US corn production for 2011/12 is projected 305 million bushels lower this month at 13,200 million as delayed planting this spring are expected to reduce plantings 1.5 million acres from producer intentions. Flooding on the Mississippi and Missouri Rivers is also expected to reduce harvested area.
Production is still expected to be a record but ending stocks are reduced this month by 205 million bushels, resulting in a year-to-year decline of 35 million bushels. Tight supplies are reflected in higher price projections for all feed grains. Revisions to several years of China’s corn supply and demand increase use more than production, tightening stocks.
Global coarse grain ending stocks projected for 2011/12 are reduced 11 per cent this month. The global stocks-to-use ratio for coarse grains is projected at 12.6 per cent, the lowest since 1973/74 when it fell to 12.2 per cent. Near-term trade implications, however, are limited with 70 per cent of this month’s global stock decline in China.
DOMESTIC OUTLOOK
US Feed Grain Supplies Projected Sharply Lower this Month
Reduced prospects for corn acreage lowered projected US feed grain production for 2011/12 by 7.7 million metric tons. Production for 2011/12 is projected at 348.3 million tons. Total use is 2.5 million tons below last month’s projection as higher prices reduce prospects for feed and residual use. Ending stocks are projected sharply at 20.7 million tons, a 5.3-million-tons decrease of lower than last month from May’s estimate and the lowest level since the 1995/96 crop year.
Feed and residual use for the four feed grains plus wheat, on a September-August marketing year basis, is lowered 3.7 million tons to 138.0 million. Grain-consuming animal units (GCAUs) for 2011/12 are projected unchanged from last month at 94.2 million compared with 92.7 million in 2010/11.
Projected 2011/12 feed grain exports are increased slightly to 49.4 million tons, compared with 49.3 million last month, on higher projected sorghum shipments.
Planting Delays and Flooding Reduce Projected Harvested Area and Production for Corn
Planting delays in the eastern Corn Belt, especially Ohio and Indiana, and in the Northern Plains are expected to reduce planted area, offsetting potential gains in the western Corn Belt and central Plains. Planted area is reduced 1.5 million acres as some of this land is expected to remain too wet to plant to corn. Harvested area is lowered 1.9 million acres to 83.2 million, reflecting early assessments of May flooding in the Mississippi and Ohio River valleys, and June flooding along the Missouri River valley. Production is projected 305 million bushels lower at 13,200 million, but is still a record. This month’s yield projection is unchanged at 158.7 bushels per acre because the crucial July and August weather that will determine yields remains unknown.
Feed and residual use for 2011/12 is projected 100 million bushels lower this month. Higher prices for corn are expected to ration demand for feed use. Feed use is projected at 5,000 million bushels for the marketing year, compared with 5,150 for 2010/11. Projected food, seed and industrial use for 2011/12 is unchanged at 6,455 million bushels, 55 million higher than 2010/11. Ethanol production, mostly using corn as a feedstock, continues to advance, according to weekly Energy Information Agency data. As the share of corn that is not forward contracted at favorable price declines, margins will decrease, although higher petroleum prices may be an offsetting factor.
The lower feed and residual projection reduces projected corn use for 2011/12 to 13,255 million bushels, 195 million bushels below 2010/11.
The sorghum export projection for 2011/12 is increased from 130 million bushels to 135 million. Shipments to Mexico are expected higher due to tight corn supplies.
Feed and Residual Use Down in 2011/12
The 2011/12 US feed and residual use for the four feed grains plus feed wheat on a (September-August) projected at 138.0 million tons, down 3.7 million tons from the previous year. Feed and residual use per grain-consuming animal unit (GCAU) is projected at 1.48 tons in 2011/12, compared with 1.53 tons in 2010/11. Total GCAUs are projected up 1.6 per cent on the year to 94.2 million. GCAUs are expected to be up for the year because of increased poultry and pork production as demand begins to strengthen offset by lower cattle numbers. Feed and residual use per animal unit is reduced this month to 1.48 tons as lower expected feed use more than offsets the decline in GCAUs.
Projected Ending Stocks Slip on Production Decline
Lower projected feed grain production in 2011/12 more than offsets the decline in feed use, reducing projected ending stocks to 695 million bushels, the lowest since 1995/96. The projected stocks-to-use ratio falls to 5.2 per cent, compared with 5.4 per cent forecast for 2010/11. The stocks-to-use ratio at the end of 1995/96 was 5.0 per cent. A stocks-to-use ratio at 5.0 per cent may represent minimal ‘pipeline’ stocks, however, significant changes in grain storage, handling and transportation have occurred since 1995/96. Among the most important have been changes associated with expansion of corn processing to produce ethanol.
Higher Feed Grain Prices Projected
The season-average corn farm price for 2011/12 is projected at a record $6.00 to $7.00 per bushel, up $0.50 on both ends of the range from last month. Tight supplies caused by reduced acreage and lower carry-in prompted the increase. The projected corn price for 2010/11 is boosted $0.10 on each end of the range to $5.20- $5.50 per bushel.
Projected 2011/12 sorghum prices are expected to be record high. This month’s forecast is increased by $0.60 on both ends of the range to $5.60 to $6.60 per bushel. Projected barley prices are raised $0.20 on both ends of the range to $5.95- $7.05 per bushel. The increase in the oats projected price is larger, up $0.30 on both ends of the range to $3.60-$4.20 per bushel.
Weekly Crop Progress Report Shows Gains
The Crop Progress report issued by USDA’s National Agricultural Statistics Service for the week ended 5 June 2011, showed further progress in the major corn States as farmers sowed eight per cent of the crop in newly-dried fields over the preceding week. As of 5 June, 94 per cent of the crop was planted compared with the 2006-2010 average of 98 per cent. Indiana and Ohio remained significantly behind normal at 82 and 58 per cent, respectively, compared to five-year averages of 94 and 99 per cent. Producers in Illinois, Iowa, Kansas, Missouri and Nebraska have planted 98 per cent or more of their corn crops by 5 June.
INTERNATIONAL OUTLOOK
Global Coarse Grain Production Cut as US Drop Bigger than China Increase
World coarse grain production in 2011/12 is projected to reach 1,143.9 million tons, down 3.0 million this month. US corn production, down 7.7 million tons, has the largest drop, but a 6.0-million-ton increase for China’s corn, and a few adjustments to other countries, leave global corn production down 1.6 million tons this month to 866.2 million. World barley production is reduced 1.2 million tons to 130.3 million as EU prospects deteriorate.
China’s corn production increase for 2011/12, up 6.0 million tons to 178.0 million, is based on an increase in area reported by China’s National Bureau of Statistics (NBS) for 2010/11. The 2010/11 production is increased 5.0 million tons to 173.0 million, adopting the NBS corn area but remains below the NBS production estimate because USDA analysis indicates that since 2009/10 NBS has overestimated China’s corn yields. The projection for China’s 2011/12 corn crop assumes an increase in corn area of two per cent, down from the four per cent growth reported for the previous year. USDA’s corn yield for China is not changed this month for 2010/11 or 2011/12.
Coarse grain production prospects increased this month for Ukraine, up 0.6 million tons to 24.9 million tons. Spring weather has had enough rain to maintain adequate soil moisture in most regions, without excessive rains to disrupt fieldwork. Planting reports indicate more corn area seeded than expected, boosting corn production prospects 0.5 million tons. There is also a small increase in millet area based on plantings.
Russia’s coarse grain production is increased slightly this month to 28.9 million tons, reflecting variable planting conditions. In the Southern District and the Caucasus, spring plantings have gone well but in the Volga, cold temperatures and spotty dryness delayed plantings. Barley area planted is larger than expected, boosting production prospects 1.0 million tons to 14.5 million. However, the pace of corn seedings appears to be too slow to reach the previously expected area, so corn area is cut this month, trimming production prospects 0.5 million tons to 6.0 million. Rye area is also reduced this month, cutting expected output 0.3 million tons to 3.0 million.
Zambia reports expanded corn area, boosting production 0.5 million tons to 3.0 million. Argentina is expanding area planted for winter barley, increasing production prospects 0.3 million tons to 2.5 million.
European Union (EU) coarse grain production prospects are down 2.2 million tons this month to 143.0 million. The entire decline is based on barley yields. A few EU countries reported slightly increased barley area this month. Severe spring dryness centered in northern France extended into Germany, parts of the UK and western Poland. Harsh winter conditions in parts of Germany and Poland may also have reduced crop potential.
Canada’s barley production expected in 2011/12 is reduced 0.3 million tons to 8.2 million as southeastern Saskatchewan and southwestern Manitoba have been too wet for planting, reducing barley area.
Moldova reported corn area plantings down compared to the previous year, trimming production prospects 0.3 million tons to 1.2 million. Kyrgyzstan reported a slight dip in barley area and production prospects.
Reduced China Corn Beginning Stocks Trim 2011/12 Supplies
Estimated corn use for China for 2007/08 through 2010/11 is increased this month, enough to more than offset the five million ton increase in 2010/11 production, and leave 2011/12 beginning stocks down 5.0 million tons to 53.7 million. Numerous small adjustments to 2011/12 beginning stocks for other countries are mostly offsetting, leaving global coarse grain stocks down 4.9 million tons at 153.5 million. With world coarse grain production down 3.0 million tons this month, global supplies are down 7.8 million.
Global Coarse Grain Demand Prospects for 2011/12 Boosted This Month
World coarse grain use projected for 2011/12 is up 9.3 million tons this month to 1,152.1 million tons. Corn total use is up 11.0 million tons to 871.7 million, while barley is down 1.4 million to 132.8 million. Projected use of rye and sorghum are down fractionally as well.
Corn use in China for 2011/12 is raised 13.0 million tons this month to 181 million. Feed and residual use is projected to reach 126.0 million tons, up 10.0 million this month, but only five per cent higher than the revised forecast for 2010/11. Corn feed use growth is faster in recent years than the reported growth in some key livestock indicators such as pig meat production but remains slower than the apparent growth in use of soybean meal. Food, seed and industrial use in China is up 3.0 million tons this month to 55.0 million. That represents six per cent growth compared to the revised forecast for 2010/11 but is much slower growth than estimated between 2009/10 and 2010/11. China’s Government has announced several measures to slow the growth in use of corn for industrial use. China’s barley use (beer) is reduced 0.2 million tons this month, reflecting high prices and lower projected imports.
Russia’s 2011/12 coarse grain use is boosted 0.7 million tons this month. Barley feed use is up 1.0 million and rye use cut 0.3 million reflecting production changes.
Saudi Arabia’s barley feed use is cut 0.5 million tons this month as satellite imagery confirms exceptionally good winter and spring pastures, and the pace of imports has slowed. There are smaller changes to coarse grain use this month for Moldova (reduced corn production), Jordan, Canada, Ukraine and Uruguay.
EU total coarse grain use is projected unchanged this month but feed use is up 0.5 million tons. Corn imports and feed use are raised 1.0 million tons each, but with reduced barley production, the feed use and food use are each cut 0.5 million tons.
World Coarse Grain Ending Stocks Cut Dramatically This Month
Global coarse grain ending stocks for 2011/12 are slashed 17.1 million tons this month to 145.3 million. Foreign stocks are projected down 11.8 million tons, with the China reduction of 12.0 million tons dominating. The revisions to China’s use over several years are much greater than the increases in production, drawing down stocks prospects considerably. These tighter stocks reflect corn price developments in China. While corn stocks are not dropping significantly year-to-year, the rapid increase in use implies an important tightening in the stocks-to-use ratio, supporting corn prices.
Changes in projected 2011/12 ending coarse grain stocks for other countries are mostly small and offsetting. Increased corn production boosts Zambia’s ending stocks 0.3 million tons, and the EU, Philippines and Australia are each up 0.2 million. Ukraine’s corn stocks are reduced 0.5 million tons due to strong export prospects, and Saudi Arabia’s ending stocks are reduced 0.3 million due to the slow pace of barley imports. There are several smaller, mostly offsetting revisions to projected ending stocks.
The world coarse grain ending stocks forecast for 2011/12, at 145.3 million tons, are similar to the 141.2 estimated for 2006/07 and 143.3 for 2003/04. These are the lowest in recent decades. However, because of increased use, the 2011/12 stocks represent only 12.6 per cent of use, while in 2006/07 they were 13.9 per cent and in 2003/04, 15.2 per cent. So the current forecast is for historically tight global coarse grain stocks; however, 70 per cent of this month’s reduction in global stocks is projected for China where stocks remain at 27.3 per cent of use limiting broader near-term trade implications.
Corn Trade Projected Slightly Higher, US Export Prospects Unchanged
Global corn trade for 2011/12 is projected to reach 92.5 million tons, up 0.7 million this month. The EU, with reduced wheat and barley production, is expected to import more corn to maintain meat production. EU corn imports are forecast up 1.0 million tons this month to 5.0 million.
With increased production prospects and strong demand from EU, Ukraine’s corn export prospects are boosted 1.0 million tons to 7.5 million. Zambia, with increased production, is expected to export to neighbouring countries, boosting exports 0.2 million tons. However, reduced production prospects are expected to limit Russia’s corn exports, down 0.5 million tons this month to 0.5 million.
World corn trade forecast for 2010/11 is unchanged this month at 92.9 million tons. Mexico’s corn imports are reduced 1.0 million tons to 8.0 million as the pace of purchases has been slower than expected, especially given the reduced production. This is partly offset by increased corn imports for the EU, up 0.5 million tons to 7.0 million, as the pace of purchases has been strong.
US sorghum export prospects for 2011/12 are increased 0.2 million tons to 3.5 million – up 5 million bushels to 140 million for the local marketing year. Mexico’s import prospects are increased the same amount as tight corn and sorghum supplies in Mexico are expected to encourage purchases of US sorghum.
World barley trade for 2010/11 and 2011/12 is forecast down significantly this month and is the lowest in 14 years. The 2011/12 global barley trade (October-September) is projected down 1.1 million tons this month to 13.2 million. Tight supplies in the EU and Canada are expected to limit trade. EU export prospects are down 1.0 million tons this month to 1.5 million. The pace of EU shipments in 2010/11 has been slower than expected, trimming the export forecast 0.6 million tons to 4.0 million. Barley imports by Saudi Arabia are forecast sharply lower at 5.4 million tons for 2010/11 and 5.2 million for 2011/12. Saudi Arabia appears content to reduce its stocks instead of increasing import subsidies.
Further Reading
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June 2011
