USDA Feed Outlook

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13 February 2012

USDA Feed Outlook - February 2012

US 2011/12 corn exports are increased 50 million bushels this month to 1.7 billion as lower production prospects in Argentina reduce competition in global markets.

US Corn Exports Higher With Reduced Competition

US corn supplies are projected up slightly due to increased imports, but the larger increase in exports leaves ending stocks down. Global corn trade is up, supported by increased imports by the EU. World coarse grain production is forecast lower mostly due to a 4.0- million-ton reduction in projected corn production in Argentina. With world coarse grain use projected nearly unchanged, global ending stocks decline.

US corn stocks-to-use ratio

Domestic Outlook

Higher Trade Boosts Feed Grain Supplies and Use for 2011/12

US feed grain supplies projected for 2011/12 edge up 0.3 million metric tons this month to 358.3 million, with increases for corn and oats imports. Supplies, however, remain down 6 percent from last year. Total feed grain use is up due to higher projected corn exports. At 335.5 million metric tons, forecast use is raised 1.3 million tons from last month but remains down 4 percent from the previous season. With demand exceeding production in 2011/12, ending stocks are expected to be drawn down 9.5 million tons from an already low carryin. At a projected 22.8 million tons, stocks would be the lowest since the end of the 1995/96 marketing year.

Feed and residual use for the four feed grains plus wheat on a September-August marketing year basis is lowered this month to 126.2 million metric tons due to lower wheat feed use. Grain-consuming animal units (GCAUs) are projected at 93.6 million this month, down slightly from last month due to a very small inventory change. Broiler weights are down, contributing to lower feed use. Feed and residual use per animal unit in 2011/12 is unchanged this month at 1.35 tons, which is down from 1.39 tons in 2010/11.

US corn utilization

Forecast Corn Exports Raised, Stocks/Use Lowest Since 1995/96

US corn exports were increased 50 million bushels this month due to adverse weather conditions in Argentina, boosting prospects for higher demand. Corn imports are projected 5 million bushels higher, mostly reflecting strength in reported imports through November. As a result, ending stocks slip to 801 million bushels, down 45 million bushels from last month’s projection.

The stocks-to-use ratio is projected at 6.3 percent, down from 6.7 percent last month and the lowest level since 1995/96, when the stocks-to-use fell to 5.0 percent. Unlike in 1995/96, corn being held by farmers for delivery to ethanol plants is expected to account for a significant portion of 2011/12 ending stocks, making it more difficult to draw down ending year supplies.

December 1 US hay stocks and RCAU

Minor Changes Made to Feed Grain Price Projections

The midpoint of the projected range for the 2011/12 US corn price received by farmers remains at $6.20 per bushel this month, but the range is narrowed by 10 cents at each end, to $5.80-$6.60 per bushel. With the exception of prices in September, corn prices at the farm gate have been reported below $6.00 per bushel so far this marketing year. If the preliminary January price of $5.90 per bushel is confirmed, the farm price for the first 5 months of this marketing year will average $5.90 per bushel, weighted by 5-year average marketing percentages by month. The farm price has been below prevailing cash market bids due to farmers forward contracting when prices were lower. Farm gate prices are expected to average around $6.50 per bushel over the coming months to reach the $6.20 midpoint of the projected season average price range. The projected price range for sorghum was narrowed by 10 cents on each end to $5.70 to $6.50 per bushel, and the barley price range was narrowed by 5 cents on each end to $5.15 to$ 5.65.

US corn prices expected to hit record as stocks continue to tighten

International Outlook

Global Coarse Grain Production Prospects Reduced

World coarse grain production in 2011/12 is projected at 1,142.2 million tons, down 3.4 million this month mostly due to reduced prospects in Argentina. Global corn production is forecast down 4.0 million tons to 864.1 million, and sorghum is reduced 0.1 million tons to 60.6 million, but barley prospects are increased 0.6 million tons to 134.0 million and oats are up 0.1 million tons to 23.2 million.

In Argentina, crop damage was confirmed for corn and sorghum. While crucial rains and milder temperatures in the latter half of January allowed filling corn and sorghum to recoup some loses, rainfall for the month was below normal in most of the key growing areas, and temperatures averaged above normal. Forecast corn harvested area is reduced 0.2 million hectares to 3.6 million as corn with poor pollination is expected to be harvested for silage instead for grain. The projected yield in Argentina is reduced 11 percent this month to 6.1 tons per hectare, as damage done by the hot, dry conditions in December has been confirmed, as were additional yield loses caused by hot and dry weather in early January. Sorghum is more drought tolerant than corn, but the crop has experienced serious stress. Argentine sorghum yields are forecast down 8 percent this month to 4.3 tons per hectare, reducing production 0.3 million tons to 4.4 million tons. The barley harvest in Argentina was completed in mostly favorably dry conditions, and area harvested for grain and yields are reportedly higher than expected earlier, boosting production 0.7 million tons to 4.0 million.

While the drought in South America during December and January extended into Southern Brazil, damaging production prospects for first-crop corn, favorable conditions for the second crop are offsetting, leaving total projected corn production unchanged this month. In Paraguay, however, corn production losses will not be offset, and 2011/12 area and yield prospects are reduced this month, cutting production 0.35 million tons to 1.65 million.

In Australia, ample summer rains in Queensland and Northern New South Wales improved sorghum yield prospects, boosting 2011/12 production 0.2 million tons to 2.6 million. The Philippines reported increased corn plantings, increasing projected production 0.14 million tons to 7.14 million.

EU 2011/12 corn production is increased 0.2 million tons to 64.5 million, based on higher yields reported for Italy. Kazakhstan reported 2011/12 harvest results, generally trimming coarse grain area but increasing yields. Barley production is reduced 0.1 million tons to 2.6 million, and rye is reduced, but these reductions are more than offset by increases for oats, up 0.1 million tons to 0.3 million, and small increases for corn and millet.

Changes to the previous year’s coarse grains supply and demand balances are mostly offsetting, but boost world 2011/12 beginning stocks 0.3 million tons this month to 166.2 million. World corn beginning stocks are up 0.8 million tons to 128.8 million, mostly due to a 0.5-million-ton increase for South Africa caused by reduced exports and increased imports estimated for 2010/11. Increased 2010/11 corn imports boost Brazil’s 2011/12 beginning stocks 0.3 million tons, with other changes smaller and mostly offsetting.

Global Coarse Grain Use Prospects Little Changed, Ending Stocks Lower

World coarse grain use in 2011/12 is projected to reach 1,149.9 million tons, up 0.3 million this month. Global corn use is forecast down 0.4 million tons to 867.6 million, but barley is up 0.6 million to 136.8 million.

Canada’s corn use is projected down 0.4 million tons to 11.1 million as a stocks report verifies reduced use during the early months of 2011/12, and meat production prospects are sluggish. However, corn use is projected higher for Argentina, up 0.3 million tons due to expanding poultry production; for Ukraine, up 0.25 million tons due to increased feed prospects; for Chile, up 0.1 million tons as less sorghum is expected to be imported; and for Kazakhstan, up slightly based on increased production. Global local marketing year imports increase more than exports this month, trimming world corn disappearance.

Kazakh barley use is forecast down 0.4 million tons to 1.8 million as increased exports and reduced production limit domestic use. Saudi Arabia’s barley use estimated for 2010/11 is trimmed 0.3 million tons due to tight supplies and the increased use of alternative feed ingredients. These changes support a 0.2-millionton reduction in Saudi Arabia projected 2011/12 feed use. However, these reductions are more than offset by increases for Ukraine, Jordan, Argentina, and Canada. Also, for barley, local marketing year imports increased less than exports, boosting global disappearance.

Reduced 2011/12 coarse grain supplies and nearly unchanged use prospects combine to cut forecast global ending stocks 3.3 million tons to 158.5 million. Corn stocks are projected down 2.8 million tons to 125.3 million, while barley is down 0.6 million to 21.9 million.

The largest reduction in projected 2011/12 ending stocks is for corn in Ukraine, down 2.25 million tons this month to only 1.30 million. The pace of exports and domestic use is expected to keep Ukraine’s corn stock build up modest, despite the huge increase in production. Reduced production prospects are expected to limit stocks in Paraguay, down 0.35 million this month. Strong corn exports are reducing projected ending stocks for Brazil and Russia by 0.2 million tons each. There are also small reductions this month in ending corn stocks for Taiwan and Mexico. These reductions are partly offset by increased stocks prospects for the EU, up 0.7 million tons to 5.9 million as imports and production are higher this month, but meat production in the EU prospects remain sluggish. South Africa’s corn stocks are up 0.5 million tons to 3.4 million, as internal prices have been high enough recently to slow exports, increase imports, and maintain domestic stocks. There are also small increases in corn ending stocks this month for the Philippines, Saudi Arabia, and Kazakhstan.

Russia’s barley ending stocks for 2011/12 are down 0.7 million tons to 1.3 million as strong exports limit stocks. Increased export prospects also limit Canada’s barley ending stocks, down 0.4 million tons this month to 1.0 million. There are small reductions this month in projected barley ending stocks for Kazakhstan, Argentina, and the EU. However, for Ukraine, the slow pace of exports boosts stocks prospects 0.5 million tons to 1.7 million. Saudi Arabia’s ending stocks are increased 0.1 million tons to 1.7 million, supported by the pace of imports.

US Corn Exports up on Reduced Competition and Increased Trade

World corn trade in 2011/12 (October-September) is projected to reach 95.6 million tons, up 1.0 million this month. EU imports are forecast up 1.0 million tons to 4.0 million as the pace of import licenses shows that there is demand for imported corn despite increased production this year. Brazil’s corn imports are increased 0.3 million tons to 0.8 million based on shipments from Paraguay. South Africa’s imports are up 0.2 million tons as it is importing yellow corn due to tight supplies and high internal prices while continuing to export white corn. Corn imports are up by smaller amounts for Chile and the United States. These increases are partly offset by Canada’s corn import reduction of 0.4 million tons to 1.0 million. Canada’s stock report revealed weaker than expected demand for corn in early 2011/12.

Argentina’s corn export prospects for 2011/12, down 3.5 million tons this month to 14.0 million, are sharply constrained by reduced production prospects. Recent high internal corn prices in South Africa are slowing the pace of exports, down 0.3 million tons to 2.0 million. Exports are increased for a number of countries to offset these declines and meet increased demand. Ukraine’s corn exports are up 2.0 million tons this month to 14.0 million based on the strong pace of recent exports that reveal that corn for export is getting priority access to rail cars and port facilities. The massive year-to-year increase in production supports unprecedented export levels, matching those of Argentina. Brazil’s corn exports are boosted 0.5 million tons to 9.0 million based on good prospects for the “safrina” second-crop corn. EU corn exports are up 0.5 million tons to 2.5 million based on the pace of export licenses. Several Eastern European countries have a surplus of corn and are exporting outside the EU, while in Southern and Western Europe, other countries are importing. Russia’s corn exports are up 0.2 million tons to 1.2 million based on the strong pace of shipments to date. There is also a small increase in Moldova’s corn export prospects.

US corn exports in 2011/12 (October-September) are projected up 1.5 million tons to 43.5 million (up 50 million bushels to 1.7 billion bushels for the September- August local marketing year). The forecast is down 4 percent from 2010/11. Import demand in recent months has supported the pace of shipments, with Census corn exports for October to December 2011 at 11.7 million tons, nearly 5 percent higher than the previous year. January 2012 corn export inspections reached 3.45 million tons, up 18 percent from a year ago. However, as of February 2, 2012, outstanding export sales reached only 10.3 million tons, down from 12.4 million a year earlier. Tight US supplies and high prices are expected to keep sales and shipments in the second half of 2011/12 from matching levels of the previous year.

World barley trade for 2011/12 (October-September) is projected up 0.7 million tons this month to 17.0 million. Imports are increased for Saudi Arabia, the EU, Jordan, and Morocco. Ukraine’s exports are cut 1.0 million tons to 3.4 million as the recent pace of shipments has been much slower than expected. Offsetting these changes are increased export prospects for Argentina, up 0.5 million tons to 2.9 million, and increases of 0.3 million each for Canada, the EU, Kazakhstan, and Russia.

Global sorghum trade is reduced 0.3 million tons to 5.1 million due to reduced export prospects for Argentina caused by lower production. Import prospects are reduced for Chile and Japan but increased slightly for Egypt. Sluggish US exports and very low outstanding sales support the current US export forecast, unchanged this month, but down 57 percent on the October-September trade year.