Summary
World 2011/12 corn production is forecast up 8.5 million tons this month to a record 868 million tons, mostly due to a large increase in China’s production based on recently published government estimates. Global ending stocks are boosted six million tons to 127 million, down just one million from the previous year.
US feed grain supplies are increased slightly this month due to an increase in forecast oats imports from Canada, where supplies are plentiful. Expected corn use is down five million bushels due to reduced prospects for use in sweeteners. These changes are reflected in higher ending stocks. Sorghum export prospects are reduced due to very slow export sales, and feed and residual is raised. Forecast prices received by farmers are lowered for corn, sorghum, and barley.
DOMESTIC OUTLOOK
Feed Grain Use Slips on Lower Food Seed and Industrial Use
Forecast US feed grain supplies are edged upward, reflecting an increase in expected oats imports due to larger supplies in Canada and the strong pace of US imports in recent months. US feed grain supplies for 2011/12 are forecast at 357.6 million tons, compared with 380.5 million in 2010/11. Imports are forecast at 2.2 million tons, slightly higher than last month’s forecast. Production is unchanged this month.
Forecast US feed grain use is lowered slightly to 333.5 million metric tons. Lower forecast corn food, seed and industrial use accounts for the fractional decline.
Feed Use
On a September-August marketing year basis for 2011/12, US feed and residual use for the four feed grains plus wheat is projected to total 126.5 million tons, up slightly this month due to increased sorghum feed and residual use. Corn is expected to account for 92 percent of feed and residual use, compared with 94 percent last year.
The projected index of grain-consuming animal units (GCAU) in 2011/12 is 93.3 million units, virtually unchanged from last month and slightly higher than last season’s 92.9 million. Feed and residual per GCAU is estimated at 1.37 tons, compared with 1.39 tons in 2010/11. In the major index components, GCAUs are increased this month for cattle on feed and lowered for broilers.
Forecasts for US beef and turkey production are unchanged this month but broiler production is forecast lower, largely due to slower expected growth in average bird weights in the first part of 2012.
USDA’s November Cattle on Feed report indicated October placements in feedlots were one per cent below a year earlier but one per cent ahead of September placements. Cattle and calves on feed for slaughter in the United States in feedlots with capacity of 1,000 or more head totalled 11.9 million head on 1 November 2011. The inventory was four per cent above 1 November 2010. This is the second highest inventory on 1 November since the series began in 1996. Higher feed demand is expected despite high feed prices but lighter cattle weights may reduce some of the impact from the larger inventories.
This month, pork production was forecast higher as slightly higher carcass weights are expected. Federal-inspected average dressed weight of hogs in October was up slightly from September and up from 2010. Pork production was raised slightly for both 2011 and 2012. Higher feed costs are anticipated to moderate the increase in carcass weights by mid-2012.
Milk cow inventory on farms in the 23 major producing states was 8.48 million head, 111,000 more than October 2010, and 10,000 more than September 2011. Production per cow in the 23 major states averaged 1,787 pounds in October, 20 pounds above October 2010. Feed use for dairy is expected to advance slightly through mid-2012 as cow numbers and production per cow continue to increase. Milk production forecasts for 2011 and 2012 are raised slightly, reflecting higher growth in milk per cow and slightly higher cow numbers in 2012.
Corn Price Lowered
The forecast US corn price received by farmers for 2011/12 is reduced by $0.30 per bushel on both the high and low end of the range to $5.90 to $6.90 per bushel, reflecting recent market trends and abundant foreign supplies of corn and feed quality wheat. The season average price received by farmers in 2010/11 was $5.18 per bushel. Food, seed and industrial (FSI) use is lowered five million bushels due to lower expected first-quarter use for high fructose corn syrup (HFCS) due to the reduced export pace in recent months. The change in FSI is reflected in an increase in ending stocks to 848 million bushels, compared with last month’s 843 million. Total use is forecast at 12,605 million bushels, compared with 13,054 million in 2010/11.
Sorghum
Forecast 2011/12 US sorghum exports are lowered 20 million bushels, reflecting slowing year-to-date sales and shipments. Feed and residual use is raised by the same volume, leaving ending stocks unchanged.
Reflecting the lower corn price forecast this month, the projected sorghum price received by farmers for 2011/12 is also reduced $0.30 per bushel on both ends of the range, resulting in a forecast of $5.70 to $6.70 per bushel. The season average price received by farmers in 2010/11 was $5.02 per bushel.
Minor Changes for Oats and Barley
Forecast 2011/12 US oats imports are raised five million bushels to 95 million, reflecting abundant supplies in Canada due to a large crop and the strong US import pace in recent months. The increase results in higher projected ending stocks.
The projected range for 2011/12 oats prices received by farmers is narrowed $0.05 per bushel on each end to $3.20 to $3.60 per bushel. The season-average price received by farmers in 2010/11 was $2.52 per bushel.
There are no supply and use changes for barley this month. Forecast grower prices were reduced $0.25 on the upper end of the range and $0.15 on the lower end, for a 2011/12 forecast of $5.20 to $5.80 per bushel. The price reduction mostly reflects lower-than-expected malting barley prices to date. The 2010/11 season average farm price for barley in 2010/11 was $3.86 per bushel.
INTERNATIONAL OUTLOOK
Large Corn Crop in China Boosts Global Production
World 2011/12 coarse grain production is projected up 9.4 million tons this month to a record 1,145.2 million, mostly due to higher corn production reported for China. Foreign corn production is up 8.5 million tons to 554.8 million, foreign sorghum production is increased 0.6 million to 55.3 million, and foreign barley and oats production are each boosted 0.1 million tons to 129.9 million and 22.0 million, respectively.
China’s National Bureau of Statistics released estimates of national corn production this month, many months earlier than usual and with provincial detail for total grain. Both area and yield are increased from earlier projections, boosting 2011/12 production 7.25 million tons to a record 191.75 million. Area is up 0.2 million hectares this month to 33.4 million, a three per cent increase from the previous year. China’s corn area has increased for eight consecutive years. Good returns for planting corn have supported corn replacing other crops, especially soybeans.
The provincial data indicate strong area expansion in Inner Mongolia and Heilongjiang, the northern and western edge of corn production in China. Rainfall and temperatures through the growing season were mostly favourable, supporting record corn yields, up three per cent this month to 5.74 tons per hectare, and five per cent higher than a year ago. Satellite imagery, rainfall and temperature data confirm good crop conditions through the growing season in most areas, though there was dryness in Heilongjiang and some other parts of the Northeast during the late summer and fall. An overview of growing conditions for corn in China for 2011 indicates good but not exceptionally favourable, rainfall and temperatures. However, it is exceptional that a country as large as China had no corn areas with significant floods or drought.
The European Union (EU) corn crop is up 1.0 million tons this month to a record 63.9 million, as several countries revised production estimates based on harvest reports. The largest increase was reported for Romania; Bulgaria, France and Spain also had significant increases; Italy and the Czech Republic had small increases; and Hungary had a decline. Corn yields for the EU are record high, with favourable rains during key growth stages in most countries, with the exception of Hungary, which suffered from dry conditions. Serbia (not part of the EU but Hungary’s neighbour) also reported a slight reduction in corn production this month.
Canada’s corn production is up 0.7 million tons this month to 10.7 million. Statistics Canada published a production estimate based on harvest results that showed better yields than earlier expected. The delayed development of the crop caused by cool wet conditions in most of Ontario did not hurt corn yields as much as expected but the yield remains down eight per cent from the previous year’s record.
Corn production in Belarus is forecast down 0.4 million tons to 1.2 million this month as less-than-record yields are confirmed by government reports. Area and production remain at record levels.
Brazil reported larger sorghum area and production for both 2010/11 and 2011/12. Sorghum is used in parts of the Center-West of Brazil as a “cover crop” to protect soils from exposure to the sun during the dry season, and area is being maintained despite the relatively low grain yields. Sorghum production is raised 0.5 million tons for both years, to 2.2 million for 2011/12 and 2.3 million for 2010/11.
Australia’s sorghum production projected for 2011/12, still being planted, is up 0.2 million tons this month to 2.4 million. Good soil moisture and prices support area and yield prospects. However, for South Africa, sorghum production is cut 0.1 million tons to 0.1 million as area being planted is reported down significantly. South Africa’s barley yield prospects are slightly higher this month.
Australian yield reports boosted barley production 0.3 million tons to 8.5 million while increasing oats fractionally and reducing corn slightly. Statistics Canada reported lower barley yields, trimming production 0.1 million tons to 7.8 million but oats area was increased, boosting production 0.1 million to 3.0 million. There are also small reductions this month for Morocco’s barley and Mexico’s oats.
Reduced Beginning Stocks Partly Offset Increased Production
World coarse grain beginning stocks for 2011/12 are down 1.9 million tons this month to 166.2 million, partly offsetting the 9.4-million ton increase in production. Barley stocks are cut 0.8 million tons to 25.4 million, corn stocks are reduced 0.8 million to 128.3 million, rye stocks are trimmed 0.2 million tons to 1.8 million, and oats and sorghum are reduced slightly.
The Australian Bureau of Statistics revised 2010/11 barley production down significantly, cutting 2011/12 beginning stocks 1.2 million tons to 1.1 million. Instead of building barley stocks during 2010/11, as previously expected, Australia is now estimated to have reduced stock-holding. The drop in Australia’s 2011/12 barley beginning stocks more than offset a 0.3-million-ton increase for Belarus and small increases for Brazil, South Africa, and China.
South Africa’s corn beginning stocks for 2011/12 are down 0.8 million tons this month to 2.8 million, as the previous year’s production is estimated lower based on actual deliveries to market and estimated farm use and stocks retained by producers. Small increases for Belarus and Australia and a reduction for Argentina are comparatively insignificant. Rye stocks are reduced mostly for Belarus and Russia, oats are reduced slightly in Belarus and Australia, and sorghum is reduced in Australia and Mexico but raised in Brazil.
Global Coarse Grain Use Projected Higher
World coarse grain consumption for 2011/12 is forecast up 1.9 million tons this month to 1,150.7 million tons. Feed and residual use is projected up 2.1 million tons to 662.9 million, but food, seed and industrial use prospects are reduced. Most of the increased forecast use is corn and sorghum, with reductions for barley, oats and rye.
The largest increase in coarse grain use this month is for corn in China, with the 2011/12 feed and residual use increased 2.0 million tons to 134.0 million. Corn prices in China remain relatively high despite the very large harvest, evidence of strong demand. With the larger crop, corn use in Canada is boosted 0.5 million tons to 11.5 million, with 0.3 million of the increase in feed use and 0.2 million in food, seed and industrial use. Reductions in expected corn use in Belarus, the United States, South Africa and Australia are partly offsetting.
Global sorghum use for 2011/12 is projected up 0.6 million tons to 62.1 million, with increased feed use more than offsetting a small decline in food, seed and industrial use. Brazil’s feed use is up 0.5 million tons, almost the same as the US increase. Partly offsetting are decreases for Mexico, down 0.3 million tons, where sorghum is reportedly being replaced by imported wheat, and for South Africa, with reduced production prospects expected to limit food use.
Barley feed use in Ukraine is reduced 0.5 million tons to 2.9 million. With abundant supplies of other grains that can be used for feed, barley stocks are not expected to decline in 2011/12, so projected use was trimmed to meet stock expectations. Australia’s barley feed use is projected 0.1 million tons lower this month to 3.4 million due to tight beginning stocks and ample feed-quality wheat supplies. These decreases in barley feed use are partly offset by increased feed use projected for Belarus, up 0.2 million tons to 1.4 million tons due to increased supplies.
Oats use in 2011/12 is forecast lower this month for Canada, Belarus, and Mexico; rye use is projected lower for Russia, Belarus and the United States.
Global Coarse Grain Ending Stocks Prospects Increased but Still Tight
World coarse grain ending stocks for 2011/12 are up 5.5 million tons to 160.7 million, mostly due to increased corn stocks in China. China’s corn ending stocks are up 5.3 million tons to 57.0 million because the bumper crop is expected to facilitate the holding of corn as a hedge against future price increases. Other increases in corn ending stocks are for the EU, up 0.5 million tons due to the record corn crop; Serbia, up 0.4 million because of problems moving exports with low water on the Danube; and Canada, up 0.2 million due to increased production. The United States and Australia had smaller increases. Partly offsetting are reductions for South Africa, down 0.7 million tons due to reduced supplies and for Belarus and Argentina down by smaller amount.
World barley ending stocks are reduced 0.3 million tons to 22.6 million, with reductions for Russia (-0.4 million tons), Australia (-0.4 million), Argentina (-0.2 million), Canada (-0.1 million), and Morocco (small increase) more than offsetting increases projected for Ukraine (+0.5 million), Algeria (+0.2 million) and Belarus, South Africa and Brazil (small increases).
Oats ending stocks in Canada and rye ending stocks for Russia are each increased 0.1 million tons for 2011/12, accounting for most of the changes in global stocks for those grains. Changes in projected sorghum ending stocks are small, with declines for Australia, Mexico, South Africa and Japan, but an increase for Brazil.
World Corn Trade Prospects Reduced Slightly; US Exports Unchanged
Global corn trade projected for 2011/12 (October-September) is reduced 0.4 million tons this month to 94.0 million. EU corn import prospects are reduced 0.5 million tons to 3.0 million because of increased production and the slow pace of import licences. Serbia’s corn export prospects are cut 0.4 million tons to 1.6 million as low water in the Danube River has complicated logistics for moving grain, and slack EU import demand reduces the urgency of shipments and limits the willingness of importers to pay extra for alternative freight.
US corn exports for 2011/12 remain projected to reach 41.0 million tons (1.6 billion bushels for the September-August local marketing year). While US exports for October 2011 were reported by Census down eight per cent from a year earlier at 3.2 million tons, the November corn export inspections reached 3.8 million, an increase of 0.5 million tons over a year ago. As of 1 December 2011, outstanding sales were 12.8 million tons, up three per cent from the previous year. The 2011/12 forecast is down nine per cent from 2010/11, implying a significant slowdown in additional sales and shipments. Tight US corn supplies, relatively high US corn prices and competition from abundant feed-quality wheat in foreign markets are expected.
US sorghum exports for 2011/12 are reduced 0.5 million tons to 1.9 million – down 20 million bushels to 70 million for the September-August local marketing year. US sorghum supplies are tight because of a small crop, limiting export sales. As of 1 December 2011, outstanding sales reached only 187,400 tons, down from 720,700 a year ago. Prospects for an increase in sorghum sales seem limited as Mexico has turned to cheaper wheat to replace sorghum imports. Mexico’s sorghum imports for 2011/12 are reduced 0.3 million tons this month to 1.8 million. Australia’s sorghum export projection is increased 0.2 million tons to 1.2 million as a larger crop combines with prospects for a stronger share of Japan’s sorghum imports.
The five-million-bushel US oats import increase for the June-May 2011/12 local marketing year was due to strong shipments for the period July to September and is reflected in the 2010/11 October-September international trade year. With increased production this month, Canada’s oats export prospects for 2011/12 are increased slightly.
World barley trade for 2011/12 is projected slightly higher this month due to an increase in import demand from Algeria, doubling to 0.5 million tons this month. With a smaller crop, Australia’s barley export prospects are reduced but exports for Russia and Argentina are increased because of strong sales.
Further Reading
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December 2011