Feed Grain Outlook: Record Projected Corn Yield and Production

    Excellent growing conditions have resulted in a 613-million bushel increase in the 2016/17 corn crop. The August Crop Production report from USDA’s National Agricultural Statistics Service forecast the national corn yield at 175.1 bushels per acre, 7.1 bushels above last month’s weather-adjusted trend projection and 4.1 bushels higher than the previous record of 171.0 bushels per acre. With the harvested area forecast unchanged at 86.6 million acres, the resulting production is 15.2 billion bushels, 938 million above the previous high in 2014/15.

    Total use is forecast 300 million bushels higher on the lower price to 14,500 million bushels. If realized, this would be record-high use and 752 million bushels above the prior record in 2014/15. Feed and residual use is projected up 175 million bushels to 5,675 million and exports are projected up 125 million bushels to 2,175 million. The 2016/17 season-average farm price for corn is projected at $3.15 per bushel, 25 cents below last month and the lowest since 2006/07.

    Domestic Outlook

    Feed Grain Supply Advances to Record on Higher Yields

    At 175.1 bushels per acre, the first survey-based yield forecast provided by the August 12 USDA National Agricultural Statistics Service (NASS) Crop Production report for the 2016/17 corn crop is up 7.1 bushels per acre over the trend-based projection in USDA’s July 12 World Agricultural Supply and Demand Estimates (WASDE). The increase reflects excellent growing conditions in the Corn Belt, with yield increases in all major producing States but Minnesota and South Dakota.

    If realized, production from the 86.6 million acres expected to be harvested this season will reach a record 15,153 million bushels, exceeding last year’s estimated crop of 13,601 million bushels by 1,552 million.

    The Illinois yield led the major producing States at 200 bushels per acre, followed by Iowa with 197 bushels. Yields for Indiana and Nebraska were each forecast at 187 bushels per acre. Of the major corn-producing States, Indiana and Illinois had the largest yield gains compared with last season. As of August 7, the NASS Crop Progress report indicates 74 percent of the crop was in the good-to-excellent range, compared with 70 percent at this point last year and 76 percent the previous week.

    Feed Grain Supplies Advance

    The boost in corn production, accompanied by smaller increases in sorghum, barley, and oats production, advances projected feed grain supplies for 2016/17 to 452.9 million metric tons, 17.3 million tons over last month’s projection. Feed grain supplies are projected 35.7 million tons above the 2015/16 record level.

    Feed and Residual Use for the Four Feed Grains and Wheat Projected up Sharply for 2016/17

    Projected 2016/17 feed and residual use for the four feed grains and wheat on a September-August marketing year is raised to 155.6 million metric tons from last month’s 151.7 million. The increase is mostly the result of a large jump in corn feed and residual use, reflecting the large crop and lower expected price.

    Offsetting some of the increase for corn is a decline in projected sorghum feed and residual use. For the September-October marketing year, the 2015/16 forecast was raised 1.1 million metric tons to 144.9 million tons with this months’ increase in projected 2016/17 (June-July) wheat feed and residual use.

    Grain consuming animal units (GCAUs) for 2016/17 are projected at 94.93 million units this month, down 0.16 million from last month’s projection of 95.09 million. Lower indices for cattle on feed, broilers, and turkeys are behind the month-tomonth decline. Feed and residual use per GCAU is projected at 1.64 tons per GCAU, compared with 1.60 tons last month. For 2015/16, GCAUs are unchanged from last month’s 93.80 million units.

    Corn Supplies Surge

    Higher production for 2016/17 accounts for most of this month’s increase in projected new-crop corn supplies; however, supplies are also augmented by a small increase in carryin and higher expected imports. For 2015/16, an increase in imports and offsetting changes in use categories boost ending stocks 5 million bushels.

    Projected imports are raised for both years reflecting higher reported imports of organic corn in recent months. At 16,909 million bushels, corn supplies for 2016/17 are 628 million higher than last month’s projection and 1,512 million above those for 2015/16.

    Corn Use Projected Higher With Lower Price Outlook

    With lower projected prices, some use categories are projected higher. Corn feed and residual use for 2016/17 is projected 175 million bushels higher at 5,675 million bushels this month. Exports are raised 125 million bushels to 2,175 million, the highest since 2007/08 (2,437 million bushels). Lower prices have made U.S. corn more competitive in the world market and while global supplies are high, the United States is expected to remain very competitive in world corn trade.

    Corn food, seed, and industrial (FSI) use is unchanged for 2016/17, with corn used for ethanol projected at 5,275 million bushels, 75 million over this month’s lowered 2015/16 forecast of 5,200 million.

    Corn ending stocks for 2016/17 are projected 328 million bushels higher than last month and 703 million higher than for 2015/16. At 2,409 million bushels, projected stocks are the highest since 1987/88 when corn held in nonrecourse loan and the Farmer Owned Reserve programs boosted carryout to 4,259 million bushels.

    Corn Balance Sheet Changes for 2015/16

    The only change to the 2015/16 corn balance sheet is a 5-million-bushel increase in imports based mainly on increased pace of organic corn and continued shipments of feed corn, mostly to the U.S. Southeast feed market from Brazil. Shipments from South America avoid higher freight charges for rail shipments and ocean shipping between domestic ports, which require U.S. flagged vessels at higher freight rates.

    These shipments, however, are expected to slow in the coming months with rebounds in corn production in the eastern Corn Belt and tightening supplies of corn in Brazil. U.S. corn supplies for 2015/16 are expected at 15,397 million bushels.

    Corn for ethanol production is lowered 25 million bushels this month based on the latest data from the NASS Grain Crushings and Co-Products Production report. Total FSI is estimated at 6,567 million bushels. There are no revisions in other FSI use categories.

    Exports for 2015/16 are raised 25 million bushels as U.S. corn gains competitiveness as supplies remain tight in Brazil following strong exports earlier in the year and a weather-reduced second-season corn crop. Total disappearance for 2015/16 is projected at 13,692 million bushels, resulting in ending stocks of 1,706 million, up 5 million this month.

    Census Trade Revisions This Month

    Small back-year Census trade revisions are made for 2013/14 and 2014/15 corn imports and exports. For 2013/14, imports and exports are now estimated at 35.8 million bushels and 1,920.8 million, respectively. Revisions for 2014/15 put corn imports and exports, respectively, at 31.6 million bushels and 1,866.9 million. Feed and residual use estimates for both years are adjusted to reflect the net change in trade volumes.

    Corn Price Prospects Slump on Record 2016 Yield Forecast

    The projected 2016/17 U.S. season-average farm price for corn is lowered 25 cents at both ends of the range to $2.85 to $3.45 per bushel. At the midpoint of $3.15 per bushel, this would be the lowest since the 2006/07 marketing year when corn averaged $3.04 per bushel. The stocks-to-use ratio is projected at 16.6 percent, up from 12.5 percent expected in 2015/16.

    The price range for the 2015/16 crop is lowered by 5 cents on the low and high end of the range to $3.55 to $3.65 per bushel for a midpoint projection of $3.60 per bushel.

    Sorghum Yields Also Bumped up

    The first survey-based yield forecast for 2016/17 puts the average sorghum yield 8.4 bushels per acre higher than the July projection. At 73.5 bushels per acre, the current yield forecast is 2.5 bushels below last year’s record high of 76.0 bushels per acre. Projected yields in Kansas are 4 bushels per acre below last year while Texas recovered from last year’s drought to gain 4 bushels per acre, reaching 65 bushels per acre.

    The higher yield forecast boosts production by 55 million bushels from last month’s projection but is still 122 million bushels behind last year’s crop. Combined with a 10-million-bushel decrease in carryin gives a supply of 511 million bushels, 45 million bushels over last month’s forecast but 109 million short of 2015/16.

    Sorghum Use Projected Higher

    Sorghum use for ethanol in 2016/17 is forecast 20 bushels higher this month at 118 million. A 30-million-bushel increase in exports puts this month’s projection at 250 million bushels. Although purchases by China are still substantial, Mexico has returned as a major buyer. Overall, shipments are expected down from 2015/16 when heavy early-season buying by China supported near-record exports.

    Projected sorghum feed and residual use for 2016/17 is lowered 10 million bushels, reflecting stronger expected use for ethanol and exports. Total disappearance is projected at 460 million bushels, up 40 million from last month’s projection but down from 585 million bushels forecast for 2015/16, mostly due to lower expected exports.

    At 51 million bushels, 2016/17 sorghum ending stocks are projected 5 million over last month’s forecast and 16 million greater than the 2015/16 forecast. Stocks would be the largest since 2008/09 (55 million).

    There are no supply changes this month for the 2015/16 marketing year, but revisions are made to expected use. The NASS Grain Crushings and Co-Products Production report indicates a higher rate of sorghum use for ethanol, boosting expected use 5 million bushels to 138 million bushels with total FSI use now projected at 140 million.

    Feed and residual use is lowered 10 million bushels as other grains increase in competiveness. Exports are raised 15 million bushels to 345 million as the pace of shipments continues to run ahead of expectations supported by continued demand from China. Sorghum ending stocks for 2015/16 are projected at 35 million bushels, down 10 million this month.

    Minor back-year Census sorghum trade revisions are made for 2013/14 and 2014/15 exports. For 2013/14, exports are now estimated at 211 million bushels and for 2014/15, exports are 352 million. Feed and residual use estimates for both years are adjusted to reflect the net change in trade volumes.

    With the significant increase in both corn and sorghum production, the 2016/17 sorghum season-average price is lowered this month. At the midpoint, the projected sorghum farm price is $3.00 per bushel, a 15-cent decrease from the July estimate and 30 cents lower than the expected 2015/16 season-average farm price.

    The 2016/17 sorghum price range is lowered 15 cents on both ends to $2.70 to $3.30 per bushel. The 2015/16 average sorghum price received by producers is unchanged with a low of $3.25 and a high of $3.35 per bushel for a midpoint estimate of $3.30 per bushel. The 2015/16 season-average price of sorghum is projected at approximately 92 percent of the comparable corn price.

    Improved Yields Push Barley Production Higher

    The 2016/17 barley crop is forecast up 6.9 million bushels from last month on a yield increase of 2.7 bushels per acre, which boosts crop prospects to a projected 189.7 million bushels from last month’s forecast. Seventy-two percent of the crop was rated good to excellent as of August 7, compared with 66 percent at the same time last year. With no changes in projected disappearance, stocks are raised 6.9 million bushels to 94.1 million. This would be 8.3 million bushels below the estimate for 2015/16.

    Very small back-year Census barley trade revisions are noted for 2014/15 and 2015/16 imports and exports. For 2014/15, imports and exports are now estimated at 23.6 million bushels and 14.3 million, respectively. Updated imports and exports for 2015/16 are 18.5 million bushels and 10.8 million, respectively. Feed and residual use estimates for both years are adjusted to reflect the net change in trade volumes.

    With little barley being fed, the price of barley is largely determined by contracts for malting barley. The projected low and high ends of the 2016/17 price range are raised 25 cents each this month to $4.55 and $5.35 per bushel. The midpoint all barley price is projected at $4.95 per bushel.

    Oats Yield Forecast Shows Moderate Increase

    Alongside other small grains, U.S. oats have benefited from favorable weather conditions that nudged yield forecasts upward. This month, the 2016/17 oats yield forecast is increased 0.2 bushels per acre to 66.0 bushels.

    With harvested area anticipated at 1.2 million acres, U.S. oats production is projected to reach 76.9 million bushels, 245,000 over last month’s forecast but 12.7 million below last year’s production of 89.5 million. As a result, the 2016/17 forecast total oats supply increases this month by 245,000 bushels to 228.7 million bushels, putting it virtually equal to the 2015/16 total supply.

    Slight back-year Census revisions to oats imports are noted for 2013/14 and 2014/15, now estimated at 108.9 and 85.6 million bushels, respectively. Backyear revisions to exports for the same years result in new estimates of 1.843 million bushels for 2014/15 and 1.972 million for 2015/16. Feed and residual for these years are revised with offsetting changes.

    The midpoint of the 2016/17 oats season-average farm price is projected at $1.80 per bushel with a range of $1.60 to $2.00 per bushel. The projected range is reduced 15 cents per bushel on the low and high end from July. The current oats price projection is 32 cents lower at the midpoint than the 2015/16 season-average price and would be the lowest oats price since 2005/06, when prices were $1.63 per bushel.

    Alfalfa, Other Hay Yields, and Production up Slightly

    Forecast 2016 U.S. production of alfalfa and alfalfa mixtures, as well as other hay, are up a combined 5 percent relative to the 2015 estimates. Based on August 1 conditions, yields for the two categories of hay are expected to average 3.40 and 2.07 tons per acre, respectively.

    Harvested alfalfa and alfalfa mixture hay area is up 2 percent from 2015 and is forecast at 18.1 million acres; other hay harvested area is projected at 38.1 million acres, up 4 percent from a year ago. In aggregate, total hay production is forecast at 140.5 million tons and compares to the 134.4 million tons harvested in 2015.

    The current production forecasts will be updated in the NASS October 12 Crop Production report. Nationwide, pasture and range conditions for the week ending August 7 indicate that 51 percent of acres were rated as “good” to “excellent,” an increase of 4 percent over the previous year.

    The June all-hay price, at $134 per ton, was markedly lower than the $162 per ton growers received in June 2015. The year-to-year decline in the all-hay monthly price is primarily driven by sizable reductions in alfalfa hay prices. In June 2015, the average price of alfalfa was $178 per ton; in 2016, the price was 20 percent lower at $142 per ton.

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