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    Feed Grain Outlook: U.S. Corn Price Projected Higher on Increased Export Prospects

    ©Debra L Ferguson Stock Photography

    The 2016/17 corn price is projected up 15 cents per bushel from last month due to tighter supplies and stronger export prospects. Carryin is projected down 95 million bushels, and exports are projected up 50 million, pushing the midpoint price projection to $3.50 per bushel.

    Export prospects are also improved for 2015/16, with a 100-million-bushel increase tightening up ending stocks and resulting in a 10-cent-per-bushel increase in the projected midpoint price to $3.70 per bushel.

    Domestic Outlook

    Higher Projected Wheat Feeding Boosts Feed and Residual Use for Four Feed Grains Plus Wheat

    The 2015/16 feed and residual use for the four feed grains plus wheat on a September-August year is projected at 146.0 million tons, down from 142.2 million estimated last month. Wheat feed and residual is raised 4.1 million tons as higher corn prices improve the competitiveness of feed wheat.

    For 2016/17, feed and residual use of feed grains and wheat is decreased this month from 151.9 million tons to 149.0 million, also on reduced projected wheat feeding. These month-to-month changes reflect adjustments to preliminary quarterly wheat feed and residual disappearance projections for the 2016/17 June-August wheat marketing year. USDA will release its first 2016/17 by-class wheat use projections in its July 12 World Agricultural Supply and Demand Estimates (WASDE).

    Forecast GCAUs Lowered for 2015/16, Raised for 2016/17

    Total grain consuming animal units (GCAUs) for 2015/16 are projected 0.439 million units lower than last month at 93.23 million due to lower estimated broiler and turkey inventories and lower projected red meat and poultry production. GCAUs per ton of feed and residual are projected at 1.57 tons per GCAU in 2015/16, down slightly from last month’s 1.52 per GCAU.

    GCAUs for 2016/17 are raised 0.14 million units from last month’s forecast to 95.35 million. Changes within animal unit categories followed the same pattern as those in 2015/16. GCAUs per ton of feed and residual are lowered to 1.56 tons per GCAU from last month’s 1.58 tons.

    Trade Moves Tighten Corn 2015/16 Balance Sheet

    This month’s corn balance sheet changes are due solely to trade. On the supply side, projected 2015/16 imports are raised 5 million bushels based on pace and recent shipments from Canada. In April, Canada accounted for 70 percent of all imported corn. The 5-million-bushel increase boosts marketing year imports to 60 million bushels, nearly double the 32 million in 2014/15.

    On the disappearance side, projected 2015/16 corn exports are raised 100 million bushels to 1,825 million as export commitments have pulled ahead of last year’s levels for the first time this marketing year. In addition, a decline in projected production in Brazil and harvest delays in Argentina boost the competitive position of U.S. corn. The increase puts the 2015/16 projection 39 million bushels below the 2014/15 level of 1,864 million bushels.

    The net effects of the trade adjustments this month are reflected in a 95-million bushel decrease in projected ending stocks to 1,708 million.

    Grain Commentary


    Lower Carryin Reduces 2016/17 Corn Supplies

    Projected 2016/17 U.S. corn acreage, yield, and production are unchanged this month as crop conditions continue to be very favorable. Corn emergence reached 90 percent on June 5 according to USDA’s National Agricultural Statistics Service (NASS) Crop Progress report, which set emergence 4 percent ahead of the 5-year average.

    Crop condition is nearly identical to that at the same time last year, with 75 percent in the good-to-excellent range and 21 percent in the fair range. Topsoil and subsoil moisture conditions are in surplus for most major corn-producing States.

    U.S. corn supplies for 2016/17 are forecast down 95 million bushels to 16,178 million on the lower carryin.

    Projected Exports Raised for 2016/17

    Projected U.S. corn exports for 2016/17 are raised 50 million bushels to 1,950 million for the season’s second forecast. A favorable export environment is largely due to continuing crop production declines in Brazil and generally tighter global supplies, which provide receptive markets for U.S. corn shipments. If the projected exports are realized, they will be the highest since 2009.

    NASS June Surveys Will Impact Next Month’s Report

    During the first 2 weeks of June, NASS will gather information about this season’s crop area and supplies of grain in storage as of June 1. The results will be available in the June 30 Acreage and Grain Stocks reports and incorporated in the July 12 WASDE report.

    Corn Price Projected Higher for 2015/16 and 2016/17

    Tighter stocks and favorable trends in global trade raise the 2015/16 corn price outlook by 10 cents to $3.60 to $3.80 per bushel. The projected midpoint of $3.70 per bushel is identical to the 2014/15 estimate.

    The projected range for the 2016/17 corn price received by farmers is $3.20 to $3.80 per bushel, up 15 cents on both the high and low ends of the range from last month’s projection, which was the first for the year. The resulting midpoint price of $3.50 per bushel compares with last month’s midpoint of $3.35 per bushel.

    Sorghum Use Projected up This Month

    The supply side of the 2015/16 sorghum balance sheet is unchanged this month. However, the impacts of the large crop this year are being felt on the demand side. Use of sorghum for ethanol is raised sharply based on data from NASS’s June 1 Grains Crushings and Co-Products Production report. Based on higher indicated sorghum grind in March and April, projected sorghum for ethanol is raised 10 million bushels to 135 million.

    Projected feed and residual use for sorghum is reduced 15 million bushels from last month’s forecast as other uses bid the grain away from the livestock sector, with abundant supplies of corn available as a feed alternative.

    In addition, U.S. export prospects for sorghum have strengthened as indicated by U.S. Census Bureau trade data through April. Shipments to China are continuing, and U.S. exports are being augmented by food-aid shipments to Sub-Saharan Africa. Sorghum exports for 2015/16 are projected at 330 million bushels, up 15 million from last month and just 23 million short of last year’s record shipments.

    The net result is a 10-million-bushel increase in projected 2015/16 sorghum use to 565 million bushels. Projected carryout is lowered 10 million bushels month-to-month to 55 million, which would be 37 million higher than last year.

    For 2016/17, the lower carryin forecast dampens projected sorghum supplies 10 million bushels to 463 million, 157 million below those for 2015/16.

    Projected sorghum use 2016/17 is unchanged and ending stocks are reduced by 10 million bushels to 43 million.

    The high and low ends of the projected 2015/16 price range for sorghum are each raised 5 cents per bushel, partly reflecting the higher level of prices expected for corn. Farm prices for sorghum continued to slip relative to those for corn in April, the most recent reporting month. The 2015/16 sorghum farm price range is projected at $3.20 to $3.40 per bushel, with a midpoint of $3.30 per bushel.

    For 2016/17, the high and low ends of the price range are each raised 10 cents for a higher range of $2.95 and $3.55 per bushel and a midpoint price projection of $3.25 per bushel, in keeping with the historical relationship between corn and sorghum prices.

    Barley

    A 2-million-bushel decrease in projected U.S. exports to 11.0 million bushels based on U.S. Census Bureau trade data through April is the only change in the 2015/16 balance sheet for barley. The decline results in total use of 214 million bushels and carryout of 99 million. The reduction is carried through to 2016/17 projected beginning stocks and is the only change this month for the out year. As a result, ending stocks for 2016/17 are also raised 2 million bushels.

    There is no price change for 2015/16 projections. The season-average price remains $5.50 per bushel. For 2016/17, the price range is raised 10 cents per bushel on both the high and low ends of the range giving a midpoint price of $4.80 per bushel. The price increase reflects slightly higher expected prices for malt barley and an increase in expected prices for feed barley driven by the higher projected corn price.

    Oats

    The projected 2015/16 oats balance sheet is revised slightly with changes for trade. Oats imports are lowered 2 million bushels to 88 million, and exports are reduced 300,000 bushels to just under 2 million, both based on U.S. Census Bureau trade data through April. As a result, ending stocks are projected 2 million bushels lower at 58 million. This 2-million-bushel reduction carries through to projected 2016/17 ending stocks as there are no other changes in the 2016/17 balance sheet this month.

    The 2016/17 oats price projection is raised 10 cents on both the high and low ends of the range to $1.80 and $2.20 per bushel, with a midpoint projection of $2.00 per bushel. As in the other feed grains, the increase is due to this month’s higher outlook for corn prices.

    Full report.




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