20 July 2010

16 minute read

Feed grain production is projected up from 2009 as planted and harvested area are up from last year for corn, more than offsetting year-to-year reductions for sorghum, barley and oats. Adjustments are made in 2009/10 use this month to reflect 1 June stocks. The resulting changes lower 2009/10 ending stocks and 2010/11 supplies. Forecast 2010/11 prices for all four feed grains are raised this month, as feed grain ending stocks are projected lower. US corn exports for 2010/11 are decreased based on stronger US prices. Foreign coarse grain ending stocks for 2010/11 are down slightly more than US stocks, mostly due to reduced barley production prospects. During 2010/11, world coarse grain stocks are projected to decline five per cent.

Feed Grain Production Prospects Lowered

US feed grain production in 2010/11 is projected at 350.6 million metric tons, down 3.5 million tons from a month ago and up 1.6 million from 2009. The 30 June Acreage report showed planted acres decreased from earlier intentions for all four feed grains. The first survey-based production forecast for barley is down eight million bushels from the previous projection, which was based on trend yields and intended plantings. The lower barley production forecast reflects lower planted and harvested area, which is partially offset by an above-trend yield forecast. The first survey-based oats production forecast is down two million bushels from the June projection, reflecting lower harvested area but yields are expected to be higher than trend. USDA will make its first survey-based forecasts for corn and sorghum in the 12 August Crop Production report.

Feed grain supply in 2010/11 is projected at 394.6 million metric tons, down 7.2 million from last month and down 3.7 million tons from 2009/10. Feed grain imports are decreased 300,000 tons from last month and are down 200,000 tons from 2009/10. Beginning stocks in 2010/11 were lowered 3.4 million tons this month to 41.9 million because of higher use in 2009/10.

Projected total use of feed grains in 2010/11 is decreased 1.4 million tons this month, reflecting lower feed and residual use and exports. Ending stocks for 2010/11 are projected at 38.5 million tons, down 5.8 million tons from last month and down 3.4 million tons from 2009/10.

Feed and residual use of all feed grains in 2010/11 is expected to total 141.6 million metric tons and account for 39.8 per cent of total use. When converted to a September-August marketing year, feed and residual use for the four feed grains plus wheat is projected to total 147.57 million tons, down from the 2009/10 forecast of 150.28 million. Corn is projected to account for 92 per cent of total grain feed and residual use, down from a forecast 93 per cent in 2009/10.

The index of grain-consuming animal units (GCAUs) for 2010/11 is expected to be down slightly from the 2009/10 forecast of 91.5 million units. The grain used per GCAU would be 1.61 tons, down from 1.64 tons in 2009/10. In the index components, GCAUs for all types of poultry and hogs are up, while those for the other categories are down slightly, with cattle on feed being down the most. Cattle on feed in feedlots with capacity of 1,000 or more head totaled 10.5 million head on 1 June 2010. The inventory was one per cent above 1 June 2009. But, current feed use by cattle in feedlots is expected to decline in 2011. Beef production in 2011 is forecast at 25.2 billion pounds, down from 25.8 billion in 2010. In addition, some of the feed needs may be satisfied by increased use of distiller’s spent grains produced by the expanding ethanol industry.

Pork production in 2011 is expected to increase two per cent from the 22.3 billion pounds expected in 2010. Hog farmers responding to the June 2010 survey intend to have 2.89 million sows farrow during the June-August 2010 quarter, down two per cent from the actual farrowings during the same period in 2009 and down six per cent from 2008. Intended farrowings for September-November 2010, at 2.90 million sows, are down one per cent from 2009 and down four per cent from 2008. However, continued gains in pigs per litter result in larger supplies of slaughter hogs in 2011.

The broiler production forecast for 2011 is also raised as hatchery data indicate continued growth in bird numbers and increasing weights. Broiler production in 2011 is expected to increase three per cent from the projected 2010 production. Forecast turkey production in 2011 is up 1.9 per cent from 2010. Egg producers are expected to produce 7.62 billion dozen eggs in 2010, up 0.5 per cent from the projected 2010 output. Milk production in 2011 is forecast at 193.5 billion pounds, up from 191.2 billion pounds expected in 2010. These forecast increases in 2011 production will likely increase feed use.

Corn Production Decreases From Last Month in 2010/11

The projection for 2010/11 corn production was decreased one per cent from last month as a result of decreased plantings. Producers decreased plantings 926,000 acres from their March intentions to 87.9 million acres. Plantings are up from 86.5 million in 2009. Forecast harvested area is decreased 754,000 acres month to 81.0 million acres. The largest year-to-year increases in planted area were recorded in Illinois and Kansas, both up 600,000 acres from last year. Other notable increases were shown in Indiana, up 400,000 acres; Missouri, up 300,000 acres; and Ohio, up 250,000 acres. The largest declines occurred in Iowa, down 400,000, and Nebraska and South Dakota, both down 350,000 acres from last year. The national average yield projection remains unchanged from last month at 163.5 bushels per acre, down from 164.7 bushels per acre in 2009/10. As of 4 July, 71 per cent of the corn crop was rated in good to excellent condition, the same as this time last year.

Projected corn use for 2010/11 is down 50 million bushels this month to 13.36 billion. Feed and residual use and food, seed, and industrial (FSI) use remain unchanged at 5.35 billion and 6.06 billion bushels, respectively. Expected corn use for ethanol also remains unchanged this month at 4.7 billion bushels. Exports for 2010/11 were decreased by 50 million bushels to 1.95 billion bushels, as tighter domestic supplies, strong demand from ethanol production, and rising prices reduce the export competitiveness of US corn. As a result, 2010/11 ending stocks were projected 200 million bushels lower at 1.373 billion.

For 2009/10, projected corn use is up 125 million bushels from last month to 13.315 billion bushels. Feed and residual is raised 175 million bushels from last month to reflect higher-than-expected third-quarter (March-May) disappearance as indicated in the 30 June Grain Stocks report. FSI use is lowered 50 million bushels this month, as corn used for ethanol is lowered 50 million bushels, reflecting the latest ethanol production data from the Energy Information Administration (EIA). Although daily ethanol disappearance set another record in April, daily production slipped below March’s record pace. EIA’s new weekly ethanol production data series (first reported for the week ending June 4) suggests June production, while up from April, will not reach the pace seen in March. Corn exports for 2009/10 remain unchanged this month at 1.95 billion bushels.

With 2010/11 ending stocks projected lower this month, prices are projected higher. The marketing-year average farm price for 2010/11 is projected at $3.45 to $4.05 per bushel, up 15 cents on both ends of the range. The 2009/10 marketing-year average price is expected to be $3.50 to $3.60 per bushel.

Sorghum Production Prospects Trimmed in 2010/11

Sorghum production in 2010 is projected at 350 million bushels, down five million from last month and down 33 million bushels from last year, as producers in Texas and Kansas decreased their planted area by 11 per cent in both states. Sorghum planted and harvested acreage is forecast at 6.0 million and 5.2 million acres, respectively. Planted area is down 360,000 acres from March intentions. The projected yield is increased from last month to 67.6 bushels per acre, reflecting adequate to abundant soil moisture in the Southern and Central Plains. As of 4 July, 71 per cent of the sorghum crop was rated in good to excellent condition, compared with 51 per cent last year at this time.

Sorghum supplies in 2010/11 are expected to decrease from last month because of decreased production and lower carry-in. For 2010/11, total use is lowered five million bushels because of smaller expected supplies. The decrease was reflected in feed and residual use, which was lowered five million bushels to 105 million.

For 2009/10, feed and residual was raised five million bushels because of increased use indicated by the 1 June stocks. Exports remain unchanged at 170 million bushels. As a result, ending stocks for 2009/10 are lowered five million bushels this month to 28 million.

The forecast farm price for sorghum in 2010/11 is $3.15 to $3.75, which is 91 to 93 per cent of the corn price. The projected price for 2009/10 is $3.10 to $3.20 per bushel.

Barley Production Down in 2010/11

The first survey-based forecast of 2010 barley production is 182 million bushels, down eight million from the previous projection and down 45 million from the 2009 crop. Planted area was down 301,000 acres from earlier intentions and down 595,000 acres from 2009. Harvested acreage is estimated at 2.5 million acres and is down 567,000 acres from 2009. The expected decline in production is a result of the lowest planted acreage on record and the lowest expected harvested acreage since 1883. The average barley yield is forecast at 71.6 bushels per acre, up from last month's trend-based projection of 66.9 bushels. If realised, the 2010 yield would be second only to last year’s record of 73.0 bushels per acre. As of 4 July, 85 per cent of the crop was rated in good to excellent condition, compared with 77 per cent last year at the same time.

Total barley use in 2010/11 is unchanged from last month and up seven million bushels from 2009/10. Imports in 2010/11 are lowered five million bushels this month as a result of low planted area in Canada. This is down two million bushels from the prior marketing year. Small changes were made in 2009/10, reflecting the 1 June Grain Stocks, which finished the marketing year for barley. Imports were unchanged at 17 million bushels. Feed and residual use was lowered one million bushels, and food, seed, and industrial use was lowered one million bushels. Ending stocks were reported at 115 million bushels, up from the earlier estimate of 113 million for 2009/10.

Prices received by farmers for barley in 2010/11 are expected to average $3.50 to $4.10 per bushel, up 15 cents on both ends of the range. The 2009/10 season average price for barley is raised one cent to $4.66 per bushel, due to historical revisions in monthly prices from USDA’s National Agricultural Statistics Service. The spread between malting barley and feed barley prices is projected to be down from last year, as contract prices for malting barley were not as high as seen last year. In 2009/10, the spread was $2.41 vs. $1.89 in 2008/09.

Oats Production at Record Lows

According to the first survey results, oats production is forecast at a record low of 88 million bushels for 2010, down two million bushels from last month’s projection and down five million from 2009. Planted acres are down 188,000 acres from the March intentions, and harvested acres are also down from last month’s projection. Yields are forecast at 66.7 bushels per acre, up 1.2 bushels from the trend yield used last month but down 0.8 bushels from 2009. At the forecast, yields for 2010 would be second only to last year’s record 67.5 bushels per acre. As of 4 July, 81 per cent of the crop was rated in good to excellent condition, compared with 59 per cent last year at the same time.

Beginning stocks for oats are estimated at 80 million bushels for 2010/11, down seven million bushels from last month based on 11 June stocks. Despite decreases in supply, total use in 2010/11 remains unchanged this month, resulting in a 19-million bushel decrease in ending stocks.

For 2009/10, feed and residual use was raised five million bushels to account for reported 1 June ending stocks. Imports were also lowered three million bushels to 95 million. Ending stocks are estimated at 80 million bushels for 2009/10. Oats farm prices are projected at $2.10 to $2.70 per bushel for 2010/11, which was raised 25 cents on both end of the range, as prices for all feed grains have increased with decreasing supplies. In 2009/10, the season-average farm price for oats is estimated at $2.02 per bushel.

Hay Acreage Down in 2010/11

Producers expect to harvest 59.7 million acres of all hay in 2010, down slightly from 2009. Expected harvested area of alfalfa and alfalfa mixtures, at 20.7 million acres, is down 495,000 acres from 2009. Expected area for harvest of all other types of hay totals 38.9 million acres, up 396,000 acres from 2009.

Harvested area for alfalfa and alfalfa mixtures is expected to decrease or remain unchanged from last year in all states except Arizona, Montana, New York, Oregon, Texas and Utah. While Montana acreage is expected to increase 100,000 acres, large decreases are expected in North Dakota and Minnesota, down 180,000 and 100,000 acres, respectively.

Compared with amounts last year, area harvested for all other types of hay is expected to increase by 100,000 acres or more in Missouri, Montana, Texas, Virginia, and Washington. Texas is expecting the largest increase in acreage as producers look to replenish hay supplies after last year’s severe drought. However, decreases of 100,000 acres or more are expected in Kansas, Kentucky, New York, Oklahoma and South Dakota.

World Coarse Grain Production Prospects Cut This Month

Global coarse grain production forecast for 2010/11 is reduced 10.8 million tons to 1,117.6 million, a cut of about one per cent this month. Much of the decline is in other countries, down 7.3 million tons to 766.8 million, and in barley, with foreign production prospects cut 6.7 million tons to 131.6 million. Foreign oats production is reduced 0.8 million tons, corn and rye are trimmed 0.2 million each, and sorghum is virtually unchanged, but mixed grain is increased 0.6 million due to improved prospects in Germany and Hungary.

Foreign corn production prospects are reduced slightly to 495.9 million tons this month. Russia’s projected production is reduced 0.5 million tons to 5.0 million as planting reports indicate that harvested area will not expand as much as previously forecast. In the EU, a 0.3-million-ton increase in corn production prospects is caused by small improvements in prospects for several countries, more than offsetting a decline in corn area for France.

Global barley production prospects for 2010/11 are cut five per cent this month to 135.5 million tons. The largest drop is for Russia, down 2.5 million tons to 13.0 million. Serious drought and severe high temperatures in the spring grains areas of the Volga region and the Urals, with dryness extending into parts of Siberia and the Central production region, are sharply curtailing spring barley production prospects. The same drought extends into Kazakhstan, where expected barley production is cut more than 30 per cent this month to 1.8 million tons.

Canada’s barley production prospects are cut 1.1 million tons this month to 8.4 million as excessive rains and below-normal temperatures during the second half of May and the first half of June in the Prairie Provinces (especially in parts of Saskatchewan) left many fields too wet for field work and planting. Canada’s barley area is cut 12 per cent due to the planting problems. The same wetness prevented oats planting, cutting Canada’s oats area 26 per cent and slashing production prospects 0.9 million tons to 2.8 million.

The EU has suffered from excessive rains in the east, disrupting barley harvests in the Balkans, but below normal precipitation in England, northern France, across the low countries, and into northern Germany. EU barley production is reduced 2.4 million tons this month to 56.4 million. The largest reductions are for France and Finland, with smaller declines for Germany, Spain, Hungary, Italy, the Czech Republic, Sweden, Austria and Portugal.

Forecast 2010/11 global beginning stocks of coarse grains are reduced 4.1 million tons this month, contributing to tighter supplies, but most of the reduction is for the United States. Foreign beginning stocks are down only 0.7 million tons to 146.8 million. EU coarse grain beginning stocks are reduced 0.5 million tons, mostly due to increased 2009/10 barley exports and a slight reduction in 2009/10 production. Brazil’s 2010/11 beginning stocks are reduced 0.5 million tons this month because of increased 2009/10 corn exports. Russia’s barley beginning stocks are trimmed 0.4 million tons due to increased 2009/10 exports. Partly offsetting the reductions are increased beginning stocks of corn, oats and barley for Canada, and barley for Saudi Arabia.

Coarse Grain Consumption Prospects, Ending Stocks Trimmed

Projected global 2010/11 coarse grain use is down 3.2 million tons this month to 1,126.2 million. Russia, with reduced production, is forecast down 2.5 million tons to 26.9 million. The largest cut in use is for barley, down 1.7 million tons, with corn reduced 0.5 million and rye 0.3 million. The reduction in feed and residual use of 2.0 million tons is offset by an increase in expected wheat feeding, as meat production prospects in Russia continue to be for strong growth. EU coarse grain use is forecast down 0.8 million tons, with feed use of corn and barley each reduced 0.5 million tons and a small reduction in oats, partly offset by increased feed use of mixed grain. Meat production prospects in the EU are stagnant for 2010/11. There is also a small reduction this month in forecast feed use in Kazakhstan, as well as small increases for Brazil, Turkey, and Serbia.

World coarse grain ending stocks forecast for 2010/11 are down 11.8 million tons this month to 180.2 million. More than half the decline is in foreign stocks, down 6.0 million tons to 141.6 million. The largest decline is for the EU, down 2.5 million tons to 16.7 million. EU barley stocks are reduced 3.9 million tons this month to 8.3 million. With intervention no longer available for barley, its price is expected to decline compared to that for other grains, encouraging use, but grains prices are expected to be high enough to facilitate some reduction in stock levels. EU corn, rye and mixed grain projected ending stocks are up this month, partly offsetting the barley reduction. Canada, with reduced production, has coarse grain ending stocks reduced 1.0 million tons this month to 4.0 million. Kazakhstan, with reduced barley production, has ending stocks cut 0.6 million tons. With higher corn price prospects, Mexico is not expected to import as much corn to build stocks, trimming corn stocks 0.6 million tons. Brazil, with strong 2009/10 corn exports trimming 2010/11 beginning stocks, is projected to have ending stocks of corn 0.5 million tons lower. Ukraine, with increased corn export prospects, has ending stocks reduced 0.5 million tons this month. Russia’s barley ending stocks are reduced 0.4 million tons this month. Australia’s barley stocks are reduced 0.3 million tons as export prospects improve with reduced competition. Barley stocks are increased 0.3 million tons this month for Saudi Arabia due to increased 2009/10 imports.

US Corn Export Prospects for 2010/11 Reduced This Month

US corn exports for October-September 2010/11 are reduced 1.5 million tons to 49.5 million (down 50 million bushels to 1.95 billion for the September-August local marketing year). Tighter supplies and strong domestic demand are expected to increase corn prices, limiting the competitiveness of US corn exports. World corn trade for 2010/11 is projected down 0.5 million tons to 89.7 million, as increased corn prices trim Mexico’s imports 0.5 million tons to 9.1 million. Ukraine and Brazil are expected to benefit from reduced US competition, and corn exports are raised 0.5 million tons each.

Barley world trade projected for 2010/11 is increased 0.4 million tons to 16.5 million. China’s imports are up 0.4 million based on strong demand for malting barley to meet beer demand. Reduced production prospects slash Russia’s exports 0.8 million tons to 1.0 million and cut Canada’s exports 0.4 million tons to 1.0 million. There is also a small reduction in Kazakhstan’s exports. With large stocks, EU barley exports are increased 1.4 million tons despite reduced production. Reduced competition is also boosting export prospects for Australia.

US corn exports for 2009/10 are unchanged this month at 49.0 million tons. Census exports for October 2009 to May 2010 reached 31.5 million tons, and June grain export inspections of corn reached 4.1 million tons. As of 1 July 2010, outstanding export sales for shipments in 2009/10 reached 9.9 million tons. However, the pace of recent shipments indicates that a larger-than-usual share of the 1 July outstanding sales are likely to get carried into the next marketing year. World corn trade in 2009/10 is increased slightly this month to 85.9 million tons mostly due to a small increase in corn exports for Ukraine. Corn imports for South Korea are increased 0.4 million tons to 8.2 million.

Further Reading

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July 2010