Feed Grain Outlook: Corn Area Reduced, June Stocks Exceed Expectations

    Photo: University of Tennessee

    Lower corn harvested area forecast for 2020/21 in the Acreage report lowered forecast production nearly 1 billion-bushels to 15 billion bushels, the second highest behind 2016/17. Supplies are projected down 850 million bushels to 17.3 billion.

    On the demand side, lower feed and residual use partially offset by a small increase in food, seed, and industrial (FSI) use lowered total disappearance and left carryout down 0.7 million bushels. Projected price is up $0.15 per bushel this month ending at $3.35.

    Domestic Outlook

    Corn Supply Sharply Reduced

    Projected 2020/21 corn supply is reduced 850 million bushels to 17,273 million this month, still a record high level besting 2016/17’s 16,942 million. Lower corn acreage reported in the National Agricultural Statistics Service (NASS) Acreage report highlights a 5.0-million-acre decline in planted acreage and a 5.6-million decrease in forecast harvested acreage.

    North Dakota leads year-over-year area reductions with a 1.1-million decline in planted acreage. While Kansas and Nebraska follow with 0.3 million less for each State. Acreage gains were seen in South Dakota, which nearly made up for the loss in its norther neighbor with a 1,050-million-acre increase.

    Compared with total principal crop acreage 2019/20, North Dakota area planted to all crops declined 5 percent while South Dakota’s increased by 21 percent. The Eastern Corn Belt saw acreage gains in Ohio, Iowa, Indiana, Illinois, Missouri, Minnesota, and Michigan.

    The decline in corn planted acres from the Prospective Plantings to the Acreage report is the largest in both absolute value and absolute percentage terms since the Payment In Kind program year of 1983.

    Projected corn yield is unchanged for 2020/21 at 178.5 million bushels.

    Total supply is projected 850 million bushels lower at 17,273 million. The decline in production is offset by a 145-million bushel increase in carryin from 2019/20.

    Use, Ending Stocks Projected Lower for 2020/21

    Total 2020/21 corn disappearance is projected 175 million bushels lower at 14,625 million. Feed and residual use is reduced 200 million bushels to 5,850 million, based on expected higher prices and a smaller crop. Food, seed, and industrial use is raised 25 million on an expected continuation of trends for increased beverage and manufacturing use.

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    This is due to increased prospects for products such as hand sanitizer and increased in corn used for glucose, dextrose, and starch. Exports are unchanged at 2,150 million bushels.

    Corn ending stocks for 2020/21 are projected 675-million bushels lower at 14,625 million, still the largest since 1987/88 and 400-bushels higher than last year.

    The stocks-to-use ratio is projected at 18.1 percent, compared with 22.5 projected last month. The season average price received by farmers is raised 15-cents per bushel to $3.35, based on stronger cash markets and a lower carryout relative to use.

    June 1 Stocks Indicate Lower than Expected Use in 2019/20

    June 1 corn stocks as reported in NASS’s Grain Stocks were higher than expected, indicating lower total use for the first three quarters of 2019/20. At 5,224 million bushels, June 1 stocks are slightly higher than a year earlier and pegged September-May total disappearance at 10.651 billion bushels compared a year ago at 11.300 billion.

    Thus, feed and residual for 2019/20 is projected down 100 million bushels. September-May feed and residual is 4,724 million bushels compared with 4.517 million a year earlier.

    Since March, a cumulative 575-million reduction in projected corn for ethanol the major factor in lower disappearance for 2019/20. Corn for ethanol is projected at 4,850 million bushels based on data from the NASS Grain Crushing and Co-Products Production report and Energy Information Administration (EIA) weekly data through early July.

    Based on year-to-date pace, corn for high fructose corn syrup is lowered 5 million bushels to 405 million, and use for starch and glucose and dextrose are each raised 5 million bushels to 230 and 355 million bushels respectively. Total disappearance for 2019/20 is projected at 13,635 million bushels, 145 million below last month’s projection.

    There was no change in projected exports. Ending stocks are pegged at 2,248 million bushels, 145 above last month’s projection. The stocks-to-use ratio is raised month-to-month from 15.3 to 16.5. There is no change in the forecast season average price received by farmers which stands at $3.60 per bushel.

    Feed and Residual Use for Feed Grains and Wheat

    On a September-August year, 2020/21 feed and residual for the four feed grains and wheat is projected at 155.4 million metric tons, 5.0 million below last month’s forecast. Declines in corn and sorghum were offset by higher barley feeding.

    For 2019/20, feed and residual are projected at 148.7 million tons. 4.6 million below last month’s forecast. All categories except barley declined.

    Grain Consuming Animal Units Decline for 2020/21

    Grain consuming animal units (GCAUs) for 2020/21 are projected down 0.03 million units to 102.40 units compared with last month’s forecast. The small decline is due to lower beef cattle, and turkey inventories, largely offset by higher hog and broiler components.

    Total Feed Grain Use Lowered for 2020/21

    U.S. feed grain (corn, sorghum, barley, and oats) is projected 5.3 million metric tons lower this month at 386.3 million tons. Lower forecast feed and residual was slightly offset by increased FSI use driven by the corn balance sheet. Compared with 2019/20 use is projected up 24.1 million tons.

    Sorghum Supplies Lowered for 2020/21

    The June 30 NASS Acreage report indicates a a 355,000 acre decline in sorghum harvested area from the March Prospective Plantings report. Accompanied by a 200,000-acre reduction in planted area and no change in forecast yield, production is pegged at 327 million bushels, down 24 million from last month’s forecast.

    With no change in carryin, total supply is lowered the same amount to 357.2 million bushels. Supply is 48 million bushels smaller than last year’s.

    Sorghum Use Lowered for 2020/21

    Projected sorghum feed and residual use is lowered 15 million bushels to 70 million, reflecting the smaller expected crop. FSI is reduced 5 million bushels to 45 million, as prospects for sorghum use for ethanol dim due to export competition. With no change in projected exports, total use is 335 million bushels, 40 bushels less than 2019/20.

    Resulting ending stocks of 22.2 million bushels are down 4 million from last month’s projection due to lower production, mostly offset by a decline in use. The projected season average price for sorghum in 2020/21 is projected $0.15 higher at $3.35 per bushel.

    Sorghum Use Unchanged in 2019/20

    For 2019/20, projected feed and residual use is lowered 5 million bushels due to indicated disappearance to date, while sorghum FSI is raised 5 million on higher than expected sorghum use for ethanol reported in the NASS Grain Crushings and Co-Products Production. Total use is projected at 375 million bushels, unchanged.

    June 1 sorghum stocks, as reported in the NASS Grain Stocks report, indicate September-May disappearance of 332.6 million bushels. This is lower than the 5-year average of 401.5 million, but higher than last year’s disappearance of 282.4 for the same period.

    Less Barley Production and Higher Prices Forecast

    Barley production is projected at 170.0 million bushels compared with 182.0 last month. This is due to a 0.1 million acre decrease in the area planted and a 0.2 million acre decrease in the forecast area harvested. These decreases are partially offset by a slight bump in yield, now projected at 76.1 bushels per acre.

    Beginning stocks are also reduced by 12.0 million bushels from 92.0 to 80.0 million bushels based on stocks reported in the June 30 Grain Stocks report. These changes result in a total supply of 257.0 million bushels compared to last month’s projection of 281.0. Feed use is cut by 15.0 million bushels, from 40.0 to 25.0, in line with the supply reduction.

    The ending stocks are also projected down month over month to 84.0 million bushels. The forecast season average farm price is up $.15 per bushel to $4.45.

    According to the crop progress report for July 5, states which account for 81 percent of barley production in 2019 (Idaho, Minnesota, Montana, North Dakota, and Washington) reported a barley headed rate of 60 percent compared to 48 percent the same time last year.

    This suggests that the crop is developing in line with the historical average, but slightly ahead of last year’s progress. The crop condition is in line with previous years conditions and will be contingent on the weather throughout the rest of the growing season.

    Fewer Acres for Oats and Less Production Leads to Higher Prices in 2020/21

    Like barley, oat area is projected down 0.1 million acres for both the area planted and area harvested. Area harvested is now forecast at 1.0 million acres. Also reducing production is a forecast decrease in yield now projected to be 65.2 bushels per acre.

    However, total supply remains virtually unchanged month over month at 198.0 million bushels due to an increase in the beginning stocks of 8.0 million bushels, now estimated to be 37.0 million bushels based on the June 30 Grain Stocks report.

    No use changes our forecast this month leaving total use unchanged at 156.0 million bushels. The season average farm price is up $.20 per bushel this month and is now forecast a $2.70 per bushel.

    The July crop progress report for the nine states which accounted for 71 percent of the outcrop in 2019 (Iowa, Minnesota, Nebraska, North Dakota, Ohio, Pennsylvania, South Dakota, Texas, and Wisconsin) reported an 85 percent oat headed rate as of 5 July.

    This is in line with the five-year average from 2015 to 2019 of 86 percent for this week. This is above last year’s percentage of 69 percent, suggesting that the crop is developing slightly ahead of last year. The crop condition is in line with previous years conditions and will be contingent on the weather throughout the rest of the growing season.

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