Feed Outlook: Record Global Coarse Grains Stocks Inch Higher
Projected U.S. 2015/16 corn exports are lowered 50 million bushels to 1,650 million this month due to increased competition from South America. Argentina’s and Brazil’s corn production and exports are raised, limiting U.S. exports despite record global corn trade expected in 2015/16. World 2015/16 coarse grain production is forecast up more than consumption, raising coarse grain ending stocks this month. Global stocks are expected to be at their highest level since 1987/88.
U.S. 2015/16 corn imports are raised 10 million bushels based on the recent pace, and projected use of corn for ethanol production is increased 25 million bushels due to prospects for gasoline use. Corn ending stocks are projected up 35 million bushels this month to 1,837 million, the largest in 10 years. The forecast season-average price midpoint is unchanged at $3.60 per bushel.
Feed and Residual Use Unchanged
Projected U.S. 2015/16 feed and residual use for the four feed grains (corn, sorghum, barley, and oats) and wheat are unchanged this month. On a September- August marketing year basis, total feed and residual use is projected at 145.2 million metric tons, 1.74 million tons higher than in 2014/15. First quarter (September-November) feed and residual, at 57.24 million tons, is forecast 0.5 million tons below first quarter 2014/15.
Grain Consuming Animal Units Projected Higher
Higher projected cattle on feed, dairy cattle and heifers, and broiler inventories raise grain consuming animal units (GCAU) this month, resulting in 2015/16 projected GCAUs of 93.73 million units, compared with 93.52 million last month and 1.16 million units higher than the revised 2014/15 estimate of 92.58 million. Feed and residual per GCAU is projected at 1.55 tons per GCAU this month, unchanged from last month and 2014/15.
Minor Changes for Supply Side of Feed Grains Balance Sheets
Projected U.S. supplies of corn, sorghum, barley, and oats are mostly unchanged this month. Corn imports are projected 10 million bushels higher at 50 million due to shipments to mid-Atlantic ports. Relatively strong corn prices in the Eastern Corn Belt, reflecting yield losses from excessive June and early July rainfall last summer, and low ocean freight rates have made Brazilian corn an economical alternative for Southeastern livestock and poultry producers. Barley imports are also projected slightly higher, up 1 million bushels on the latest trade data.
Corn for Ethanol Projected Up 25 Million Bushels
Corn used to produce ethanol in 2015/16 is projected at a record 5,225 million bushels, up 25 million from last month and 16 million greater than in 2014/15. Higher projections for gasoline use from the U.S. Energy Information Administration (EIA) compared with those available from USDA’s January World Agricultural Supply and Demand Estimates report indicate an increase in the projected corn grind for ethanol.
In addition, the February 1 Grain Crushings and Co-Products Production report issued by USDA’s National Agricultural Statistics Service (NASS) indicated a 9-million-bushel monthly increase in corn use for ethanol in December, and weekly EIA ethanol production data show a continuation of strong ethanol production through January. All these projections are made despite spot margins for ethanol producers that have been mostly in negative territory since mid-December.
Corn Exports Reduced by 50 Million Bushels
Increased supplies of corn in South America, leading to larger exports by Brazil and Argentina, boost competition for U.S. producers and are the major factor behind the 50-million-bushel reduction in forecast exports this month. Total 2015/16 exports are forecast at 1,650 million bushels, 214 million below last year’s export volume of 1,864 million.
Corn Ending Stocks Raised for 2015/16
As a result of higher supply and the net effect of projected changes in food, seed, and industrial use and exports, projected U.S. corn ending stocks for 2015/16 are raised 35 million bushels this month to 1,837 million, 106 million higher than in 2014/15.
The range for the average price received by farmers for 2015/16 is narrowed 5 cents on each end to $3.35 to $3.85 per bushel. This gives a midpoint price of $3.60 per bushel, unchanged from last month’s midpoint.
No Changes in the 2015/16 Sorghum Balance Sheet
There were no changes in projected sorghum supply and use this month. The season-average range for prices received by farmers was narrowed 5 cents on each end, leaving the midpoint projection at $3.30 per bushel. At 91.7 percent of the corn price, sorghum is expected to be at its lowest level relative to corn in 6 years.
Barley Supply Edges up on Higher Imports
Barley imports for 2015/16 are raised 1.0 million bushels this month. The projected increase is based on year-to-date import pace. Census data show malt barley imports from Canada in December were twice the previous month’s level. Projected at 18 million bushels, 2015/16 imports are down 5.6 million from 2014/15.
Boosted by imports, projected 2015/16 barley supplies are raised to 310.9 million, 23.5 million bushels higher than the 2014/15 estimate. With no changes in use categories, ending stocks are raised 1.0 million bushels to 95.9 million, 17.3 million over the 2014/15 estimate.
The season-average 2015/16 midpoint price is raised 25 cents this month to $5.50 per bushel. The projected range is raised 30 cents on the low end and 20 cents on the high end to $5.30 to $5.70 per bushel. The price change is based on continued strong prices for malt barley as reported by NASS.
There are no changes in the projected oats balance sheet or price forecast this month.
On November 29, 2016, the Federal Reserve Bank of Chicago will hold a conference to examine the agricultural downturn in the Midwest and discuss future directions for farming. With prices