Feed Grain Outlook: Projected Corn Crop Smaller; Price Gets 20-Cent Boost

The third survey-based estimate for the 2019/20 corn crop lowered harvested acres by 200,000 and raised yield 0.2-bushel per acre, lowering the crop projection by 19.8 million bushels this month. However, supplies declined 350.8 million bushels due to lower carryin, reaching 15,944 million bushels.

On the demand side, an increase in feed and residual partially offsets decreases in exports and food, seed and industrial (FSI) use, for a net 90-million-bushel decline in total use to 14,015 million bushels. Tightening supplies and observed prices to date caused the projected average for the season average price received by farmers to gain $0.20 per bushel to $3.80.

The slow pace of U.S. corn sales and shipments in recent months reveal the country’s weak price competitiveness relative to other major corn exporters. U.S. corn exports for the October-September international trade year are projected 3.5 million tons lower. With reduced supplies and high corn output by competitors this year, the United States is expected to lose its export market share. This month, corn exports are projected higher for Brazil and Russia.

Domestic Outlook

2019/20 Supplies Down on Lower Carryin and Production

The USDA, National Agricultural Statistics Service (NASS) Grain Stocks report indicates lower than expected corn ending stocks for 2018/19. As a result, carryin for 2019/20 is reduced 331 million bushels. In addition, NASS Crop Production’s report estimate pegs the corn crop 19.8 million bushels lower this month on reduced harvested acreage, moderated by an increase of 0.2-bushel per acre in yield.

The October 1 objective yield survey indicates the lowest ear count since 2012 for the combined 10 States in the survey. Total supply is lowered 350.8 million bushels from last month’s projection to 15,944 million bushels.

As of October 6, only 15 percent of the corn crop had been harvested, compared with an average of 27 percent during the previous 5 years. The percent of the crop harvested was particularly low in major corn-producing States such as Iowa (3 percent), Illinois (13 percent), and Indiana (15 percent). States further south had higher harvest rates. For the top 18 corn-producing States, corn in good to excellent condition reached 56 percent, compared to 68 percent in 2017/18.

Grain Consuming Animal Units Raised

Grain-consuming animal units (GCAU) for 2019/20 are projected at 102.77 million units, up 1.6 million from the September forecast. Increases to dairy cows, beef cattle, layers, broilers, and hogs are behind the increase. GCAUs for 2018/19 are 0.2 higher this month, at 100.75.

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 144.8 million tons, a 3.7-million-ton increase over last month’s forecast. Feed and residual for corn is raised, sorghum is unchanged, while barley, oats, and wheat declined. For 2018/19, feed and residual is raised by 5.4 million tons to 149.9 million, as higher ending stocks boosted corn feed and residual and other categories showed small declines.

Projected 2019/20 Disappearance Shrinks 90 Million Bushels

For 2018/19, the large decline in carryout reported by the NASS Grain Stocks report resulted in a 342.8-million-bushel increase in feed and residual to 5,617.8 million (5.617 billion). Based on indicated disappearance during 2018/19, feed and residual use for 2019/20 is projected 125 million bushels higher at 5,300 million (5.3 billion) this month. The March-August disappearance was 38.8 percent of the marketing year total, compared with a 5-year average of 28.8 percent, in part because of lower-than-expected stocks on September 1.

Ethanol Prospects Dampened

The NASS Grain Crushings and Co-Production report identifies the final 2018/19 corn-for-ethanol use at 5,376 million (5.376 billion) bushels, 1.1 million bushels higher than last month’s projection. For 2019/20, projected corn use for fuel ethanol is lowered 50 million bushels to 5,400 million (5.4 billion) based on observed data to date.

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Other food, seed, and industrial (FSI) use categories are also revised. Projected corn used for high fructose corn syrup (HFCS) reached 441.4 million bushels in 2018/19. Projected corn for HFCS in 2019/20 is lowered 5 million bushels in October to 435 million based long-term on industry trends. Corn used for glucose and dextrose end the 2018/19 year at 355.1 million bushels, and the 2019/20 projection is for a 5-million bushel decline. Corn for starch ends 2018/19 at 230.5 million bushels and the use in 2019/20 is projected down 5 million at 230.0 million bushels.

The projection for 2018/19 corn exports is raised 5 million bushels over last month to 2,065 million (2.065 billion). NASS’s Grain Stocks indicates lower-than-expected September 1 stocks of 2,114.4 million (2.144 billion) bushels which results in feed and residual of 5,617.8 million bushels. Total 2018/19 use is projected at 14,474.0 million (14.474 billion) bushels, 334.0 million below last month’s forecast.

The projected season-average corn price received by farmers for 2019/20 is raised $0.20 per bushel to $3.80, reflecting tightening supplies. The stocks-to-use ratio for 2019/20 is projected at 13.8 compared to last month’s 15.5. The 2018/19 average price received by farmers was adjusted up 1-cent per bushel to $3.61 based on end-of-year data.

Sorghum 2018/19 Feed and Residual Higher, 2019/20 Supply Down

Increased carryin is the main factor in larger 2019/20 sorghum supplies projected this month. The NASS Crop Production report indicated lower acreage and yield for sorghum resulting in a 3.0 million bushel decline in production to 349.0 million. The NASS Grain Stocks report identified 2018/19 ending stocks 8.8 million bushels higher, at 63.7 million bushels resulting, in a decline in feed and residual of 16.9 million bushels to 138.1 million bushels.

Otherwise, all use categories increased for total use of 336.2 million bushels, 8.8 million bushels lower than last month’s estimate. The projected season-average price for 2018/19 is steady at $3.25 per bushel, while the 2019/20 price is raised 10-cents per bushel to maintain historical relationships to the corn price.

Barley Supply Up

The NASS Small Grains Summary estimated 2018/19 barley production up 445,000 bushels to 153.5 million on small increases in harvested area and yield. Thus, supply is 445,000 bushels higher at 253.9 million. 2019/20 barley production is projected at 171.3 million bushels, up 12 percent from the revised 2018/19 total of 154 million bushels.

The average yield per acre, at 77.4 bushels, is up 3.5 bushels from last month. Producers seeded 2.72 million acres in 2019, up 7 percent from last year. Harvested area, at 2.21 million acres, was up 12 percent from 2018. Feed and residual is lowered 5 million bushels to 15 million bushels and total disappearance is lowered the same amount to 171 million. Price is unchanged.

2019/20: Oat Production Lowered

The NASS Small Grains Summary estimates 2019/20 oat production at 54.2 million bushels, 6.2 below last month’s for comparable States. Yield is estimated at 64.4 bushels per acre, down 2.0 bushels from last month’s forecast for comparable States. Harvested area, at 842,000 acres, is projected 67,000 acres lower. Stocks are lowered 305,000 bushels to 37.0 million. Anticipated season-average price is unchanged at $2.95 per bushel for 2019/20, based on observed prices through September.

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