Feed Outlook: Corn Crop Grows on Yield Increase

Corn harvest. Photo: Kostic Dusan, 123rf

The 2019/20 U.S. corn crop projection is raised 26 million bushels this month as a 3.5-bushel-per-acre increase in yield to 169.5 bushels virtually offsets a 1.6-million-acre decline in harvested area to 82.0 million. If realized, this would produce a crop of 13,901 million bushels.

Use is projected lower on a 25-million-bushel decline in corn for ethanol and a 100-million-bushel decline in exports. Resulting ending stocks are raised, resulting in a price forecast $0.10 per bushel lower at $3.60.

Domestic Outlook

U.S. Feed Grain Use Down

U.S. feed grain supplies are projected up 2.3 million metric tons to 434.0 million on greater production and beginning stocks. The current level is 1 percent below that of 2018/19.

U.S. feed grain disappearance for 2019/20 is projected at 374.7 million metric tons, 2.3 million below last month’s projection and slightly below the 2018/19 revised estimate of 376.1 million.

Feed and residual use, projected at 137.6 million metric tons, is 0.9 million above last month’s projection but 1.8 million below the 2018/19 estimate of 139.3 million. Food, seed, and industrial (FSI) use is lowered 0.6 million tons for both 2018/19 and 2019/20 on lower corn used for ethanol. Exports are lowered 2.5 million tons for 2019/20.

Total use is lowered 2.3 million tons for 2019/20 to 374.7 million, and ending stocks are projected 4.6 million higher at 59.3 million.

Grain Consuming Animal Units Raised

Grain consuming animal units (GCAU) for 2019/20 are set at 102.3 million units, up from last month’s projection of 102.1 million, reflecting larger poultry production. For 2018/19, GCAUs are unchanged at 100.7 million units.

Feed and Residual Use: Four Feed Grains and Wheat

Feed and residual use for the four feed grains (corn, sorghum, barley, and oats) and wheat on a September-August marketing year basis for 2019/20 is projected at 141.0 million tons, 1.1 million higher than last month’s forecast mostly due to increases in wheat and sorghum feed and residual. For 2018/19, feed and residual is raised to a projection of 144.6 million tons.

Higher Yield Virtually Offset by Lower Area

Based on the first survey-based forecast for the 2019/20 corn crop, production is raised 26 million bushels this month as a 3.5-bushel-per-acre increase in yield to 169.5 bushels essentially offsets a decline in harvested acres. Harvested acreage is lowered 1.6 million acres to 82.0 million, and planted acreage is lowered 1.7 million acres to 90.0 million.

If realized, this would give a crop of 13,901 million bushels, 519 million below 2018/19. Resulting supply is 16,311 million bushels. Carry-in is projected up 20 million bushels to 2,360 million, and imports are unchanged at 50 million bushels.

Less Corn for Fuel Lowers Food, Seed, and Industrial Use

Projected corn use for fuel ethanol is lowered 25 million bushels this month to 5,475 million bushels.

Grain News on AgFax

The USDA, National Agricultural Statistics Service (NASS) Grain Crushings and Co-Products Production report indicates a small decline in corn used for fuel ethanol for June and a 4-percent (or 169-million-bushel) decline in year-to-date pace (September-June), while U.S. Energy Information Administration weekly data during July imply production during the month declined nearly 2 percent relative to that of a year ago.

Ethanol producer margins have been unfavorable for a number of months, and relatively high corn prices during June and July have likely only added to margin pressure. And, ethanol stocks as of early August were more than 10 percent above this time a year ago, while motor gasoline demand continues to be lackluster.

Diminished hopes for exports to China have added to the flat domestic consumption, resulting in a pessimistic outlook. There were no changes in other FSI categories this month.

Corn Price for 2019/20 Lowered on Increased Supplies

The projected average corn price received by farmers for 2019/20 is lowered $0.10 for the second consecutive month to $3.60 per bushel based on the increase in ending stocks. The stocks-to-use ratio for 2019/20 is projected at 15.4, an increase of 1.3 over last month’s ratio of 14.1.

Sorghum Production Raised on Yield Increase

The 2019/20 sorghum crop is projected up 44.8 million bushels. This comes from an upward revision in the area harvested and yield increases. Area harvested is now projected at 4.8 million acres, up 0.2 million acres from last month. Likewise, yield is projected at 73.9 bushels per acre, up 6.5 bushels per acre from last month’s projection.

Feed and residual is increased by 35.0 million bushels, given the increase in production and the expected lack of export market demand. Feed and residual are now projected at 160.0 million bushels. This same 35.0-million-bushel change in feed and residual flows through the balance sheet to add 35.0 million bushels to the domestic total use, now projected at 260.0 million.

The remainder of the increase in production is added to ending stocks, which are projected up 9.8 million bushels to 53.6 million. These changes, as well as lower projected corn prices, result in a revised season-average price projection of $3.30 per bushel, down $0.10 per bushel from last month.

Minor Revisions to Yield in 2019/20 Influence Barley Balance Sheet

No changes to barley area, with a 0.6-bushel-per-acre increase in yield to 73.9 bushels per acre resulting in 1.3 million bushels added to supply in 2019/20, mostly due to favorable conditions on average throughout the growing region.

All of the projected increase due to the yield change is anticipated to be stocked for next year, resulting in a 1.3-million-bushel increase in stocks over last month’s forecast, with ending stocks now projected at 92.7 million bushels. The projected season-average price is revised up – $0.05 per bushel to $4.60 per bushel in 2019/20.

Oats Production in 2019/20 Marginally Reduced due to Lower Yield Projections

Oats production in 2019/20 is projected down 1.2 million bushels to 60.4 million bushels. This change is driven by a 1.4-bushel-per-acre reduction in projected yield, now forecast at 66.4 bushels per acre. No changes are anticipated for use, however, due to the healthy stocks and market for both oats and its potential substitutes.

This results in a 1.2-million-bushel reduction in carryout, with ending stocks expected to be 38.6 million bushels. Season-average price projection remains unchanged month over month at $2.90 per bushel.

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