Feed Outlook: Another Reduction in Projected U.S. Corn Crop

Corn harvest. Photo: Kostic Dusan, 123rf

The NASS Crop Production report lowered yield for the 2019/20 corn crop by 1.4 bushels per acre, resulting in a 118.3-million-bushel cut in production to 13,661 million bushels, and supplies of 15,825 million bushels. The harvested area is unchanged. 2019/20 demand is projected 100 million bushels lower at 13,915 million, due to lower feed and residual, corn for ethanol and exports. As a result of tightening supplies, the season average price for corn is raised $0.05 per bushel to $3.85 from last month’s forecast.

The pace of U.S. corn exports continues to lag behind, as Census export data are the lowest since 1976. With reduced projected U.S. corn production, U.S. exports are projected 1.5 million tons lower on an October-September basis, which further decreases the country’s share in global trade. For Brazil, corn exports are projected up 3.0 million tons this month.

Domestic Outlook

2019/20 Corn Supplies Down on Lower Production

The November National Agricultural Statistics Service (NASS) Crop Production report forecast a 1.4 bushel per acre decline in projected yield to 167.0 bushels per acre. With harvested area unchanged, 2019/20 production is forecast at 13,661 million bushels, 118.3 lower than last month. With no change in carryin or imports, supplies are projected at 15,825 million bushels, compared with 16,588 million in 2018/19.

The NASS resurvey of corn acreage in Minnesota and North Dakota, to account for early snows, did not result in a change in harvested acreage for those States. For the main corn-producing States, yields increased for Indiana and Ohio, but lowered for Nebraska, Michigan, South Dakota, Minnesota, and Kansas.

Grain-Consuming Animal Units Raised

Grain-consuming animal units (GCAU) for 2019/20 are projected at 102.5 million units, down 0.3 million from last month. A decline in beef cattle more than offsets increases in broilers and turkey. GCAUs for 2018/19 are lowered by 0.1 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 144.1 million tons, 0.7 below last month. Feed and residual for corn was lowered 0.6 million tons and wheat edged down, while sorghum, barley, and oats showed no change. For 2018/19, there is no change from last month’s forecast. Feed and residual per GCAU is virtually unchanged.

2019/20 Use Forecast Lowered 100 Million Bushels

Projected corn feed and residual use is lowered 25 million bushels due to the smaller crop and higher expected prices. Food, seed, and industrial use (FSI) is lowered 25 million bushels to 5,375 million based on ethanol production data to date supported by September data in the Grain Crushings and Co-Products Production report and weekly data from the Energy Information Administration (EIA).

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While margins have improved for ethanol producers, plant closings and cutbacks are still impacting production levels. With this month’s reduction, corn for ethanol is forecast to be virtually unchanged from a year ago. Total food, seed, industrial use is projected at 6,790 million bushels, virtually unchanged from last year.

Export prospects are reduced 50 million bushels to 1,850 million. Slow early-season shipments and sales due to the non-competitiveness of the U.S. crop relative to other suppliers such as Brazil, Argentina, and the Ukraine has dampened early season sales.

These changes result in ending stocks of 1,910 million bushels, 18.3 million below last month’s forecast. The stocks-to-use ratio is lowered to 13.7, compared with last month’s 13.8.

The projected season-average corn price received by farmers for 2019/20 is raised $0.05 per bushel to $3.85, reflecting tightening supplies and observed prices to date.

2018/19 Byproduct Trade Wrap-Up

U.S. ethanol exports for 2018/19 totaled 1,547 million gallons, 4.7 percent below 2017/18 and representing roughly 550 million bushels of corn. The major dampening factor were ethanol shipments to Brazil which declined 72 million (16 percent) as mills shifted from sugar production to ethanol, displacing imports. Shipments to Canada and India also declined. China fell from number four in terms of volume in 2017/18 to thirty-fourth due to the impacts of retaliatory tariffs, slashing export demand by nearly 110 million gallons.

Dried distillers grains with solubles (DDGS) shipments declined 3.5 percent to 11.6 million metric tons (MT) reflecting lower shipments major destinations such as Mexico, Vietnam, Thailand, Turkey, and Ireland. The five largest destinations during the year were Mexico, Vietnam, South Korea, Indonesia, and Thailand. During the past decade, DDGS shipments have increased along with animal protein in diets as incomes in these countries have risen, allowing a transition from traditional plant based protein.

Corn gluten feed (CGF) shipments fell 12 percent in 2018/19 from the previous year to 1,074 million metric tons. Ireland, Israel, the United Kingdom, and Turkey were the major destinations, unchanged from last year. All but Turkey substantially reduced volumes.

Corn gluten meal (CGM) volume slipped 2 percent in 2018/19, to 787 million MT. Indonesia is the leading destination, even though it reduced volume from the previous year. Chile, Egypt, Colombia, and Canada received smaller volumes. For CGF and, to a lesser extent, CGM, lower available supplies dampened exports.

Sorghum 2019/20 Supply Projection Edges Up

A 2-bushel-per-acre increase in projected sorghum yields to 75.9 bushels boosted production by 9.0 million bushels to 357.6 million, 7.3 below last year’s crop. Yield is the highest since 2016. Supplies are projected at 421.3 million bushels. Use is raised 10 million bushels to 370.0 million due to increased export pace. Ending stocks are lowered 1.0 million bushels to 51.3 million. The average price received by farmers is unchanged this month at $3.40 per bushel.

Changes to Barley and Oats Due to NASS Re-survey

Survey respondents reporting unharvested acreage prior to the NASS Small Grains Summary were re-surveyed in late October and results are released in the November Crop Production report. The re-survey included barley in Idaho, Maine, Minnesota, Montana, North Dakota, Oregon, South Dakota, and Washington, and oats in Idaho, Maine, Minnesota, Montana, North Dakota, Oregon, and South Dakota.

As a result, barley harvested area was lowered 32,000 acres and yield is raised 0.3 bushels per acre to 77.7 bushels for a production decrease of 1.8 million bushels to 169.6 million. Combined with a 2-million-bushel reduction in forecast imports, anticipated supply is 264.1 million bushels. With no changes in use, the 3.8-million-bushel decrease in supply is passed through to ending stocks which are now projected at 93.0 million bushels. Higher-than-expected malting barley prices to date boost the all barley price $0.05 per bushel to $4.70.

The NASS Crop Production report projects lower 2019/20 oat production due to a 16,000-acre reduction in harvested and a 0.1 reduction in yield to 64.3 bushels per acre. If realized, this will result in a crop of 53.1 million bushels and a supply of 186.0 million bushels. With no changes in use this month, lower supplies are passed through to ending stocks which are lowered 1.0 million bushels to 36.0 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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