South American Corn Crop Lowered This Month
US feed grain supplies for 2008/09 are unchanged this month. Corn and oats use projections are unchanged, but adjustments are made to sorghum and barley use. Price ranges are narrowed for corn and sorghum. Oats prices are raised and barley prices are unchanged.
Global 2008/09 coarse grain supplies are lower this month with reductions in South America and India only partly offset by increases in FSU-12 and Australia. World coarse grain trade and consumption are down this month as global economic problems trim prospects for meat consumption. Corn feed use in Brazil, the world’s largest meat exporter, is down more than corn production is reduced this month. World corn trade is forecast down 20 million tons in 2008/09, the largest year-to-year drop in the USDA database, which goes back to 1960.
Feed Grains Use Prospects up in 2008/09
Feed grain supplies for 2008/09 remain unchanged this month at 373.9 million metric tons. Total use of the four feed grains is projected 0.8 million tons higher at 324.1 million this month. This increase is the result of increased sorghum used for ethanol and increased barley malt exports, which are partially offset by decreases in sorghum and barley feeding. Feed grain exports for 2008/09 remain unchanged. The increase in domestic use lowers ending stocks 0.8 million tons this month to 49.8 million. In 2007/08, ending stocks for the four feed grains totaled 45.1 million tons. Feed and residual use for the four feed grains plus wheat converted to a September- August marketing year is down 0.4 million tons this month because of decreases in projected sorghum and barley feeding. Grain-consuming animal units are 93.6 million this month, up from 93.0 million last month, based on the 30 January Cattle report. Feed and residual use per animal unit declines slightly this month to 1.56 tons.
Corn Projections Unchanged This Month
The 2008/09 marketing year corn projections are unchanged this month. In the first quarter of 2008/09, corn used for fuel ethanol totaled 891.9 million bushels, up 39 percent from the same quarter in 2007/08, as new plants have come on line. Corn used for fuel represented 24 per cent of total use in the quarter, up from 16 per cent in first quarter 2007/08. Use of corn in sweeteners and starch during the first quarter of 2008/09 is down from the previous quarter and first quarter 2007/08. Sweetner and starch use for the first quarter accounted for 6 per cent of total corn use, up just slightly from the same quarter in 2007/08.
First quarter exports are 13 per cent of total use, down from 17 per cent in 2007/08. The projected range for prices received by farmers in 2008/09 is narrowed 10 cents on each end of the range to $3.65 to $4.15 bushels per acre.
Sorghum Use Prospects Increase in 2008/09
Sorghum food, seed, and industrial (FSI) use is increased 40 million bushels to 110 million in 2008/09. This raise is based on increased sorghum use by ethanol plants in the Southern and Central Plains. Sorghum prices are well below those for corn in these areas as supplies have increased this year due to a slower export pace. Sorghum feed and residual use is lowered 10 million bushels to 220 million bushels, partly offsetting the increase in ethanol use. Projected ending stocks are lowered to 65 million bushels, down 30 million from last month.
First quarter 2008/09 sorghum exports were 44.2 million bushels, down from 93.7 million in first quarter 2007/08. Exports were 21 per cent of total use in first quarter 2008/09, down from 39 per cent in the same period in 2007/08. The projected range of prices received by farmers in 2008/09 is narrowed 15 cents on each end to $3.05 to $3.35 per bushel. If farmers have marketed their sorghum at the same rate as the average of the last 5 years, then 65 per cent of the sorghum has been sold and the weighted average price to date would be $3.47 per bushel.
Barley Malt Exports Increase
Barley FSI use is raised 10 million bushels to 170 million in 2008/09 due to increased barley malt exports. Feed and residual use is lowered by an offsetting amount to 70 million bushels. First half 2008/09 barley imports were 15.6 million bushels, up 3.9 million from 2007/08. First-half barley exports were 10.6 million bushels, down from 24.4 million bushels in 2007/08. The 2008/09 barley price range remains unchanged at $4.95 to $5.35 per bushel. If farmers have marketed the same amount of barley as the average of the last 5 years, then 78 per cent of the barley has been marketed at a weighted average price through January of $5.29 per bushel.
Oats Supply, Use Unchanged but Price Projection up
Supply and use estimates for oats in 2008/09 were unchanged this month. First half 2008/09 oats imports were 67.6 million bushels, up 4.3 million from 2007/08. First half oats exports were 2.1 million bushels, up from 1.3 million bushels in 2007/08. The price range was raised 10 cents on each end to $3.00 to $3.20 per bushel, compared with $2.63 per bushel in 2007/08.
Hay Price Prospects in 2008/09 Remain High
As reported last month, hay stocks totaled 104 million tons on 1 December 2008, down less than 1 per cent from a year ago. In addition, the annual cattle inventory was released since the last Feed Outlook report. Cows and heifers that have calved on 1 January 2008, were down 2 per cent from the previous year, and replacement heifers were down slightly. Recalculated roughage-consuming animal units (RCAU) in 2008/09 are projected to be 70.85 million units, down 1 per cent from 2007/08. Hay stocks per RCAU are projected to be 1.463 tons in 2008/09, up from 1.456 tons a year earlier.
All hay prices for the 2008/09 marketing year have averaged higher than those of a year ago. All hay prices for May 2008-January 2009 averaged $155.56 per ton, up from $127.00 per ton in the same period a year earlier. Prices received for alfalfa hay in May 2008-January 2009 averaged $169.33 per ton, up from $136.44 a year earlier. During May 2008-January 2009, other hay prices averaged $122.56 per ton, up from $109.67 per ton last year.
World Coarse Grain Production Reduced This Month
Global coarse grain production forecast for 2008/09 is down 2.3 million tons this month to 1,100.1 million. Corn production prospects have deteriorated in South America, more than offsetting increased production reported elsewhere. However, the 2008 world crop of coarse grains is still record high, up 2 per cent from the previous year’s high.
Global corn production for 2008/09 is projected down 4.6 million tons this month to 786.5 million, but barley is up 1.1 million to 154.6 million, with smaller increases for oats, sorghum, rye, and millet.
The largest production change this month is a 3-million-ton drop in Argentina’s corn prospects, to 13.5 million. An ongoing drought and high temperatures have been concentrated in the provinces of Santa Fe, Entre Rios, and Buenos Aires. Much of Cordoba has received better rains, limiting the production decline. Intermittent rains have brought some relief, but coverage and intensity have not been enough to end the drought in many areas. Moreover, the heat and drought was most intense during corn pollination in some areas, severely reducing yield potential. Some corn will be cut for fodder instead of harvested for grain, so both harvested area and yield were reduced by about 10 per cent this month.
Brazil’s corn production is reduced 2.0 million tons this month to 49.5 million. Dryness during pollination stressed the main-season crop in Parana, the largest producing state. Nearby states were also somewhat affected. Yield prospects are trimmed 4 per cent this month.
Paraguay also suffered from the dry, hot weather that reduced corn production in neighboring Argentina and Brazil. Corn production prospects in Paraguay are down 0.8 million tons this month to 1.0 million.
India reported lower corn yields than previously expected, as the monsoon rains were sporadic in some regions, trimming production 0.5 million tons to 17.5 million. There were also small reductions reported for Russia and Nicaragua.
Partly offsetting the aforementioned corn production declines are some production increases. Ukraine published final harvest reports that indicated production of 11.4 million tons of corn, 1.4 million tons higher than USDA’s forecast a month ago. While the crop is large, the quality of a significant portion is not good, making it a challenge to market or store the corn. Philippines corn production is up 0.3 million tons to 6.8 million based on government reports. Corn production is also up slightly this month in the EU-27 and Peru.
World barley production is up nearly 1 per cent this month. Russia’s barley production is up 0.6 million tons to 23.1 million based on final harvest reports. Australia reported barley production is up 0.5 million tons to 7.0 million, as area was larger than previously estimated. There was a small production increase for Ukraine, but a reduction for the EU-27.
Global oats production is projected to reach 26.7 million tons in 2008/09, up 0.6 million this month. Russia is reported up 0.4 million tons to 5.8 million, and Ukraine reported a smaller increase.
Australia’s sorghum production is up 0.4 million tons to 2.4 million based on improved yield prospects. Russia and Ukraine each increased rye production slightly this month, and Ukraine reported increased millet.
The 2.3-million-ton production decline in world coarse grains projected this month for 2008/09 is partly offset by increased beginning stocks, dominated by a 1.4- million-ton increase in barley stocks for Australia, the result of increased production reported for 2007/08. Australian barley area in 2007/08 was revised up 11 per cent.
Projected 2008/09 World Coarse Grains Use Reduced
Projected use of coarse grains in 2008/09 is reduced 1.3 million tons this month to 1,078.9 million. US consumption increased, leaving foreign consumption down 2.0 million tons. Reduced corn production in South America and the effects of the global economic downturn contributed to the decline.
Global corn use is forecast down 5.8 million tons this month to 777.5 million. This is partly offset by: 1) an increase in projected world barley consumption of 2.5 million tons to 146.0 million, 2) an increase in global sorghum use of 1.2 million tons to 63.6 million, 3) an increase in oats use of 0.7 million tons to 25.9 million, and 4) small increases in rye and millet use.
The largest cut in projected corn use in 2008/09 is for Brazil, down 3.0 million tons this month to 44.5 million. Brazilian corn production was reduced this month, but the decline in use is more due to economic problems than to reduced supplies because corn stocks in Brazil are ample. Brazil, the world’s leading exporter of meat, has been hit hard by a drop in demand for meat imports. Meat inventories are reportedly piling up at ports, with limited capacity for storage. Financial problems arranging letters of credit to some destinations exacerbate the situation. The interruptions to Brazil’s meat exports are expected to reduce the use of corn as poultry and hog producers cut back on production.
Argentina is projected to use 0.8 million tons less corn this month, a result of the large reduction in production. Corn use in Paraguay and India are each down 0.2 million tons due to reduced corn production, and Ukraine corn use is up 0.2 million this month due to increased production.
Several countries have reduced corn use projections this month as lower expected meat demand trims the need to import corn. Corn use is cut 0.7 million tons for South Korea, reduced 0.5 million for Mexico (partly offset by an increase for sorghum), trimmed 0.3 million for Saudi Arabia, lowered 0.2 million for Tunisia, and reduced by lesser amounts for Nicaragua, Chile, and El Salvador.
The projected increase in barley use this month is mostly in the EU-27, up 2.0 million tons as the price of barley compared with that for feed-quality wheat has led to more feeding of barley and less of wheat than previously forecast. Barley consumption is also projected higher this month due to increased production in Russia, up 0.6 million tons; in Australia, up 0.5 million; and in Ukraine, up 0.1 million. Syria’s barley use is up 0.4 million tons this month based on the strong pace of imports, and Saudi Arabia is up slightly because of large beginning stocks. However, a stocks report in Canada revealed less barley use than expected, reducing the annual consumption forecast 0.3 million tons. Projected barley use in Morocco was cut 0.4 million tons this month.
Increased global sorghum use this month was mostly in the United States, but Mexico is also increased 0.3 million tons as the sorghum import pace has been stronger than expected. Increased sorghum feeding in Mexico is expected to offset some of the reduction in corn use. Australia sorghum use is up slightly this month with increased production prospects.
World oats use is projected up 0.4 million tons for Russia and 0.2 million for Ukraine due to increased production. Mexico’s projected use was increased slightly due to the pace of imports.
World Coarse Grain Ending Stocks Up Slightly This Month
Reduced production this month was more than offset by increased beginning stocks and lower forecast use, leaving projected global 2008/09 ending stocks of coarse grains up slightly to 178.8 million tons. Projected world corn stocks increased 0.6 million tons to 136.7 million. Higher production contributed to increased corn stocks prospects for Ukraine, up 0.7 million tons; the Philippines, up 0.3 million; and the EU-27 and Peru, small increases. Despite a cut in production, corn ending stocks prospects for Brazil increased 0.6 million tons this month as use prospects dimmed. These increases were partly offset by reduced stocks prospects caused mostly by reduced production in India, down 0.5 million tons; Russia, down 0.4 million; and Argentina and Paraguay, smaller reductions.
World Corn Trade for 2008/09 Reduced
Global corn trade in 2008/09 (October-September) is down 1.8 million tons this month to 76.1 million. This is a drop of 20 million tons from that of the previous year, the largest year-to-year drop in world corn trade in the USDA database, which goes back to 1960.
Meat production prospects are being reduced by harsh economic conditions in some countries, leading to lower forecast corn imports. This month, imports are down 0.7 million tons in South Korea, 0.5 million tons in Mexico (with a smaller increase in sorghum imports are 0.3 million tons in Saudi Arabia imports in Tunisia, Peru, Chile, and El Salvador are trimmed by smaller amounts.
Corn export prospects for Argentina are cut 2.0 million tons to 7.0 million as drought-reduced production limits export prospects. The same drought cut Paraguay’s corn export prospects 0.5 million tons to 1.0 million. Brazil’s corn export prospects remain unchanged this month as reduced internal feed demand is expected to leave ample supplies for export. Brazil is forecast to emerge as the world’s second largest corn exporter in 2008/09. Corn export prospects are increased this month for Ukraine, up 0.5 million tons to 4.0 million. Ukraine’s crop is increased this month, and a weak exchange rate contributes to competitive prices. Russia’s projected corn exports are increased 0.2 million tons to 0.5 million this month as the pace of export sales and shipments has been strong. The Russian corn crop, though reduced slightly this month, is record high and Russia has become a net corn exporter.
The US corn export forecast for 2008/09 remains at 45.0 million tons this month (1.75 billion bushels for the September-August local marketing year). Projected corn exports are down 26 per cent from that of a year earlier. Census export data for October-December 2008 reached 10.5 million tons, down nearly 40 per cent from the total a year ago. January 2009 export sales shipments data indicate exports of about 3.1 million, just over half the previous year’s January corn exports. At the end of January, outstanding export sales were 8.5 million tons, less than half the outstanding sales a year ago. However, in recent weeks US corn export sales have been strong, and with sharply reduced South American corn production, US sales are expected to remain strong in the second half of 2008/09.
World barley trade was trimmed slightly this month to 19.0 million tons. Australia’s barley exports are up 0.5 million tons to 3.5 million due to increased supplies, while EU-27 exports are trimmed 0.5 million tons to 4.0 million as more barley is expected to be used in the EU-27 and less exported. Exports are trimmed 0.2 million this month for Argentina based on slow shipments. Imports are up this month for Iran and Syria but are reduced for Morocco.
Global sorghum trade is up 0.4 million tons this month to 5.4 million. Higher expected production in Australia boosts export prospects. Mexico’s imports are increased. The United States has been shipping more sorghum than expected to Mexico and less to Japan as Australia gains market share in Japan.
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February 2009
