Aquaculture for all

Feed Outlook August 2011

Nutrition Economics

Lower projected yields have reduced global production prospects, according to the latest report from the USDA Economic Research Service.

The first survey-based forecasts for corn and sorghum sharply reduce this month's outlook for 2011/12 US feed grain production. Harvested acres and yield are reduced this month for corn, resulting in a projection for the third-largest corn crop on record, falling behind the 2007 and 2009 crops. Sorghum production is forecast down from last month, also on lower expected harvested acres and yield. Reductions this month in projected corn feed and residual, food, seed and industrial (FSI) use, and exports lower total disappearance for 2011/12. Ending stocks for corn, sorghum, and barley are reduced and oats are increased slightly from last month. Prices for the four feed grains are expected to be stronger with tight domestic supplies and low global stocks.

World coarse grain production for 2011/12 is down this month but foreign production is up led by increased prospects for corn in Brazil and for corn and barley in Ukraine. Global coarse grain use is reduced by increased prospects for wheat feeding. Foreign coarse grain ending stocks are projected higher, offsetting about half this months decline in US stocks.

US Feed Grain Supply Prospects Diminish

Forecast US feed grain beginning stocks in 2011/12 are raised 1.5 million tons from last month but are down 20.6 million tons from the previous year, a 43-per cent reduction. US feed grain production is forecast at 338.6 million metric tons, 15.7 million below last month but 8.6 million above the 2010/11 estimate. Compared with the amounts in 2010/11, production is up for corn but down for sorghum, barley, and oats. This month saw sharp declines in projected production for corn and sorghum. Feed grain supply is projected at 368.4 million metric tons this month, 14.2 million short of last month and 12.2 million below 2010/11.

Total 2011/12 feed grain use is projected 10.0 million metric tons lower from last month and 5.3 million short of 2010/11. This month's reduction reflects lower estimates for feed and residual, FSI and exports for corn and sorghum. Lower forecast use for fuel ethanol was partially offset by increases in corn sweeteners and starch use. FSI is projected at 172.0 million metric tons in 2011/12, compared with 169.8 million in 2010/11. Exports are forecast at 47.5 million metric tons, down 4.3 million from the previous estimate and 2.9 million below last season.

The US Census Bureau issued revised numbers for calendar year 2010, affecting trade estimates this month for corn and sorghum in 2009/10 and for barley and oats in 2010/11. Imports are unchanged for 2009/10 but are up slightly for 2010/11, with a small increase for oats. Marketing year exports for feed grains in 2009/10 are lowered slightly to 54.7 million metric tons, mostly reflecting a small downward revision for corn. In 2010/11, forecast exports are lowered for barley and oats based on the Census revisions, with sorghum and corn export projections also adjusted based on the pace of shipments. Feed grain exports for 2010/11 are projected 1.0 million metric tons lower to 50.4 million. Ending stocks for 2010/11 are up by 1.5 million metric tons to 27.5 million.

When converted to a SeptemberAugust marketing year, feed and residual use for the four feed grains plus wheat in 2011/12 is projected to total 133.6 million tons, down from 138.7 million last month and down three per cent from the 2010/11 forecast of 138.0 million. Corn is estimated to account for 93 per cent of total feed and residual use in 2011/12, up from 92 per cent in 2010/11.

Projected grain-consuming animal units (GCAUs) for 2011/12 are up slightly from last month at 94.5 million. Estimated GCAUs for 2010/11 are unchanged at 93.1 million. Feed and residual use per animal unit is projected at 1.42 tons, down from last month's 1.47 tons due to lower cattle carcass and hog numbers.

US Corn Crop Prospects Lowered

US corn production in 2011/12 is forecast at 12,914 million bushels, down 556 million from last month but up 467 million from 2010/11. Harvested acreage for 2011/12 is forecast at 84.4 million acres for grain, down 500,000 from last month but up 2.9 million from the previous year. Based on conditions on 1 August, yields are expected to average 153.0 bushels per acre, down 5.7 bushels from last month's projection of 158.7 bushels and just 0.2 bushels higher than the estimated 2010 yield of 152.8 bushels. Unusually high average temperatures and below-average precipitation across much of the Corn Belt in July sharply reduced yield prospects. As of 8 August, 60 per cent of the corn crop was rated in good-to-excellent condition in the 18 major corn-producing States, down 11 percentage points from a year ago.

US Corn Use Expected To Slip

Total US corn use for 2011/12 is forecast down 340 million bushels to 13,160 million this month as a result of decreased exports, feed and residual use and FSI use. FSI use is lowered 40 million bushels. Corn for fuel is lowered 50 million bushels, and use for 'cereals and other' is reduced five million bushels. However, high fructose corn syrup (HFCS), corn used for starch, and glucose/dextrose are each raised five million bushels. US exports are reduced by 150 million bushels as high prices reduce demand and world feeders shift to more competitively priced wheat.

Total corn use for 2010/11 is forecast down 60 million bushels to 13,245 million bushels this month. Food, seed and industrial use (FSI) is reduced 10 million bushels to 6,420 million bushels. Lower use for ethanol, down 30 million bushels to 5,020 million, is partially offset by increases on other FSI categories. HFCS is increased 10 million bushels to 520 million as a result of expected increased exports to Mexico and the year-to-year pace through the third quarter. Glucose/dextrose and starch are both raised five million bushels to 265 million and 260 million, respectively. US exports for 2010/11 are reduced 50 million bushels to 1,825 million. Reductions in use leave ending stocks for 2010/11 up 60 million bushels compared with last months projection.

US Census Bureau trade revisions included changes for calendar year 2010. In the 2009/10 marketing year, corn exports are lowered seven million bushels to 1,980 million. FSI use is raised 22 million bushels to 5,961 million because of revisions to monthly ethanol production estimates by the US Energy Information Administration. Together, the revisions lower feed and residual use 15 million bushels to 5,125 million for 2009/10.

Corn prices received by farmers for 2011/12 are projected at $6.20 to $7.20 per bushel, up 70 cents on both ends of the range this month. The marketing year average reflects higher prices for corn with tighter ending stocks and tight global feed grain supplies. The 2010/11 corn price range is narrowed $0.05 at each end for an estimated range of $5.20 to $5.30 per bushel.

US Sorghum Production Lower

US sorghum production for 2011/12 is forecast at 241 million bushels, down 59 million from last month and 104 million bushels below last year. Expected area harvested for grain is forecast sharply lower at 4.4 million acres and down 420,000 from 2010/11. Based on conditions on 1 August, yield is lowered by 10.6 bushels per acre this month and is projected 17.0 bushels per acre below the previous season. Hot dry weather in Texas, Kansas and Oklahoma has reduced prospects for the 2011 sorghum crop. As of 8 August, 27 per cent of the US sorghum crop was rated good to excellent, compared with 66 per cent a year earlier.

Total use of sorghum in 2011/12 is projected down 55 million bushels this month to 245 million due to tight supplies. Feed and residual is cut 25 million bushels to 55 million as it may be difficult to put together enough sorghum to encourage feedlots to switch rations to include sorghum. Sorghum FSI use is lowered 10 million bushels to 80 million, with lower expected use for fuel ethanol. Export prospects are reduced 20 million bushels to 110 million as demand from Mexico is expected to remain strong but supplies will be a constraint. US ending stocks projected at 22 million bushels represent minimal 'pipeline' stocks.

Total use for sorghum in 2010/11 is forecast at 360 million bushels, unchanged from last month. Feed and residual use remains forecast at 125 million bushels. Sorghum used for ethanol is expected lower during the summer quarter, with tightening supplies cutting FSI use 10 million bushels to 85 million. Exports are raised 10 million bushels to 150 million, reflecting strong sales in July and the ongoing pace of shipments. Ending stocks for 2010/11 are virtually unchanged at 27 million bushels.

Sorghum prices received by farmers for 2011/12 are expected to average $6.00 to $7.00 per bushel, up 90 cents on both ends of the range from last month, as reductions in domestic feed grain supplies raises prices for all feed grains. The 2010/11 average sorghum price is narrowed $0.05 on each end of the range to $5.15 to $5.25 per bushel.

US Barley Production Prospects Up

US barley production for 2011/12 is forecast at 168 million bushels, down four million bushels from last month and down 12 million from 2010. Based on conditions on 1 August, producers expect yields to average 70.4 bushels per acre, up 0.8 bushels from last month. Production is expected to reach record lows on lower harvested acreage and yield as compared with last year. Area harvested for grain is forecast at 2.4 million acres, slightly lower than last month's estimate and down three per cent from 2010. On 8 August, 72 per cent of this year's US crop was rated in good-to-excellent condition, compared with 83 per cent a year ago.

Total barley supplies in 2011/12 are lowered 4 million bushels this month to 268 million, as a result of lower production. Domestic use is forecast at 210 million bushels, unchanged this month. With lower supply and steady use, this month's ending stocks are projected down four million bushels to 58 million, compared with 89 million in 2010/11.

US Census Bureau revisions for calendar year 2010 increased barley exports for 2009/10 slightly. Exports for 2010/11 were reduced slightly. Imports were reduced 0.5 million bushels to 9.5 million.

Prices received by farmers for barley in 2011/12 are expected to average $5.80 to $6.90 per bushel, raised 15 cents on both ends of the range this month. This compares with $3.86 per bushel for 2010/11. Although prices for feed barley are expected to increase largely in line with those for corn and sorghum, price gains will be limited for malting barley as much of the crop is produced under contract.

US Oats Production at Record Low

US oats production for 2011/12 is forecast at 57 million bushels, increased slightly from a month ago. This would be down 24 million from 2010/11, and if realised, the lowest production on record. Harvested area is forecast at 0.9 million acres, unchanged from last month and a record low. Based on conditions on 1 August, producers expect yields to average 61.6 bushels per acre, an increase of 1.1 bushels from the July forecast but a decrease of 2.7 bushels from last year. On 8 August, 52 per cent of the oat crop in the nine major producing States was rated as good to excellent, compared with 77 per cent last year.

Total oats supplies for 2011/12 are edged up this month to 215 million bushels. Oats use estimates remain unchanged with total use at 169 million bushels.

US Census Bureau revisions for calendar year 2010 result in minor changes in oats exports for 2009/10 and raise exports for 2010/11 0.2 million bushels to an estimated 2.8 million. Census data indicate 2010/11 imports reached 85.1 million bushels, up 2.1 million from the previous month's forecast. Small increases in imports for marketing years 2009/10 and 20010/11 produced corresponding changes in feed and residual use. FSI for 2010/11 was reduced two million bushels to 74 million.

Prices received by farmers in 2011/12 are expected to average $3.40 to $4.00 per bushels, up 20 cents on both ends of the range. This compares with $2.52 per bushel for 2010/11.

US Hay Production Slips in 2011/12

All US hay production in 2011/12 is forecast at 132.0 million tons, down 13.6 million from 2010/11 due to extremely hot and dry weather. The all-hay yield is expected to be 2.29 tons per acre, down from 2.43 tons per acre in 2010/11. Harvested acres are forecast at 57.6 million acres, down 2.3 million from last year and the lowest all hay area on record going back to 1919.

Alfalfa hay production is forecast at 65.0 million tons, down four per cent from last year.

Based on crop conditions on 1 August, yields are expected to average 3.36 tons per acre, down 0.04 tons from last year. If realised, this will be the second highest yield since 2005. Harvested area is forecast at 19.3 million acres, unchanged from June but down three per cent from the previous year's acreage.

Other hay production is forecast at 67.0 million tons, down 14 per cent from last year.

Based on conditions on 1 August, yields are expected to average 1.75 tons per acre, down 0.2 tons from last year. If realised, this will be the lowest US yield since 1988. Harvested area, forecast at 38.3 million acres, is unchanged from June but down four per cent from last year.

Roughage-consuming animal units (RCAUs) in 2011/12 are estimated to be down from 2010/11. Even with lower RCAUs, the sharp drop in hay production leaves hay supply per RCAU down at 1.94 tons, compared with 2.10 tons in 2009/10.

With tighter hay supplies, prices have risen sharply in recent months. The preliminary July 2011 estimate for the average price received by farmers for all hay was $170 per ton, compared with $112 per ton in July 2010. The preliminary July estimate for alfalfa hay was $189 per ton, compared with $117 per ton last season. The preliminary July estimate for hay other than alfalfa and alfalfa mixtures was $119 per ton, compared with $97 per ton a year ago.

Global Coarse Grain Production Down Due to US Drop

World coarse grain production is down 14.0 million tons this month to 1,136.3 million tons, mostly because of reduced US prospects. In contrast, foreign production is projected up 1.7 million tons to 797.5 million, mostly due to increased corn and barley prospects. Foreign corn production is up 2.2 million tons this month to 532.5 million, led by increased prospects in Brazil. Foreign barley production is up 0.8 million tons to 128.7 million, boosted by improved prospects for Ukraine. EU oats production increased this month, boosting projected world production slightly. Global rye and mixed grains are each reduced 0.8 million tons this month as EU production prospects are reduced, mostly due to excessive rain during harvest in Poland and Germany.

Brazil's 2011/12 corn crop is projected up 2.0 million tons to 57.0 million, supported by increased area prospects. Planting for the main crop starts in September, and recent price increases for corn relative to those for other crops support expanded area, even in Brazil where climatic conditions often make soybeans less risky than corn. Brazil's estimated corn crop for 2010/11 remains at 55.0 million tons, with upward revisions reported for the main crop offsetting declining prospects for the second crop.

Ukraine's corn production prospects are increased 1.0 million tons to 16.5 million based on increased reported area. Favourable soil moisture during seeding and attractive prices encouraged corn plantings. EU corn production prospects are increased 0.8 million tons this month to 60.1 million, with improved yield prospects in Germany and increased reported area for Romania, Italy, Slovakia and Bulgaria more than offsetting lower-than-expected area in France.

Egypt's corn production prospects are cut 0.8 million tons to 5.9 million because producers are reported to have shifted area to rice, likely due to relaxed government controls. Canada's corn production prospects are trimmed 0.3 million tons to 11.0 million as yield prospects in Ontario are reduced by delayed crop development and dry conditions in some locations. Lower area and trimmed yield prospects are reducing Croatia's corn production prospects 0.2 million tons to 2.0 million. Ongoing drought in northeast Kenya is reducing corn production prospects 0.2 million tons to 2.8 million; the drought is also extending into Somalia, cutting 2011/12 corn production prospects in half to 60,000 tons. However, corn production in Kenya for 2009/10 and 2010/11 is revised 0.3 million tons and 0.4 million higher this month. Corn production for 2010/11 is also raised this month for India, the EU and Indonesia, more than offsetting a small decline for Mexico. A decline in 2010/11 Mexican sorghum production is more than offset by an increase for Argentina.

Barley production prospects in Ukraine for 2011/12 are up 1.0 million tons this month to 8.5 million. Nearly complete harvest data reveal higher-than-expected yields. Argentina's 2011/12 barley production prospects are increased 0.4 million tons to 3.1 million based on increased area prospects. The export quota regime for wheat makes barley an attractive alternative winter grain for producers who wish to avoid the uncertainty of the government's wheat export policy. Argentina's 2010/11 barley area was increased slightly, boosting production 0.05 million tons to 2.95 million. India reported a slightly higher barley yield, boosting 2011/12 production 0.07 million tons to 1.57 million, a rabi crop harvested months ago. China's winter grain harvest report also boosted barley yield slightly, increasing production 0.05 million tons to 2.6 million.

EU barley production prospects for 2011/12 are reduced 0.6 million tons this month to 51.5 million. Spring dryness in France and Germany, compounded by excessive harvest rains in Germany, trimmed barley yields. Also, Spain reported lower barley area. Kazakhstan reported no increase in barley area for 2011/12, reducing barley production prospects 0.1 million tons to 2.1 million. Croatia also reported no growth in barley area, reducing production prospects slightly.

World 2011/12 Beginning Stocks Increased This Month

Global coarse grain beginning stocks for 2011/12 are increased 3.6 million tons this month to 160.9 million. Foreign countries account for 2.1 million tons of the increase. Argentina's coarse grain beginning stocks for 2011/12 are boosted 0.7 million tons to 2.7 million with increased corn production estimated for 2009/10 and increased sorghum production for 2010/11. Area harvested is estimated higher. EU coarse grain beginning stocks for 2011/12 are increased 0.6 million tons to 15.7 million, mostly due to reduced barley feed use estimated for 2010/11. Beginning stocks are also increased for India, Indonesia, Russia, Kenya, and several other countries. Beginning stocks for 2011/12 are reduced 0.5 million tons for South Africa based on increased 2010/11 corn exports. Mexico's beginning stocks are also trimmed.

Global Coarse Grain Use Prospects Reduced

World coarse grain disappearance in 2011/12 is projected down 8.4 million tons this month to 1,150.0 million. Foreign use is forecast down 2.7 million tons to 849.5 million as strong prices ration demand. EU coarse grain domestic use is cut 2.0 million tons this month to 146.5. Coarse grains are being displaced by feed wheat in animal rations, cutting EU feed and residual prospects 2.7 million tons to 108.2 million. EU 2010/11 coarse grain feed use estimated for 2010/11 is also reduced this month. However, based on demand prospects reported by USDA's Foreign Agricultural Service posts in the EU, food, seed and industrial use in 2011/12 is boosted 0.75 million tons to 38.3 million, with most of the increase attributed to barley used for malting. Canada is also expected to have coarse grain feed use displaced by competitively priced wheat, cutting coarse grain feed and residual use 0.7 million tons this month to 14.2 million tons. South Korea and Thailand are expected to import wheat for feed, displacing coarse grains and trimming feed and residual use 0.5 and 0.2 million tons, respectively. Egypt, with reduced corn production prospects, has feed and residual forecast 0.3 million tons lower this month.

Partly offsetting the aforementioned declines are increased 2011/12 use prospects for Saudi Arabia, up 0.8 million tons, based on increased barley imports; India, up 0.5 million, with increased use estimated for 2010/11; Indonesia, up 0.3 million, due to growing feed demand; China, up 0.2 million, due to increased barley malting for beer production; and several other countries, up by smaller amounts.

Foreign Coarse Grain Ending Stocks Projected Higher

World coarse grain ending stocks in 2011/12 are projected down 2.0 million tons this month to 147.2 million but foreign stocks are forecast up 2.1 million tons to 126.6 million, roughly offsetting half the drop in US stocks. Increased foreign production and reduced coarse grain feed use because of ample supplies of competitively priced wheat combine to boost prospects for foreign ending stocks.

Brazil's coarse grain ending stocks in 2011/12 are increased 2.0 million tons to 8.5 million this month, supported by increased corn production prospects. Ending stocks for Brazil are still expected to decline for the fourth consecutive year. Saudi Arabia's coarse grain stocks are up 0.3 million tons to 1.6 million, based on strong barley imports. However, Saudi stocks are also expected to decline for the fourth straight year. Smaller increases are expected for Thailand, Ukraine, Turkey, Viet Nam and several other countries. Partly offsetting these increases are reduced stocks forecast for South Africa, down 0.5 million tons to 4.0 million, due to recent strong corn export shipments. Smaller reductions in stock prospects are expected for Mexico and some other countries.

US Corn Export Prospects for 2011/12 Reduced

US corn exports in trade year 2011/12 are projected at 45.0 million tons, down 3.0 million this month down 150 million bushels to 1.75 billion for the local marketing year due to tight US supplies and high corn prices, increased competition from other exporters and declining world corn trade caused by increased availability of competitively priced feed quality wheat.

World corn trade in 2011/12 is projected to reach 92.8 million tons, down 0.9 million this month. EU corn imports are reduced 1.0 million tons to 4.0 million because of increased production and feed use of wheat. EU wheat feed use is forecast up 2.0 million tons this month. South Korea, Thailand and Viet Nam have reduced corn imports forecast this month down 0.5 million tons, 0.1 million and 0.1 million, respectively due to increased import prospects for feed quality wheat. Partly offsetting are increased corn imports expected for Egypt, up 0.5 million tons, and Kenya, up 0.15 million, because of reduced production prospects.

Ukraine, with increased corn production prospects, is projected to export 8.5 million tons in 2011/12, up 1.0 million this month. Argentina, with increased estimated beginning stocks, is projected to export 17.5 million tons of corn in 2011/12, up 0.5 million tons this month. Canada's corn export prospects are increased 0.5 million tons this month to 1.0 million as the recent strong pace of sales and shipments is expected to slow but not cease in 2011/12. South Africa has shipped corn in recent months at a pace that indicates that port capacity and transportation infrastructure problems are not as severe as previously thought. Its corn export prospects for 2011/12 are boosted 0.3 million tons this month to 2.3 million. Croatia's 2011/12 corn exports are trimmed 0.15 million tons to 0.1 million due to reduced production prospects.

US 2011/12 Sorghum Export Prospects Drop

Sharply reduced US production prospects are limiting sorghum export prospects for 2011/12. Exports are projected down 0.4 million tons to 2.9 million down 20 million bushels to 110 million for the local marketing year). Argentina's sorghum exports for the 2011/12 October-September trade year are boosted 0.3 million tons to 2.0 million, supported by increased production in the 2010/11 March-February local marketing year. EU sorghum imports are trimmed slightly for 2011/12.

US sorghum exports for 2010/11 are increased 0.2 million tons to 3.8 million this month based on the recent pace of sales and shipments and strong demand from Mexico. Demand growth in Mexico stems from reduced production prospects, especially in Tamalipas. According to Census data, US sorghum exports for October-June reached 2.9 million tons. Sorghum grain inspections in July 2011 were 0.3 million tons, up 50 per cent from a year earlier. As of 4 August, outstanding sales were 0.4 million tons, down just two per cent from last year at this time, supporting prospects for shipments in August and September 2011.

US 2010/11 Corn Exports Slump

US corn exports for 2010/11 are forecast down 2.0 million tons to 46.0 million down 50 million bushels to 1.825 billion for the local marketing year. The pace of export sales and shipments has fallen short of expectations in recent months as US corn prices have not been competitive with feed-quality wheat, and other exporters have shipped aggressively. The 2010/11 forecast is down seven per cent from the previous year. Census exports for October-June reached 34.1 million tons, down five per cent from the previous year. July export inspections were only 3.9 million tons, down 14 per cent from a year ago. Moreover, as of 4 August, outstanding export sales reached only 5.7 million tons, down 23 per cent from the same week last year. With US corn in Southern States damaged by drought, less new-crop corn than usual is likely to be available for shipment in September 2011.

Partly offsetting the drop in US export prospects for 2010/11 are increased exports forecast based on the recent pace of shipments for Argentina, up 0.5 million tons; India, up 0.4 million; South Africa, up 0.3 million; Canada, up 0.2 million; and Thailand, up 0.05 million. Import forecast adjustments based on the pace of recent shipments include Japan, down 0.6 million tons; Viet Nam, down 0.3 million; Thailand, down 0.1 million; Indonesia, up 0.5 million; Turkey, up 0.2 million; and the United States and Kenya, up by smaller amounts.

August 2011

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