Corn feed and residual use is raised because of a slight rise in grain-consuming animal units and earlier-than-usual harvesting before the start of the crop year. US corn exports are reduced mostly due to higher prices and competition from Argentina. World coarse grain production is reduced this month and use is increased, leaving global stocks slightly lower. Corn, sorghum and barley prices are increased this month but the projected range for oats is unchanged.
Domestic Outlook
Feed Grain Production Down Sharply in 2010/11
US feed grain production for 2010/11 is forecast at 335.4 million tons, down from 349.1 million last month. The month-to-month decrease reflects reduced forecast production for corn and sorghum and smaller production estimates for barley and oats from the Small Grains 2010 Summary report. Planted area for the four grains is decreased 400,000 acres this month, and acres harvested for grain were decreased 300,000 acres. Yields per harvested acre for the four grains combined are decreased to 3.74 metric tons per acre, compared with 3.88 metric tons last month. Beginning stocks in 2010/11 are raised to 48.1 million tons, based on the September 30 Grain Stocks report. Total 2010/11 feed grain supply is forecast at 385.5 million tons, down from 390.7 million last month and 398.3 million in 2009/10.
Total 2010/11 feed grain utilisation is projected at 359.0 million tons, up from 358.7 million last month and 350.2 million in 2009/10. The month-to-month increase is mostly from higher corn feed and residual use but is partly offset by lower corn exports and lower sorghum domestic use. Total projected feed grain ending stocks for 2010/11 are lowered 5.5 million tons to 26.5 million, mainly reflecting tight corn supplies.
Feed Use
On a September-August marketing year basis for 2010/11, feed and residual use for the four feed grains plus wheat is projected to total 147.26 million tons, up 5.29 million from the revised total of 141.97 million tons in 2009/10. Corn is estimated to account for 93 per cent of feed and residual use in 2010/11, up from 92 per cent in 2009/10.
The projected index of grain-consuming animal units (GCAU) in 2010/11 is 92.1 million units, up from the revised 91.5 million in 2009/10. Feed and residual per GCAU in 2010/11 is estimated at 1.60 tons, up from 1.55 in 2009/10. In the index components, GCAUs are increased for dairy, pork and poultry but decreased for beef.
With higher prices forecast for feed grains this month, most of the 2011 production forecasts for meat, milk and eggs are reduced. However, feed and residual use for 2010/11 is increased this month because it is calculated as the residual and about twice as much corn as usual was harvested before the 1 September start of the marketing year. September 1 corn stocks (2009/10 ending stocks) are reported for ‘old crop’ (harvested in 2009) stocks by respondents to the NASS survey. ‘New crop’ (harvested in 2010) corn harvested and used before the start of the marketing year is expected to show up as residual usage during the first quarter of the new marketing year. Early new-crop usage showed up as higher first quarter feed and residual use in the September-November quarter of 2007/08, the last time the corn harvest was early.
USDA’s September 17 Milk Production report indicated milk production in the 23 majors states during August totalled 15 billion pounds, up 2.8 per cent from August 2009. Production per cow averaged 1,796 pounds for August, 51 pounds above last year. However, the number of milk cows on farms declined by 10,000 head from August 2009 to 8.36 million. Milk production for 2010 is raised slightly from last month as higher milk per cow more than offsets lower cow numbers. The forecast for 2011 is reduced as higher feed prices are expected to slow the rate of growth in cow numbers and milk per cow compared with last month; with lower milk production, feed needs would be reduced.
US hog breeding inventory on the third quarter of 2010 was at 5.77 million head, down two per cent from last year and down slightly from the previous quarter according to USDA’s September 24 Quarterly Hogs and Pigs report. Market hogs inventory, at 59.2 million head, was also down three per cent from last year. As the result of lower market inventory, lower slaughter and slower growth in slaughter weights, 2010 pork production forecast is reduced. Intended farrowings from December 2010 to February 2011, at 2.89 million sows, are up slightly from the same period a year earlier but down four per cent from the period December 2008 to February 2009 based on the report. Pork production for 2011 is lowered from last month as relatively high feed prices are expected to keep the growth in sows farrowing modest and dampen hog weights requiring slightly less feed.
USDA’s Broiler Hatchery report on 6 October indicated that broiler-type eggs sets and chicks placed have been increasing. Cumulative placements of broiler flock are up from the same period a year earlier. For these reasons, the broiler production projection is increased for the last quarter of 2010 but reduced for 2011 as producers are expected to respond to rising feed prices, slowing the expansion and reducing feed use relative to last month’s forecast.
Egg-type chicks hatched and pullet chicks for future hatchery supply have been decreasing based on USDA’s September 21 Chickens and Eggs report. Rising feed prices are also expected to reduce egg production for 2011. If realised, lower production would weaken feed use by the egg industry.
USDA’s September 15 Turkey Hatchery report indicated that during August 2010, turkey poults hatched were down two per cent from a year earlier but net poults placed were 80,000 above August 2009. Turkey production projection for 2010 remains the same as that of last month but the turkey meat forecast for 2011 is lowered from last month as higher feed prices slow growth and weaken feed needs.
USDA’s September 17 Cattle on Feed report indicated placements and marketings of feed cattle during August both increased seven per cent above 2009. Beef production forecasts for 2010 are raised as second half production is higher than previously expected. The 2011 beef production forecast is also raised primarily in the first quarter as larger-than-expected third quarter 2010 placements are marketed. Thus, feed needs by the cattle feeding industry are expected to remain strong but will partly be met by plentiful supplies of spent distillers’ grains.
Minor Changes Made to 2009/10 Crop Year
The following changes are made to the 2009/10 balance sheets:
Corn: feed and residual use is lowered 358 million bushels to 5,167 million this month based on 1 September stocks; food, seed and industrial (FSI) use is raised 30 million bushels, reflecting an increase of 25 million bushels for corn used for ethanol and small increases in other FSI uses; exports are raised seven million bushels to 1,987 million bushels based on trade data; ending stocks are raised 322 million bushels, to 1,708 million bushels, based on the 1 September stocks estimate.
Sorghum: FSI use is lowered 10 million bushels to 90 million due to tighter supplies; exports are also lowered one million bushels to 166 million based on trade data; ending stocks are raised 10 million bushels to 41 million based on the 1 September stocks estimate; and the farm price per bushel was raised from $3.20 to $3.22.
Barley: feed and residual use was lowered slightly, which lowered total use one million bushels to 217 million.
Oats: no changes were made.
Corn Crop Down Sharply in 2010/11
Corn production is forecast at 12,664 million bushels for 2010/11, down 496 million from last month. The forecast was lowered because of lower expected yield, down 6.7 bushels per acre from last month to 155.8 per acre. As forecast, this year’s production would be the third highest on record behind 2009 and 2007. Based on administrative data, 2010/11 planted area is raised 350,000 acres to 88.2 million and area harvested is up 258,000 acres to 81.3 million. Beginning stocks are raised to 1,708 million bushels, up 322 million from last month. Larger-than-expected carryout of old-crop corn, combined with an unusually early start to this year’s harvesting, suggests heavy new crop corn use before the 1 September beginning of the 2010/11 marketing year. Individual state harvest progress reports suggest that 600 to 700 million bushels of corn were harvested across the South, Southern Plains and southern Corn Belt before 1 September. This is double the level of the last two years and similar to what happened between the 2006/07 and 2007/08 marketing years. New crop corn usage ahead of 1 September 2007 lowered feed and residual disappearance during the June-August quarter of 2006/07 and boosted feed and residual disappearance during the September-November quarter of 2007/08.
The 1 October corn objective yield data indicate the second highest number of ears per acre on record for the combined 10 objective yield States (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin), behind only the record year of 2009. Record high ear counts are forecast in Iowa, Ohio and Wisconsin.
Feed and residual use is raised 150 million bushels to 5,400 million, reflecting the expected impact of new crop corn usage before 1 September on indicated disappearance during the current marketing year. Exports are lowered 100 million bushels to 2,000 million as a result of smaller supplies, higher prices and increased export competition from Argentina. Corn used for ethanol production in 2010/11 was unchanged this month at 4,700 million bushels, even though ethanol production in July (latest numbers available) was 1,116 million gallons, a new record. Corn used for high-fructose corn syrup (HFCS) was decreased 10 million bushels this month due to weak domestic demand. Total utilization is projected at a record 13,480 million bushels, up 40 million from last month and 396 million from 2009/10.
Ending stocks are lowered sharply this month by 214 million bushels. At a projected 902 million bushels, 2010/11 ending stocks would be the lowest since 1996/97. Projected stocks drop to less than 24 days of expected use. Tight supplies and strong demand boost expected corn prices 60 cents on both ends of the range to $4.60 to $5.40 per bushel, compared with $3.55 per bushel for 2009/10.
Sorghum Production Cut
Production is forecast at 337 million bushels, down 39 million bushels from last month and 46 million from last year. Based on updated administrative information, acreage changes were made in several states. Planted area is estimated at 5.4 million acres, down 598,000 acres from the previous forecast and 1.2 million from 2009. Planted acreage for 2010 is the lowest on record. Harvested area is forecast at 4.7 million acres, down 518,000 acres from the previous forecast and 862,000 acres from last year. If realised, this will be the lowest harvested acreage on record since 1936. Based on 1 October conditions, yield is forecast at 72.4 bushels per acre, down 0.3 bushels from September but up 3.0 bushels from last year. Record high yields are forecast in Louisiana and Texas. With a 10-million bushel increase in beginning stocks, total supply for 2010/11 is projected at 378 million bushels, down 29 million from last month, reflecting decreased production.
Projected total utilisation is 340 million bushels, down 30 million bushels from last month and 56 million from 2009/10. Feed and residual use is expected to be 20 million bushels lower this month and FSI use is expected to be 10 million bushels lower than last month, as strong prices and export demand limit sorghum feeding and processing use. Exports remain unchanged this month and are expected to total 160 million bushels, down from 166 million in 2009/10. Ending stocks for 2010/11 were raised one million bushels this month to 38 million.
The expected sorghum season average price was increased $1.10 on the low end of the range and $1.20 on the high end of the range to $4.80 to $5.60 per bushel, compared with $3.22 per bushel for 2009/10. This sharp increase in expected price reflects the smaller corn and sorghum crops, while export demand remains strong.
Barley Crop Forecast at 182 Million Bushels
Barley production for 2010/11 is forecast at 182 million bushels, down 2 million from August and 45 million from 2009/10. Average yield per acre, at 73.6 bushels, is up 1.3 bushels from last month and 73 bushels from last year. Area harvested for grain is estimated at 2.5 million acres, unchanged from last month and down 642,000 from 2009/10. Total supply of barley is projected at 312 million bushels, down 2 million from last month and 21 million from 2009/10. Imports were unchanged from last month’s projection of 15 million bushels.
Projected barley use was unchanged from last month. Ending stocks for 2010/11 were lowered by two million bushels to 87 million and are down 28 million from last year. Barley prices were increased by 10 cents on both the high and low ends of the range to $3.80 to $4.40 per bushel, compared with $4.66 in 2009/10.
Oats Production at Record Lows
Production of oats for 2010/11 is estimated at a record low 82 million bushels, down five million from last month and 11 million from 2009/10. The estimated yield was lowered 1.7 bushels per acre from last month to 64.6 bushels. Compared with last year, yields were down 2.9 bushels per acre. Area planted to oats is estimated at 3.1 million acres, down slightly from last month and down 266,000 acres from 2009/10. The largest decline occurred in North Dakota, where planted area decreased 70,000 acres from last year and is a record low for that state. Harvested area is estimated at 1.3 million acres, down slightly from last month and down 111,000 acres from last year, making it the smallest acreage harvested for grain on record.
Total supply is forecast at 242 million bushels, down six million from last month. Ending stocks were lowered by six million bushels this month to 48 million, down 32 million from 2009/10. Prices for 2010/11 are unchanged this month at $2.20 to $2.70 per bushel, compared with $2.02 last year.
Hay Production up in 2010/11
All-hay production in 2010 is forecast at 152.3 million tons, up from 147.4 million in 2009. This increase stems partly from a 3.2 per cent rise year-to-year in yield at 2.55 tons per acre. Total hay harvested area for 2010/11 decreased slightly to 59.7 million acres from 59.8 million last year. Roughage-consuming animal units (RCAU) in 2010/11 are projected to be 69.5 million units, down from 70.2 million in 2009/10. With hay production up and RCAUs down, hay supply per RCAU is 2.49 tons in 2010/11, compared with 2.41 tons in 2009/10.
Production of alfalfa hay and alfalfa mixtures is forecast at 71.3 million tons, down two per cent from the August forecast but up slightly from last year. Based on 1 October conditions, yields are expected to average 3.44 tons per acre, down 0.05 tons from August but up 0.09 ton from 2009. Harvested area is forecast at 20.7 million acres, unchanged from August but down two per cent from the previous year's acreage.
Other hay production is forecast at 81 million tons, down one per cent from the August forecast but up six per cent from 2009. If realised, this will be the third highest production level on record. Based on 1 October conditions, yields are expected to average 2.08 tons, down 0.01 tons from the August forecast but up 0.10 tons from last year. If realised, this will be a record-high yield, surpassing the 2.06 tons per acre in 2004. Harvested area, at 38.9 million acres, is unchanged from August but up one per cent from the previous year.
International Outlook
Foreign Coarse Grain Production Prospects Increased This Month
World coarse grain production in 2010/11 is projected down 8.9 million tons to 1,088.8 million because of the large US cut. However, foreign coarse grain production changes this month are partly offsetting, up 4.8 million tons to 753.2 million. Foreign corn production is up 6.2 million tons to 498.0 million boosted by increases for Argentina and Sub-Saharan Africa. Foreign barley production prospects continue to deteriorate, down 1.3 million tons to 120.6 million. Global barley production is projected to be the lowest since 1970/71. World oats production is down slightly this month to 21.5 million, the lowest in USDA’s history back to 1960. Generally, poorer returns than those for alternative crops have limited barley and oats area planted, and unfavorable weather across much of Europe limited yields.
Argentina’s corn production is forecast up 4.0 million tons this month to 25.0 million. In recent weeks, excellent rains across western corn areas such as Cordoba have complemented earlier good rains to the east. This has facilitated timely corn planting in contrast to previous years when dryness delayed seeding. Recent increases in corn prices have encouraged seeding, as have relatively ample export quotas for the previous crop. Moreover, many producers are feeling the negative effects of continuous soybeans on yield and soil productivity, and they are attracted to corn to provide a crop rotation. Projected harvested area is up 19 per cent this month to 3.2 million hectares. The forecast yield is nearly unchanged this month but is down six per cent from the previous year’s record.
Corn production in Sub-Saharan Africa is up 2.1 million tons this month to 54.2 million. Rainfall across most of the region has been favourable and crop reports support increases in many countries. The largest increase is for Zambia, up 0.8 million tons to 2.8 million with increased area and very good yields. Malawi and Mozambique are each increased 0.4 million tons, with good yields pushing the increase in Malawi and increased reported area the main factor in Mozambique. There are smaller increases this month for Angola, Rwanda, Madagascar, Congo, Uganda, Somalia, Lesotho, Botswana and Swaziland. These increases overwhelm reductions for Benin, Burkina-Faso and Sierra Leone.
Serbia’s corn prospects are increased 0.3 million tons to 6.8 million due to good reported yields. EU corn production is up 0.25 million tons to 55.00 million as increased prospects for Romania, Bulgaria and France more than offset reduced prospects for Hungary and Spain. Russia’s corn production prospects are cut 0.5 million tons to 3.0 million as harvest reports indicate hot dry temperatures during grain fill reduced yields more than previously anticipated.
EU barley production is forecast down 0.7 million tons this month to 53.6 million. Spain, with barley harvest completed months ago, reported lower area and yields, reducing production 0.4 million tons to 8.3 million. There are smaller reductions this month for Poland, the Czech Republic and Hungary. Russia’s barley production is reduced 0.5 million tons to 8.5 million as harvest reports confirm large yield losses due to drought. Statistics Canada reported slightly reduced area and yield for barley, trimming production prospects 0.25 million tons to 8.25 million. There is also a 0.1 million-ton increase in barley production for Algeria based on reported yields.
Oat production is reduced slightly this month for Canada, the United States and Spain, leaving global production at record-low levels. Foreign sorghum production is up slightly this month due to a 0.2-million-ton increase for Sub-Saharan Africa, but that is more than offset by reduced US prospects, leaving projected global production down 0.8 million tons this month to 63.3 million.
Increased beginning stocks, especially of US corn, are partly offsetting reduced production of world coarse grains in 2010/11. Global coarse grain beginning stocks of 198.8 million tons are the largest in eight years. Foreign coarse grain beginning stocks are up 1.0 million tons this month to 150.6 million. EU coarse grain beginning stocks are up 0.6 million tons to 23.8 million, mostly due to increased corn imports in late 2009/10 and reduced 2009/10 local marketing year barley exports. Iran’s beginning stocks are up 0.5 million tons this month due to strong corn imports at the end of 2009/10. Consumption revisions for 2009/10 for Canada and import revisions for Brazil, Colombia and Venezuela boosted 2010/11 corn beginning stocks 0.2 million tons each. There are smaller increases this month for Lebanon, Cameroon, Senegal, Kenya and Azerbaijan. These more than offset reduced stocks for Paraguay and Argentina, each down 0.3 million tons due to strong 2009/10 corn exports. There are also small reductions for several other countries.
Global Coarse Grain Consumption up, Ending Stocks Reduced
World coarse grain consumption in 2010/11 is forecast up 3.9 million tons this month to 1,124.2 million. Most of the increase is for the United States, with foreign consumption up 1.1 million tons to 820.0 million. With increased production, consumption in Sub-Saharan Africa is increased 0.9 million tons to 99.1 million. Declines in Burkina-Faso and Benin are more than offset by numerous increases in other countries. Increased supplies support increased feed use of 0.3 million tons each in Turkey and Venezuela; 0.2 million tons each in Colombia, Iran, Indonesia, Serbia and South Korea; and smaller amounts for Lebanon, Morocco and Azerbaijan.
EU coarse grain use is down 1.2 million tons this month to 151.9 million mostly due to reduced production and feed use of barley and reduced imports and feed use of corn. Russia’s coarse grain use is reduced 0.8 million tons this month to 21.7 million. Reduced corn and barley production is only partly offset by increased barley imports and despite policies to support meat production, coarse grain feed use is expected to decline more year-to-year than increases in wheat feeding. Canada’s coarse grain use is reduced 0.7 million tons this month to 22.5 million. Feed use is trimmed 0.2 million tons and corn food and industrial use is cut 0.4 million tons to 4.3 million. Coarse grain consumption for Argentina is lowered 0.5 million tons this month with lower expected corn feeding. There is also a small reduction in forecast use for Uruguay caused by increased corn export prospects.
World coarse grain ending stocks projected for 2010/11 are down this month due to the large drop in US corn stocks. Foreign coarse grain stocks are forecast up 2.1 million tons to 136.9 million, with increased corn stocks more than offsetting a small decline for barley. World corn ending stocks for 2010/11, projected at 132.4 million tons, are larger than in six of the previous 10 years.
Corn ending stocks in Sub-Saharan Africa are projected up 0.8 million tons this month to 9.8 million, boosted by increased production in many countries. Increased production is also supporting higher corn stocks prospects in Argentina, up 0.7 million tons, and in the EU, up 0.6 million. Strong imports in 2009/10 and increased beginning stocks for 2010/11 are supporting corn ending stocks prospects for Iran, up 0.3 million tons; and for Brazil, Canada and Colombia, each up 0.2 million. Serbia’s corn stocks are up slightly due to increased production. Increased corn export prospects are trimming corn ending stock prospects in Paraguay, Mexico and Uruguay; while strong demand is expected to reduce corn stocks in Venezuela.
US Corn Export Prospects Cut Due to Reduced Supplies
US corn export prospects for 20010/11 (October-September) are reduced 2.0 million tons to 51.5 million (the local marketing year is cut 100 million bushels to 2.0 billion bushels). This is still up three per cent from the 50.0 million estimated for 2009/10. As of 30 September 2010, outstanding export sales reached 13.8 million tons, up 23 per cent from a year earlier. However, increasing US prices and increased competition, especially from Argentina, is expected to limit future US corn sales.
Increased corn exports are expected from Argentina, up 1.5 million tons to 15.0 million based on sharply increased production prospects. Paraguay’s export prospects are up 0.3 million tons this month as strong export demand will limit their stocks’ increase. Zambia’s corn exports are up 0.2 million tons. A large crop is expected to encourage exports to nearby markets. Mexico’s 2010/11 corn exports are boosted 0.2 million tons based on the strong exports for 2009/10. Uruguay’s corn export prospects are nudged up for the same reason.
World corn trade for 2010/11 is increased slightly this month to 93.6 million tons. Turkey’s corn imports are up 0.3 million tons to 0.7 million to support poultry production. Meat production supports corn import increases of 0.2 million each for Colombia, Indonesia and South Korea. Lebanon’s corn import prospects are increased slightly. Mostly offsetting these corn import increases is a reduction of 0.5 million tons for the EU, where meat production is expected to decline in 2011; and a reduction of 0.4 million tons for Canada, with less industrial use expected.
Global barley trade is up slightly this month to 16.2 million tons with a 0.2-million ton increase in imports by Russia and exports by the EU. Despite tight grain supplies, the EU is expected to respond to strong foreign demand and boost exports. World sorghum trade for 2010/11 is unchanged this month. US sorghum exports are unchanged this month at 4.0 million tons as foreign customers are expected to bid sorghum away from the domestic market.
Further Reading
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October 2010
