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USDA Feed Outlook

12 March 2014

USDA Feed Outlook - 12 March 2014USDA Feed Outlook - 12 March 2014

Feed Outlook

U.S. corn exports in 2013/14 are projected to reach 1,625 million bushels, up 25 million this month. In recent weeks, U.S. corn sales and shipments have accelerated. The level of outstanding sales at the end of February reached 19.2 million tons, the highest since February 14, 2008. Outstanding sales to most destinations have dramatically increased year over year. U.S. corn sales have benefitted from a lull in the intensity of competition from other exporters as record world corn trade also supports prospects for higher U.S. corn shipments.

Forecast U.S. corn ending stocks are reduced by 25 million bushels on the higher export projection. Oats imports are projected 10 million bushels lower as shipments from Canada are restricted by logistical issues. As a result, oats domestic use and carryout are projected lower. Farm prices for feed grains are mostly unchanged with the forecast range for corn, sorghum, and oats all narrowed slightly. Barley prices are raised 5 cents at the midpoint of the projected range to $6.10 per bushel based on recent trends. Grain-consuming animal units for 2013/14 are lowered slightly.


Small Reductions in Oats Use and Grain-Consuming Animal Units

Feed and residual use for the four feed grains plus wheat converted to a September-August marketing year is forecast lower this month on a 100,000-ton reduction in oats feed and residual use. Grain-consuming animal units are forecast at 91.29 million units, 0.10 lower than the February forecast of 91.38 million and 0.49 lower than in 2012/13. The 2014 forecast of total red meat and poultry production is again lowered from last month as higher beef production is more than offset by lower pork, broiler, and turkey production.

Projected 2013/14 feed and residual use per animal unit is 1.56 tons this month, unchanged from February. Oats feed and residual use is projected 5 million bushels lower for the June-May marketing year.

Higher Forecast Corn Exports Trim Expected Ending Stocks Forecast

U.S. corn exports are raised 25 million bushels this month to 1,625 million as the pace of sales indicates an acceleration of U.S. corn shipments in coming months. Inspections in February and September through January exports as reported by the Census Bureau support the modest increase in projected exports. The increase leaves ending stocks down by the same amount for a carryout forecast of 1,456 million bushels. The resulting stocks-to-use ratio is 10.9 percent, compared with 11.1 percent in February. Otherwise, the corn balance sheet is unchanged.

Forecast corn used for ethanol is unchanged this month at 5,000 million bushels. Data from the U.S. Energy Information Administration supports this level as gasoline use is projected slightly lower and the blend of ethanol gasoline is close to its practical maximum of 10 percent.

Projected corn farm prices are steady with the midpoint of the range at $4.50 per bushel, although the range is tightened 5 cents on both the high and low ends.

The forecast U.S. sorghum farm price range is narrowed 5 cents on the high and low ends with no change to the midpoint, which remained at $4.25 per bushel. There are no changes to U.S. sorghum supply and demand projections this month.

The U.S. barley farm price range is raised 10 cents on the low end, resulting in a 5-cent increase in the projected midpoint to $6.10 per bushel. The increase in the forecast all barley price results from recently higher prices reported for feed barley.

U.S. Oats Supplies Shrink as Canadian Crop Waits for Transport

Most of this month’s feed grain changes are in oats as logistical problems in Canada result in a 10-million-bushel decline in expected oat imports. Railways in Canada are finding it profitable to ship petroleum and other higher value products so scarce rolling stock is not always available for less-profitable oats shipments. With tighter U.S. supply prospects, feed and residual is lowered 5 million bushels to 80 million bushels, and food, seed, and industrial use is projected down 2 million bushels to 155 million bushels. Carryout is also lowered 3 million bushels to 30 million. 

Nevertheless, the midpoint of the projected oats farm price range is steady at $3.70 per bushel. The projected range is narrowed by 5 cents per bushel on both the high and low ends.

Oat prices on the Chicago Board of Trade (CBOT) nearby contracts and some cash markets have been higher than corn, a highly unusual occurrence. Oats prices are generally about 75 percent of corn prices. Most oats have already been sold by farmers. When regional price differences and quality adjustments are accounted for, the high prices in the futures market will have little effect on the season average price received by farmers.

Important Upcoming Releases by NASS

On March 31, USDA’s National Agricultural Statistics Service (NASS) will release Prospective Plantings, the first survey-based projection of 2014 acreage based on producer planting intentions as of early March. NASS will also release the Grain Stocks report, which will provide the March 1 stocks estimates for the feed grains. Next month’s 2013/14 supply and use projections will reflect disappearance through the December-March quarter as indicated by the March 1 stocks.


U.S. Corn Export Prospects Increased This Month

U.S. corn exports in the 2013/14 October-September trade year are projected to reach 42.0 million tons, up 1.0 million this month (up 25 million bushels to 1,625 million bushels for the September-August marketing year). In recent weeks, U.S. corn sales and shipments have accelerated. The level of outstanding sales at the end of February reached 19.2 million tons, the highest since February 14, 2008. U.S. corn exports for the 2007/08 September-August year were a record 61.9 million tons.

Outstanding sales to most destinations have increased dramatically year over year, with 5.3 million tons to unknown, 4.1 million to Japan, 3.9 million to Mexico, and only 1.4 million remaining outstanding to China. Uncertainty remains about additional shipments to China due to rejections of U.S. corn at ports that contained a genetically modified organism (GMO) variety not yet approved by China. However, corn purchases by other destinations have more than offset the China issue. U.S. corn sales have benefitted from a lull in the intensity of competition from other exporters. From February through June, Brazil’s export infrastructure will be occupied with exporting soybeans, severely limiting the country’s corn shipments. Uncertainty about the value of Argentina’s currency is likely to continue to limit the pace of farmers’ sales to exporters there, reducing the normal flush of corn exports at harvest and stretching more corn exports beyond September (the end of the trade year). Also, political and economic uncertainty in Ukraine is reportedly causing farmers there to be reluctant sellers.

While U.S. corn sales have been exceptional recently, corn shipments early in the trade year were relatively sluggish. The late U.S. harvest and stiff competition from Brazil limited shipments last fall. Census corn exports for October 2013 through January 2014 reached 13.5 million tons, more than double the drought-devastated pace of a year earlier but modest compared with exports in most recent years. February corn export inspections reached 3.4 million tons, a modest acceleration from January. Shipments over the next several months are expected to be quite strong, reflecting the current outstanding sales. However, the export pace next summer may be limited by increasing competition from Brazil and Argentina.

Record world corn trade supports increased U.S. corn exports. Global corn trade in 2013/14 is projected up 0.5 million tons this month to 113.0 million. Indonesia’s corn imports are forecast up 0.6 million tons to 2.8 million based on strong demand. Despite large domestic supplies, Indonesia’s import purchases remains strong. The same is true for the EU, up 0.5 million tons this month to 11.0 million, supported by the pace of import licenses. Sluggish corn export licenses support a 0.5-million-ton reduction in EU corn exports to 2.0 million. Attractive corn prices are encouraging the importation and feeding of corn to replace wheat in feed rations, facilitating the export of wheat by the EU. Based on the pace of recent purchases, Peru’s corn imports are increased 0.2 million tons to 2.3 million, but Malaysia’s corn import prospects are trimmed 0.2 million to 3.2 million. Georgia’s expected corn imports are increased slightly, while Australia’s small corn export prospects are reduced.

 Canadian Logistics Limit Oats Trade

Record grain and oilseed harvests, a rail system facing increased shipments of petroleum, and frigid winter weather have combined to produce a severe delay in shipments of Canadian grain. Oats, not being a high value commodity, have not received the rail cars or locomotives to move the normal volume of shipments to the United States. As a result, U.S. oats futures prices have increased to record levels on the Chicago Board of Trade. Canada’s projected oats exports are reduced 0.2 million tons this month to 1.5 million. Partly offsetting is a 0.1-million-ton increase in EU exports to 0.3 million. U.S. import prospects are trimmed 0.1 million tons to 1.5 million.

Modest Changes to World Barley and Sorghum Trade

Global barley trade for 2013/14 is increased 0.5 million tons this month to 20.7 million. Australia, with increased production, is forecast to ship 5.5 million tons of barley, up 0.5 million this month. Australia will be the world’s largest exporter this year, pulling ahead of the EU. Import projections are increased this month for China, up 0.3 million tons to 2.8 million; Algeria, up 0.1 million to 0.5 million; Turkey, up 0.1 million tons to 0.2 million; and Morocco, up slightly.

World sorghum trade projected for 2013/14 is cut 0.3 million tons to 7.1 million due to reduced export prospects for Australia, where drought is cutting production. For importers, Mexico is trimmed 0.2 million tons to 0.3 million, the lowest level since 1975/76. China has bought large quantities of U.S. sorghum, driving U.S. sorghum export prices above corn prices. While Japan has continued to buy sorghum, Mexico has mostly switched to importing corn.

World Coarse Grain Production Prospects Up Slightly This Month

Global coarse grain production in 2013/14 is projected up 0.8 million tons this month to 1,260.8 million. World corn production is increased 0.9 million tons to 967.5 million, and barley is raised 0.6 million to 145.6 million, but sorghum is reduced 0.7 million to 61.3 million. Rye production increased by a small amount, but mixed grains and oats production declined slightly.

China’s National Bureau of Statistics published a corn production estimate for 2013/14 of 217.7 million tons, 0.7 million tons higher than last month’s projection. Record yields on record area are confirmed. China has posted a record corn crop in 9 of the last 10 years. Favorable rains and expanded area in Heilongjiang and Inner Mongolia were crucial to production expansion this year.

In Australia, the harvest of winter small grains is complete, and harvest reports reveal increased barley area and yield. Growing conditions were good, especially in Western Australia. Harvested area is increased 0.2 million hectares to 4.0 million, with record yields boosting production 1.0 million tons to 9.6 million. However, summer crops in Eastern Australia have suffered from drought, cutting prospects for sorghum and corn area harvested and yields. Sorghum production prospects are cut by more than a third, down 0.7 million tons to 1.2 million. Corn is not a major crop in Australia, but production prospects are reduced more than 10 percent. 

Record corn yields are reported for Peru for 2012/13 and another record is expected for 2013/14, boosting production to 1.7 million tons both years. There are small increases in Argentina’s oats and rye production based on area estimates being larger than expected.

EU coarse grain production is revised down 0.3 million tons to 158.8 million, mostly due to revised harvest data for Poland. Reductions for barley, mixed grain, and oats more than offset increased production for corn and rye.

Indonesia’s 2013/14 corn production is trimmed 0.1 million tons to 9.1 million due to slightly lower expected area. However, the 2012/13 corn crop is revised up 0.5 million tons to 8.5 million on confirmation of better than expected yields.

World coarse grain supplies for 2013/14 are also boosted slightly by increased beginning stocks, up 0.6 million tons to 164.4 million. Most of the increase is for Indonesia, up 0.5 million tons to 1.0 million, due to increased 2012/13 corn production.

World Coarse Grain Use Prospects Increased

Global coarse grain use in 2013/14 is projected up 1.0 million tons to 1,233.8 million. EU corn feed use is increased 1.0 million tons to 56.5 million as relative prices encourage the import and feeding of corn to replace part of the wheat in compound feed rations. Partly offsetting the increase is a reduction in expected EU mixed grain feed use of 0.1 million tons to 14.1 million. Indonesia, with increased corn beginning stocks, is projected to boost domestic corn use 0.4 million tons to 11.5 million. China’s barley feed use is increased 0.3 million tons to 0.8 million because imports are strong and high feed grains prices in China are encouraging some barley moving into feed channels. With increased corn supplies and expanding poultry production, Peru’s corn feed use is projected up 0.2 million tons to 3.6 million. Australia’s barley feed use is projected up 0.4 million tons this month to 2.7 million, but sorghum feed is forecast down 0.3 million tons to 0.7 million. With drought reducing summer crops and increasing grain feeding of ruminants, barley domestic feed demand is expected to be strong. Increased barley imports by Turkey and Algeria indicate strong feed demand, forecast up 0.1 million tons each this month to 6.0 million and 1.9 million, respectively. Also, small increases are projected this month for 2013/14 oats and rye feeding in Argentina.

Partly offsetting is a 0.2-million-ton decline to 3.1 million in projected corn feed use in Malaysia, where poultry production is relatively stagnant. Also, U.S. oats use is projected down slightly. The increase in individual countries’ forecast use is partly offset by a 0.8-million-ton difference in the revisions to local marketing year imports and exports (see the June 2013 Feed Outlook special article for an explanation).

Projected Ending Coarse Grain Stocks Increased Slightly

World coarse grain ending stocks for 2013/14 are projected up 0.4 million tons to 191.5 million. The increase in global supplies is mostly offset by increased consumption, but several countries have changes. 

Published by USDA Economic Research Service

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