Feed Grain Outlook: U.S. Corn Production, Exports Down This Month

Corn production for 2015/16 is estimated at 13.6 billion bushels, down 52 million from last month’s forecast. Partly offsetting are higher projected imports, raised 10 million bushels. Corn use for sweeteners is projected down 10 million bushels and export prospects are cut 50 million. With use reduced more than supply, projected ending stocks are increased modestly and the season-average farm price is down 5 cents to $3.60 per bushel at the midpoint of the projected range.

U.S. corn exports face increased competition from increased exports from Argentina, Brazil, Ukraine, and even Mexico. South Africa’s forecast corn production is reduced sharply by early season drought. While global corn stocks are projected lower this month, they remain record large, with more than half located in China.

Domestic Outlook

Feed Grain Production Lowered

The January 12 Crop Production 2015 Summary from USDA’s National Agricultural Statistics Service (NASS) pegged feed grain production for 2015/16 1.25 million metric tons lower than the previous forecast at 366.6 million tons. Lower estimated corn production is only partly offset by a small increase in sorghum production.

With small but offsetting increases to imports this month, total feed grain supplies decline nearly 1 million tons. At 416.7 million tons, 2015/16 supplies remain record high and up 0.5 percent from 2014/15.

Feed grain disappearance projections for 2015/16 include a 0.25-million-ton reduction in food, seed, and industrial (FSI) use to 173.9 million tons and a 1.2- million-ton reduction in projected exports to 51.7 million tons. This month’s projection of total disappearance is lowered 1.5 million tons to 366.3 million, down 1.3 metric tons from the previous year.

Feed and Residual Use Projected Slightly Higher for 2015/16

On a September-August basis, 2015/16 U.S. feed and residual use for the four feed grains plus wheat is projected to total 145.2 million tons, 1.2 million less than last month’s forecast and 1.78.million above the adjusted total of 143.4 million for 2014/15. Corn is estimated to account for 92 percent of feed and residual use in 2015/16, compared with 94 percent in 2014/15, as increases in expected sorghum, wheat, and barley feed and residual use on the September-August year reduce corn’s share of the total slightly.

The projected index of grain-consuming animal units (GCAU) for 2015/16 is 93.42 million units, down from 94.60 in November but higher than the adjusted 92.60 million units in 2014/15. Feed and residual per GCAU is estimated at 1.55 million tons, nearly the same as in 2014/15. In the index components, GCAUs are lowered this month for poultry and cattle on feed and unchanged for dairy.

Corn Yield Forecast Lowered

The NASS Crop Production 2015 Summary indicates a yield reduction of 0.9 bushels per acre to 168.4 bushels for the 2015/16 corn crop. NASS also forecast harvested acreage 85,000 higher for production of 13,601 million bushels. Of the major producing States, the largest yield increases were in Minnesota, Iowa, Kentucky, and South Dakota. Yields declined in Missouri, Indiana, Illinois, and Ohio.

Reduced production, combined with a 10-million-bushel increase in projected imports and a fractional reduction in beginning stocks, places corn supplies for 2015/16 at 15,372 million bushels, 42 million below last month’s forecast. Projected supplies are 107 million bushels below the 2014/15 estimate of 15,479 million.

Total Use Expected Down

Total projected use of 13,570 million bushels is 60 million less than last month. A 50-million-bushel reduction in exports and a 10-million-bushel reduction in corn used for high fructose corn syrup (HFCS) result in the drop in total use. The reduction in corn for HFCS is based on the pace of use this marketing year. HFCS exports are reduced on increased global competition. U.S. corn exports also face stiff competition, with slow export sales and shipments in the first months of 2015/16.

The December 1 corn stocks estimate from the NASS January 12 Grain Stocks report confirmed expected feed and residual disappearance of corn during the September-December quarter. Projected feed and residual use for the 2015/16 marketing year is unchanged at 5,300 million bushels.

Corn ending stocks for 2015/16 are projected up 17 million bushels to 1,802 million, the highest since 2005/06.

Corn Price Outlook Lowered to $3.60 per Bushel

The projected range for the 2015/16 season-average corn price received by producers is lowered 5 cents on both ends of the range to $3.30 and $3.90 per bushel, respectively. This puts the midpoint corn farm price at $3.60 per bushel. Corn prices for prompt and deferred delivery have trended down over the last month. Lackluster corn demand is offsetting slightly tighter supplies, leaving limited support for price increases.

Sorghum Supplies up on Higher Yield and Imports

Although estimated sorghum carryin for 2015/16 declined incrementally, an increase in harvested acreage offsets a 1.7-bushel-per-acre decline in yield, supporting a 3-million-bushel increase in estimated production to 597 million bushels. Total supplies of 620 million bushels are 6 million bushels above last month’s projection.

Sorghum Use Unchanged From Last Month; Carryout Higher

There are no changes in projected 2015/16 sorghum disappearance this month. The projected supply increase boosts ending stocks to 65 million bushels, the highest since 2005/06. Estimated ending stocks for 2014/15, at 18 million bushels, were lowered just 5,000 bushels from last month based on the September 1 stocks revision in the Grain Stocks report.

The projected sorghum farm price for 2015/16 is lowered 15 cents on the low end and 25 cents on the high end for a range of $3.05 to $3.55 per bushel. The midpoint is $3.30 per bushel, compared with $3.50 per bushel last month. The price of sorghum continues to fall relative to corn, especially in interior markets.

Little Change in Barley Balance Sheet

The barley balance sheet is unchanged this month with the exception of a 2.0-million-bushel increase in projected 2015/16 exports. The higher export projection, combined with an incremental increase in 2015/16 beginning stocks from the Grain Stocks report, results in a 2-million-bushel decrease in projected ending stocks. At 95 million bushels, ending stocks for 2015/16 are 16 million higher than the slightly revised 2014/15 carryout.

The projected barley farm price range is raised 10 cents on the low end of the range and unchanged on the high end for a range of $5.00 to $5.50 per bushel, with a midpoint of $5.25 per bushel. Contract prices for malting barley are supportive.

Oats Outlook Steady

With the exception of a 5-cent-per-bushel narrowing of the projected farm price range to $2.10 to $2.30 per bushel, there are no changes in the 2015/16 oats balance sheet. The midpoint of the price range remains $2.20 per bushel. The oats crop is mostly marketed, so no change is made to the midpoint price.

Hay Production up From Last Year but Lower Than Last Projection

NASS’s Crop Production 2015 Summary provides the first updates for U.S. hay production since the October 2015 Crop Production report. All hay production for 2015 is down 4 percent from 2014 and estimated at 134.4 million tons. The revised 2015 figure is down 6 percent relative to the October forecast and reflects downward revisions to both harvested area and yield. The 2015 average all-hay yield is estimated at 2.47 tons per acre, a 0.02-ton-per-acre increase from 2014. Higher yields in the Central Plains account for much of the year-to-year increase in productivity.

The January 12 Crop Production report indicates that hay stocks on farms totaled 95.0 million tons on December 1, 2015, up 3 percent from December 1, 2014. Good weather in centrally located States supported increased production and boosted local hay stocks. Nationally, disappearance from May 1, 2015, to December 1, 2015, totaled 74.7 million tons, an 11-percent increase over the 2014 estimate.

NASS’s December 30 Agricultural Prices report indicated continuing seasonal declines in the all-hay price driven by further declines in prices for alfalfa hay through November. Prices for other hay have actually risen from seasonal lows in August. The November all-hay price was $142 per ton; alfalfa hay was $150 per ton, and other hay was $127 per ton.

These prices compare to November 2014 per ton estimates of $162, $182, and $127, respectively. Of the larger producing States, the largest yield gains were found in Minnesota, Iowa, Kentucky, and South Dakota. The largest declines were found in Missouri, Indiana, Illinois, and Ohio.

Corn Silage Production Slips for 2015/16

The January 12 NASS Crop Production 2015 Summary reports corn silage production for 2015/16 down by 1.2 million tons from last year’s crop at 126.9 million tons. Area harvested for silage dropped by 150,000 acres to 6.2 million. Yields were 0.3 tons per acre higher, partially offsetting the lower acreage. Silage production per roughage-consuming animal units (RCAU) is 1.81 million per ton, down from 1.89 million per ton in 2014/15.

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