Feed Grain Outlook: Several Changes to Current, Past Year’s Balance Sheets

There were several significant changes to both the 2018/19 and 2019/20 balance sheets this month, although the end result a modest forecast decline in U.S. corn ending stocks for 2019/20. Revisions to 2018/19 corn stocks result in a 106-million-bushel jump in stocks available for 2019/20 supply, although stronger-than-expected domestic demand during the September-to-November quarter more than offset the larger supplies. Total use for 2019/20 is projected 155 million bushels higher while 2018/19 is down 186 million.

Corn trade for the October-September international trade year (TY) is virtually unchanged, although with significant shifts for major exporters. Two major foreign corn exporters—Brazil and Ukraine—see their corn export projections grow, while U.S. corn exports for 2019/20 are cut 4 percent this month. Increased competition limits U.S. exports, despite expected record global corn trade. Global trade in sorghum and barley are projected higher.

Domestic Outlook

Production Revised For Both 2018/19 and 2019/20

Projected 2019/20 corn production is raised 31 million bushels this month to 13,692 million as lower harvested acreage is offset by a 1-bushel per acre increase in yield to 168 bushels per acre, on the farmer-reported survey conducted by the National Agricultural Statistics Service (NASS) during December, released in the NASS Crop Production report.

December 1 grain stocks of 11,389 million bushels, as reported in the NASS Grain Stocks, were lower than anticipated.

NASS will re-survey operators who reported acreage not harvested in Michigan, Minnesota, North Dakota, and Wisconsin in early spring and make updates as necessary.

2019/20 Disappearance Raised 155 Million Bushels

Feed and residual use for 2019/20 is projected 250 million bushels higher this month at 5,525 million. Food, seed, and industrial (FSI) use is lowered 20 million bushels with high fructose corn syrup and glucose and dextrose down 5 million bushels each, and starch is lowered 10 million bushels, all based on year-to-date data. There is no change in projected corn for ethanol. Total FSI use is projected at 6,770 million bushels.

Projected exports are lowered 75 million bushels to 1,775 million due to the slow pace of sales and shipments, the lowest of outstanding sales in early January since 2012/13.

With total use projected at 14,070 million bushels, ending stocks are pegged at 1,892 million and stocks-to-use are projected slightly tighter at 13.4, compared with 13.7 last month.

For 2018/19, NASS revised harvested area made for an 80-million bushel reduction in production to 14,340 million and a reduction in supply of 80 million bushels to 16,509 million. In addition, September 1, 2019 stocks are revised upward by 106 million bushels to 2,221 million; thus, implied feed and residual disappearance is down 186 million bushels relative to last month.
First quarter 2019/20 (September-November) feed and residual is a record high at 2,640 million bushels.

Grain-Consuming Animal Units

Grain-consuming animal units (GCAU) for 2019/20 are projected at 102.84 million units, up 0.24 million from last month. Estimated January 1 inventories fell this month for dairy and beef cattle, broilers, and layers, and also declined for beef cattle and turkeys. However, estimated January 1 inventories rose for layers, broilers, and hogs. GCAUs for 2018/19 are estimated at 100.73 million.

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 150.5 million tons, up from 144.1 million tons last month. Feed and residual for corn and sorghum increased while barley and wheat declined. Feed and residual per GCAU increased slightly to 1.5 tons per GCAU.

2019/20 Food, Seed, and Industrial Use Update

Corn used to produce fuel ethanol, as reported in the NASS Grain Crushings and Co-Products Production, gained 8 percent to 456.7 million bushels in November, bringing first-quarter production to 1,295.4 million, 5-percent below the same period in 2018/19. Energy Information Administration weekly estimates of December ethanol production are up more than 3 percent from December 2018.

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Projected corn used for fuel ethanol is unchanged from last month’s forecast. Exports of fuel ethanol during the first quarter of 2019/20 were 19 percent short of the same period last year at 308 million gallons, representing roughly 110 million bushels of corn.

Corn used for starch and sweeteners is adjusted this month based on complete first quarter (September-November) data. First quarter corn use for high fructose corn syrup (HFCS) production is projected 5 million bushels lower at 430 million bushels. Corn for glucose and dextrose is lowered 5 million bushels to 350 million and corn for starch is projected 10 million lower at 220 million bushels.

For all these categories, September-November is significantly lower than the same period last year. With these revisions, total FSI use is projected at 6,770 million bushels, compared with 6,791 million bushels in 2018/19.

Corn Exports

U.S. corn sales and shipments for the first 4 months (Sep-Dec) in 2019 have been the lowest since the drought year of 2012/13. Actual shipments during September-November recorded by Census totaled 268.7 million bushels compared with 632.1 million during the same period last year. This is reflected in projected 2019/20 export volume of 1,775 million bushels, 14 percent lower than 2018/19. During the first quarter of 2019/20, Mexico, Japan, and Colombia, Honduras, and Canada were the major destinations for U.S. corn.

Sorghum Production Lowered

The NASS survey of sorghum producers in the Crop Production Annual resulted in lower harvested area and yield for 2019/20. As a result the crop is reduced 16 million bushes to 341 million bushels. Adding 50,000 of imports brings total supply to 405 million bushels.

Feed and residual use is lowered 20 million bushels to 140 million, based on indicated disappearance during the September to November quarter. FSI is unchanged at 100 million bushels.

Exports are raised because of strong shipments to Mexico, as well as the fact that shipments to unknown destinations through the end of December have increased.

Total disappearance is projected 10 million bushels lower at 360 million. Sorghum exports are raised 10 million bushels to 120 million on stronger pace during September-November, as reported by the Census Bureau and export inspection data during the month of December. Exports during the first quarter of 2019/20 reached 24.5 million bushels compared with 15.9 million bushels during the same period last year. Much of the increase is due to shipments to Mexico, which increased from 4.7 million bushels to 8.0 million.

Barley FSI Lowered

Malt barley is a major ingredient in beer production, especially for craft beers, which tend to be brewed by smaller operations. Revisions to FSI use for barley this month reflect updated estimates of craft sector production relative to total beer production.

Price Changes for 2019/20 Barley and Oats

The projected 2019/20 season average price (SAP) received by farmers for barley is lowered 5 cents per bushel to $4.60 per bushel. The projected oats SAP is raised $0.05 per bushel to $2.95 based on sales to date.

Full report.




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