trade in 2012/13 is projected to expand 2.1 million tons to 7.1 million, mostly because of much larger US supplies. US exports are expected to more than double in 2012/13, reaching 3.5 million tons (140 million bushels for the September-August local marketing year). However, foreign exports are also expected to increase, up 0.2 million tons to 3.6 million, the largest since 1985/86. Most of the increase in competitor’s exports is in Argentina, up 0.4 million tons to 2.2 million, based on increased production. Australia’s sorghum exports are projected down 0.2 million tons to 1.0 million due to reduced production and less domestic low-quality feed wheat.

Sorghum imports for Mexico are expected to increase 1.7 million tons to 3.0 million as sorghum becomes more attractively priced than feed-quality wheat or corn. Tight grain supplies in the Iberian Peninsula are expected to boost EU sorghum imports 0.2 million tons to 0.3 million. Small increases in imports are also expected for Morocco, Sudan, and Japan.

Barley, Oats, and Rye Trade in 2012/13

Global barley trade is projected to decline 4 percent in 2012/13 (October- September), with reduced import prospects for Saudi Arabia and Algeria. Argentina is expected to emerge as the world’s largest barley exporter for the first time, increasing exports 1.0 million tons to 4.0 million. Global oats trade is projected little changed at 2.2 million tons, while rye trade expands slightly.

May 2012

Published by USDA Economic Research Service

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