Corn & Seed/Oil Commodities

[Mustang Sally Farm]

Feed Outlook – June 2011
US corn production is still expected to be a record this year but the current forecast is for historically tight global coarse grain stocks, according to the latest report from the USDA Economic Research Service.
 

US corn production for 2011/12 is projected 305 million bushels lower this month at 13,200 million as delayed planting this spring are expected to reduce plantings 1.5 million acres from producer intentions. Flooding on the Mississippi and Missouri Rivers is also expected to reduce harvested area.

Production is still expected to be a record but ending stocks are reduced this month by 205 million bushels, resulting in a year-to-year decline of 35 million bushels. Tight supplies are reflected in higher price projections for all feed grains. Revisions to several years of China’s corn supply and demand increase use more than production, tightening stocks.

Global coarse grain ending stocks projected for 2011/12 are reduced 11 per cent this month. The global stocks-to-use ratio for coarse grains is projected at 12.6 per cent, the lowest since 1973/74 when it fell to 12.2 per cent. Near-term trade implications, however, are limited with 70 per cent of this month’s global stock decline in China.


DOMESTIC OUTLOOK

US Feed Grain Supplies Projected Sharply Lower this Month
Reduced prospects for corn acreage lowered projected US feed grain production for 2011/12 by 7.7 million metric tons. Production for 2011/12 is projected at 348.3 million tons. Total use is 2.5 million tons below last month’s projection as higher prices reduce prospects for feed and residual use. Ending stocks are projected sharply at 20.7 million tons, a 5.3-million-tons decrease of lower than last month from May’s estimate and the lowest level since the 1995/96 crop year.

Feed and residual use for the four feed grains plus wheat, on a September-August marketing year basis, is lowered 3.7 million tons to 138.0 million. Grain-consuming animal units (GCAUs) for 2011/12 are projected unchanged from last month at 94.2 million compared with 92.7 million in 2010/11.

Projected 2011/12 feed grain exports are increased slightly to 49.4 million tons, compared with 49.3 million last month, on higher projected sorghum shipments.

Planting Delays and Flooding Reduce Projected Harvested Area and Production for Corn
Planting delays in the eastern Corn Belt, especially Ohio and Indiana, and in the Northern Plains are expected to reduce planted area, offsetting potential gains in the western Corn Belt and central Plains. Planted area is reduced 1.5 million acres as some of this land is expected to remain too wet to plant to corn. Harvested area is lowered 1.9 million acres to 83.2 million, reflecting early assessments of May flooding in the Mississippi and Ohio River valleys, and June flooding along the Missouri River valley. Production is projected 305 million bushels lower at 13,200 million, but is still a record. This month’s yield projection is unchanged at 158.7 bushels per acre because the crucial July and August weather that will determine yields remains unknown.

Feed and residual use for 2011/12 is projected 100 million bushels lower this month. Higher prices for corn are expected to ration demand for feed use. Feed use is projected at 5,000 million bushels for the marketing year, compared with 5,150 for 2010/11. Projected food, seed and industrial use for 2011/12 is unchanged at 6,455 million bushels, 55 million higher than 2010/11. Ethanol production, mostly using corn as a feedstock, continues to advance, according to weekly Energy Information Agency data. As the share of corn that is not forward contracted at favorable price declines, margins will decrease, although higher petroleum prices may be an offsetting factor.

The lower feed and residual projection reduces projected corn use for 2011/12 to 13,255 million bushels, 195 million bushels below 2010/11.

The sorghum export projection for 2011/12 is increased from 130 million bushels to 135 million. Shipments to Mexico are expected higher due to tight corn supplies.

Feed and Residual Use Down in 2011/12
The 2011/12 US feed and residual use for the four feed grains plus feed wheat on a (September-August) projected at 138.0 million tons, down 3.7 million tons from the previous year. Feed and residual use per grain-consuming animal unit (GCAU) is projected at 1.48 tons in 2011/12, compared with 1.53 tons in 2010/11. Total GCAUs are projected up 1.6 per cent on the year to 94.2 million. GCAUs are expected to be up for the year because of increased poultry and pork production as demand begins to strengthen offset by lower cattle numbers. Feed and residual use per animal unit is reduced this month to 1.48 tons as lower expected feed use more than offsets the decline in GCAUs.

Projected Ending Stocks Slip on Production Decline
Lower projected feed grain production in 2011/12 more than offsets the decline in feed use, reducing projected ending stocks to 695 million bushels, the lowest since 1995/96. The projected stocks-to-use ratio falls to 5.2 per cent, compared with 5.4 per cent forecast for 2010/11. The stocks-to-use ratio at the end of 1995/96 was 5.0 per cent. A stocks-to-use ratio at 5.0 per cent may represent minimal ‘pipeline’ stocks, however, significant changes in grain storage, handling and transportation have occurred since 1995/96. Among the most important have been changes associated with expansion of corn processing to produce ethanol.

Higher Feed Grain Prices Projected
The season-average corn farm price for 2011/12 is projected at a record $6.00 to $7.00 per bushel, up $0.50 on both ends of the range from last month. Tight supplies caused by reduced acreage and lower carry-in prompted the increase. The projected corn price for 2010/11 is boosted $0.10 on each end of the range to $5.20- $5.50 per bushel.



Projected 2011/12 sorghum prices are expected to be record high. This month’s forecast is increased by $0.60 on both ends of the range to $5.60 to $6.60 per bushel. Projected barley prices are raised $0.20 on both ends of the range to $5.95- $7.05 per bushel. The increase in the oats projected price is larger, up $0.30 on both ends of the range to $3.60-$4.20 per bushel.

Weekly Crop Progress Report Shows Gains
The Crop Progress report issued by USDA’s National Agricultural Statistics Service for the week ended 5 June 2011, showed further progress in the major corn States as farmers sowed eight per cent of the crop in newly-dried fields over the preceding week. As of 5 June, 94 per cent of the crop was planted compared with the 2006-2010 average of 98 per cent. Indiana and Ohio remained significantly behind normal at 82 and 58 per cent, respectively, compared to five-year averages of 94 and 99 per cent. Producers in Illinois, Iowa, Kansas, Missouri and Nebraska have planted 98 per cent or more of their corn crops by 5 June.


INTERNATIONAL OUTLOOK

Global Coarse Grain Production Cut as US Drop Bigger than China Increase
World coarse grain production in 2011/12 is projected to reach 1,143.9 million tons, down 3.0 million this month. US corn production, down 7.7 million tons, has the largest drop, but a 6.0-million-ton increase for China’s corn, and a few adjustments to other countries, leave global corn production down 1.6 million tons this month to 866.2 million. World barley production is reduced 1.2 million tons to 130.3 million as EU prospects deteriorate.

China’s corn production increase for 2011/12, up 6.0 million tons to 178.0 million, is based on an increase in area reported by China’s National Bureau of Statistics (NBS) for 2010/11. The 2010/11 production is increased 5.0 million tons to 173.0 million, adopting the NBS corn area but remains below the NBS production estimate because USDA analysis indicates that since 2009/10 NBS has overestimated China’s corn yields. The projection for China’s 2011/12 corn crop assumes an increase in corn area of two per cent, down from the four per cent growth reported for the previous year. USDA’s corn yield for China is not changed this month for 2010/11 or 2011/12.

Coarse grain production prospects increased this month for Ukraine, up 0.6 million tons to 24.9 million tons. Spring weather has had enough rain to maintain adequate soil moisture in most regions, without excessive rains to disrupt fieldwork. Planting reports indicate more corn area seeded than expected, boosting corn production prospects 0.5 million tons. There is also a small increase in millet area based on plantings.


Russia’s coarse grain production is increased slightly this month to 28.9 million tons, reflecting variable planting conditions. In the Southern District and the Caucasus, spring plantings have gone well but in the Volga, cold temperatures and spotty dryness delayed plantings. Barley area planted is larger than expected, boosting production prospects 1.0 million tons to 14.5 million. However, the pace of corn seedings appears to be too slow to reach the previously expected area, so corn area is cut this month, trimming production prospects 0.5 million tons to 6.0 million. Rye area is also reduced this month, cutting expected output 0.3 million tons to 3.0 million.

Zambia reports expanded corn area, boosting production 0.5 million tons to 3.0 million. Argentina is expanding area planted for winter barley, increasing production prospects 0.3 million tons to 2.5 million.

European Union (EU) coarse grain production prospects are down 2.2 million tons this month to 143.0 million. The entire decline is based on barley yields. A few EU countries reported slightly increased barley area this month. Severe spring dryness centered in northern France extended into Germany, parts of the UK and western Poland. Harsh winter conditions in parts of Germany and Poland may also have reduced crop potential.

Canada’s barley production expected in 2011/12 is reduced 0.3 million tons to 8.2 million as southeastern Saskatchewan and southwestern Manitoba have been too wet for planting, reducing barley area.

Moldova reported corn area plantings down compared to the previous year, trimming production prospects 0.3 million tons to 1.2 million. Kyrgyzstan reported a slight dip in barley area and production prospects.


Reduced China Corn Beginning Stocks Trim 2011/12 Supplies
Estimated corn use for China for 2007/08 through 2010/11 is increased this month, enough to more than offset the five million ton increase in 2010/11 production, and leave 2011/12 beginning stocks down 5.0 million tons to 53.7 million. Numerous small adjustments to 2011/12 beginning stocks for other countries are mostly offsetting, leaving global coarse grain stocks down 4.9 million tons at 153.5 million. With world coarse grain production down 3.0 million tons this month, global supplies are down 7.8 million.

Global Coarse Grain Demand Prospects for 2011/12 Boosted This Month
World coarse grain use projected for 2011/12 is up 9.3 million tons this month to 1,152.1 million tons. Corn total use is up 11.0 million tons to 871.7 million, while barley is down 1.4 million to 132.8 million. Projected use of rye and sorghum are down fractionally as well.

Corn use in China for 2011/12 is raised 13.0 million tons this month to 181 million. Feed and residual use is projected to reach 126.0 million tons, up 10.0 million this month, but only five per cent higher than the revised forecast for 2010/11. Corn feed use growth is faster in recent years than the reported growth in some key livestock indicators such as pig meat production but remains slower than the apparent growth in use of soybean meal. Food, seed and industrial use in China is up 3.0 million tons this month to 55.0 million. That represents six per cent growth compared to the revised forecast for 2010/11 but is much slower growth than estimated between 2009/10 and 2010/11. China’s Government has announced several measures to slow the growth in use of corn for industrial use. China’s barley use (beer) is reduced 0.2 million tons this month, reflecting high prices and lower projected imports.

Russia’s 2011/12 coarse grain use is boosted 0.7 million tons this month. Barley feed use is up 1.0 million and rye use cut 0.3 million reflecting production changes.

Saudi Arabia’s barley feed use is cut 0.5 million tons this month as satellite imagery confirms exceptionally good winter and spring pastures, and the pace of imports has slowed. There are smaller changes to coarse grain use this month for Moldova (reduced corn production), Jordan, Canada, Ukraine and Uruguay.

EU total coarse grain use is projected unchanged this month but feed use is up 0.5 million tons. Corn imports and feed use are raised 1.0 million tons each, but with reduced barley production, the feed use and food use are each cut 0.5 million tons.

World Coarse Grain Ending Stocks Cut Dramatically This Month
Global coarse grain ending stocks for 2011/12 are slashed 17.1 million tons this month to 145.3 million. Foreign stocks are projected down 11.8 million tons, with the China reduction of 12.0 million tons dominating. The revisions to China’s use over several years are much greater than the increases in production, drawing down stocks prospects considerably. These tighter stocks reflect corn price developments in China. While corn stocks are not dropping significantly year-to-year, the rapid increase in use implies an important tightening in the stocks-to-use ratio, supporting corn prices.

Changes in projected 2011/12 ending coarse grain stocks for other countries are mostly small and offsetting. Increased corn production boosts Zambia’s ending stocks 0.3 million tons, and the EU, Philippines and Australia are each up 0.2 million. Ukraine’s corn stocks are reduced 0.5 million tons due to strong export prospects, and Saudi Arabia’s ending stocks are reduced 0.3 million due to the slow pace of barley imports. There are several smaller, mostly offsetting revisions to projected ending stocks.

The world coarse grain ending stocks forecast for 2011/12, at 145.3 million tons, are similar to the 141.2 estimated for 2006/07 and 143.3 for 2003/04. These are the lowest in recent decades. However, because of increased use, the 2011/12 stocks represent only 12.6 per cent of use, while in 2006/07 they were 13.9 per cent and in 2003/04, 15.2 per cent. So the current forecast is for historically tight global coarse grain stocks; however, 70 per cent of this month’s reduction in global stocks is projected for China where stocks remain at 27.3 per cent of use limiting broader near-term trade implications.


Corn Trade Projected Slightly Higher, US Export Prospects Unchanged
Global corn trade for 2011/12 is projected to reach 92.5 million tons, up 0.7 million this month. The EU, with reduced wheat and barley production, is expected to import more corn to maintain meat production. EU corn imports are forecast up 1.0 million tons this month to 5.0 million.

With increased production prospects and strong demand from EU, Ukraine’s corn export prospects are boosted 1.0 million tons to 7.5 million. Zambia, with increased production, is expected to export to neighbouring countries, boosting exports 0.2 million tons. However, reduced production prospects are expected to limit Russia’s corn exports, down 0.5 million tons this month to 0.5 million.

World corn trade forecast for 2010/11 is unchanged this month at 92.9 million tons. Mexico’s corn imports are reduced 1.0 million tons to 8.0 million as the pace of purchases has been slower than expected, especially given the reduced production. This is partly offset by increased corn imports for the EU, up 0.5 million tons to 7.0 million, as the pace of purchases has been strong.


US sorghum export prospects for 2011/12 are increased 0.2 million tons to 3.5 million – up 5 million bushels to 140 million for the local marketing year. Mexico’s import prospects are increased the same amount as tight corn and sorghum supplies in Mexico are expected to encourage purchases of US sorghum.

World barley trade for 2010/11 and 2011/12 is forecast down significantly this month and is the lowest in 14 years. The 2011/12 global barley trade (October-September) is projected down 1.1 million tons this month to 13.2 million. Tight supplies in the EU and Canada are expected to limit trade. EU export prospects are down 1.0 million tons this month to 1.5 million. The pace of EU shipments in 2010/11 has been slower than expected, trimming the export forecast 0.6 million tons to 4.0 million. Barley imports by Saudi Arabia are forecast sharply lower at 5.4 million tons for 2010/11 and 5.2 million for 2011/12. Saudi Arabia appears content to reduce its stocks instead of increasing import subsidies.

[Mustang Sally Farm]

Friday, June 24, 2011
Got Low-Quality Wheat? Use It as Animal Feed
US — As some farmers face the probability of low-quality wheat this growing season — in some cases below quality standards for milling — they may need to look for alternative markets for their crop.
 

One option is to use it as animal feed, but several factors need to be considered before incorporating this wheat into livestock diets.

Stephen Boyles, an Ohio State University Extension beef specialist, said that as a general rule mold-free wheat can be used to substitute up to 50 per cent of the grain portion of finishing diets for cattle.

“While some experienced feeders have used larger amounts of wheat, I tend to recommend lower levels to people not familiar with feeding wheat,” Boyles explained. “When feeding lower-quality wheat, limit wheat to 40 per cent of dry matter or 50 per cent of corn in the diet, whichever is highest. Also, you should take longer to build up to full feed than you would with corn, and carefully monitor consumption. I would not recommend using wheat in high-grain diets on self-feeders or in creep rations. Salt (7-12 per cent) might be used as an intake inhibitor for cattle on grass using a self-feeder.”

Wheat Processing Is Important
The way wheat is processed is also important. Boyles said that although the kernel must be cracked or broken, over-processing will result in the production of many fine particles that are undesirable, since the rate of wheat starch digestion in the rumen is very rapid. An excessive amount of fine particles will cause generally low and erratic intakes, digestive upsets, and poor performance.

“Rolling rather than grinding generally results in fewer fine particles,” Boyles said. “If wheat is dry-rolled, it should be rolled or ground as coarsely as possible while still breaking all the kernels. Steam-flaking wheat can improve animal performance. Mixing grains should occur after grain processing rather than before. Mix wheat with silage, haylage or corn grain to reduce the risk of animals eating too much at one time.”

Feeding Wheat to Cattle
There are a few problems associated with feeding wheat to cattle, Boyles warned. For example, when feeding high-concentrate rations, it is not advisable to change back and forth from wheat to other feed grains.

Additionally, since wheat is a fast-fermenting grain in the rumen, problems of depressed feed intake, acidosis and abscessed livers have been reported. That’s why it’s crucial to limit the amount of wheat in the ration, mix it with other grains, and feed animals at least 15 per cent roughage – making sure rations contain approximately 6-10 per cent fiber.

“Buffering agents are added to overcome the problems of reduced feed intake when high-wheat rations are fed to cattle,” Boyles said. “Adding 3.5 ounces of sodium bicarbonate (baking soda) per head daily gives a slight improvement in performance of steers on wheat rations. A finely ground feed-grade limestone can also serve as a buffer. Adding an additional 1-1.3 per cent of finely ground feed-grade limestone to wheat rations may give a slight improvement to performance of cattle. However, avoid increasing the calcium levels of the ration above 0.9 percent.”

Be Careful of Mycotoxin Poisoning
What about sprouted wheat or grain infected by head scab or vomitoxin? Boyles said sprouting does not appear to affect the nutritional value of wheat, but those feeding this grain to cattle must be aware that mold and fungal infestations are more likely with sprouted wheat — and feeding moldy wheat to livestock must be avoided to prevent mycotoxin poisoning.

Meanwhile, the occurrence of scab in wheat does not automatically mean vomitoxin is present, but high levels of scabby kernels in harvested grain should raise red flags. If molds or toxins are suspected, the best thing to do is to have the wheat tested.

[Mustang Sally Farm]

Thursday, June 16, 2011
Significant Drop in Wheat and Oilseed Yields Forecast
UK - Wheat and oilseed rape yield is likely to be significantly down on the five year average, according to NFU members in a survey run between May and early June this year.

National analysis of the survey was weighted to include crops grown in areas where less crop damage had been reported.

With very poor growing conditions, particularly in the east, results suggest that average English wheat yield in 2011 will be down by 14 per cent to around 6.5 tonnes per hectare (ha), which would rank among the lowest since the late 80s.

Area planted is currently thought to be similar to last year but wheat production in England for 2011 may be much lower due to some severe drought pressure on crops this spring. Based on analysis of these farmer estimates, production could be down on the five year average by around two million tonnes to below 12 million tonnes (mt) or 15 per cent below the five year average of 13.738mt.

Winter oilseed rape appears to be in a slightly stronger position than for cereals, with farmers forecasting English yields at 3.1t/ha, nine per cent down on the five year average of 3.4t/ha. Plantings are believed to be significantly up on the five year average, at 655k/ha in 2011, indicating a potential total production of 2.028mt against the five year average of 1.762mt in England.

NFU combinable crops chairman Ian Backhouse said: “I believe this year’s forecast yield decrease was largely due to poor growing conditions since winter. With the east of England experiencing its lowest rainfall for the first half of the year in over 100 years, farmers are clearly concerned about the impact on the ground of this abnormally dry spring.

“I’d like to thank NFU members for completing this survey. Watching crops wither has meant a difficult time for many of our farmers and growers, particularly in the worst affected parts of the country.”

Responses have pointed to large variability in potential yields, often linked to almost complete lack of rainfall as well as soil type and capacity to hold water. Indications from respondents were that other cereal crop yields will be similarly affected, particularly for spring sown crops such as spring barley and spring wheat.

[Mustang Sally Farm]

Monday, July 04, 2011
CME: Surprises in Acreage, Grain Stocks Reports
US - The fireworks were flying the latest USDA Acreage and Grain Stocks reports, write Steve Meyer and Len Steiner.


The latest USDA data contained surprises for both the nearby and deferred futures markets. 1 June corn stocks were reported to be 3.670 billion bushels, some 350 million bushels higher than pre-report estimates. In the last DLR, the stocks number was highlighted in that estimates were implying livestock feed use during Mar - May down about 9 per cent from the previous year. Better quality corn may have allowed farmers to produce more meat with lower corn use. The much higher USDA stocks estimate implies corn feed use during Mar - May which is as much as 40 per cent lower than a year ago and 29 per cent lower than two years ago. Higher use of alternative feeds, including DDGs is always a factor and comparisons to a year ago may be skewed by how poor feed quality was last year. Still, the magnitude of the decline is very significant (even compared to 2009 good quality crop) and we will have to wait until the fall for the USDA to reconcile the stocks numbers with total production estimates.


The second big surprise in the report was the number of acres planted with corn. The most recent USDA survey showed that US farmers planted 92.3 million acres with corn, 1.6 million acres more than the most recent USDA estimate and pre-report market estimates, and even slightly larger than planting intentions early this spring. This increase adds about 270 million bushels to the corn balance sheet for next year. So what happened with all the talk of flooded acres and delayed plantings? The results were a lesson in system dynamics.

Plenty of acres were flooded and planting was delayed or lost in a number of areas. But as futures advanced to record levels, this allowed farmers in areas that had favorable weather to plant more corn, either by shifting soybean acres or putting corn in acres intended for hay. The report showed that farmers in the Dakotas, Texas and Illinois planted 1.1 million fewer acres than they reported in the March survey. However, farmers in Nebraska, Iowa, Minnesota and Wisconsin planted 1.1 million more acres than they intended in March. Total planted acres of corn, wheat, soybeans, cotton and hay were 295.1 million acres compared to 298.1 million acres intended in March. USDA announced yesterday that it will re-survey farmers in four states where plantings were delayed and the results of that re-survey will be published in August. In the meantime, trade will debate the full impact of flooding as well as the possible implication that the shift in acres from one state to the next will have on final yields.

The bottom line is that taken at face value, the most recent USDA data significantly alters the supply/demand balance sheet for this year and for next. Early calculations indicate that ending stocks for next year could be as high as 1.2 billion bushels, not a bumper supply but significantly better than the razor thin stocks reported in the latest WASDE. The stocks to use ratio for next year could climb to 8.6 per cent. Tom Elam and Steve Meyer have done some work on the shift in the relationship between stocks/use ratios and corn (see chart and DLR 1/28) and an 8.6 per cent ratio could push farm cash prices below the $5 threshold.

[Mustang Sally Farm]

Feed Outlook – August 2011
Lower projected yields have reduced global production prospects, according to the latest report from the USDA Economic Research Service.
 

The first survey-based forecasts for corn and sorghum sharply reduce this month's outlook for 2011/12 US feed grain production. Harvested acres and yield are reduced this month for corn, resulting in a projection for the third-largest corn crop on record, falling behind the 2007 and 2009 crops. Sorghum production is forecast down from last month, also on lower expected harvested acres and yield. Reductions this month in projected corn feed and residual, food, seed and industrial (FSI) use, and exports lower total disappearance for 2011/12. Ending stocks for corn, sorghum, and barley are reduced and oats are increased slightly from last month. Prices for the four feed grains are expected to be stronger with tight domestic supplies and low global stocks.

World coarse grain production for 2011/12 is down this month but foreign production is up led by increased prospects for corn in Brazil and for corn and barley in Ukraine. Global coarse grain use is reduced by increased prospects for wheat feeding. Foreign coarse grain ending stocks are projected higher, offsetting about half this month’s decline in US stocks.

US Feed Grain Supply Prospects Diminish
Forecast US feed grain beginning stocks in 2011/12 are raised 1.5 million tons from last month but are down 20.6 million tons from the previous year, a 43-per cent reduction. US feed grain production is forecast at 338.6 million metric tons, 15.7 million below last month but 8.6 million above the 2010/11 estimate. Compared with the amounts in 2010/11, production is up for corn but down for sorghum, barley, and oats. This month saw sharp declines in projected production for corn and sorghum. Feed grain supply is projected at 368.4 million metric tons this month, 14.2 million short of last month and 12.2 million below 2010/11.

Total 2011/12 feed grain use is projected 10.0 million metric tons lower from last month and 5.3 million short of 2010/11. This month's reduction reflects lower estimates for feed and residual, FSI and exports for corn and sorghum. Lower forecast use for fuel ethanol was partially offset by increases in corn sweeteners and starch use. FSI is projected at 172.0 million metric tons in 2011/12, compared with 169.8 million in 2010/11. Exports are forecast at 47.5 million metric tons, down 4.3 million from the previous estimate and 2.9 million below last season.

The US Census Bureau issued revised numbers for calendar year 2010, affecting trade estimates this month for corn and sorghum in 2009/10 and for barley and oats in 2010/11. Imports are unchanged for 2009/10 but are up slightly for 2010/11, with a small increase for oats. Marketing year exports for feed grains in 2009/10 are lowered slightly to 54.7 million metric tons, mostly reflecting a small downward revision for corn. In 2010/11, forecast exports are lowered for barley and oats based on the Census revisions, with sorghum and corn export projections also adjusted based on the pace of shipments. Feed grain exports for 2010/11 are projected 1.0 million metric tons lower to 50.4 million. Ending stocks for 2010/11 are up by 1.5 million metric tons to 27.5 million.

When converted to a September–August marketing year, feed and residual use for the four feed grains plus wheat in 2011/12 is projected to total 133.6 million tons, down from 138.7 million last month and down three per cent from the 2010/11 forecast of 138.0 million. Corn is estimated to account for 93 per cent of total feed and residual use in 2011/12, up from 92 per cent in 2010/11.

Projected grain-consuming animal units (GCAUs) for 2011/12 are up slightly from last month at 94.5 million. Estimated GCAUs for 2010/11 are unchanged at 93.1 million. Feed and residual use per animal unit is projected at 1.42 tons, down from last month's 1.47 tons due to lower cattle carcass and hog numbers.

US Corn Crop Prospects Lowered
US corn production in 2011/12 is forecast at 12,914 million bushels, down 556 million from last month but up 467 million from 2010/11. Harvested acreage for 2011/12 is forecast at 84.4 million acres for grain, down 500,000 from last month but up 2.9 million from the previous year. Based on conditions on 1 August, yields are expected to average 153.0 bushels per acre, down 5.7 bushels from last month's projection of 158.7 bushels and just 0.2 bushels higher than the estimated 2010 yield of 152.8 bushels. Unusually high average temperatures and below-average precipitation across much of the Corn Belt in July sharply reduced yield prospects. As of 8 August, 60 per cent of the corn crop was rated in good-to-excellent condition in the 18 major corn-producing States, down 11 percentage points from a year ago.

US Corn Use Expected To Slip
Total US corn use for 2011/12 is forecast down 340 million bushels to 13,160 million this month as a result of decreased exports, feed and residual use and FSI use. FSI use is lowered 40 million bushels. Corn for fuel is lowered 50 million bushels, and use for 'cereals and other' is reduced five million bushels. However, high fructose corn syrup (HFCS), corn used for starch, and glucose/dextrose are each raised five million bushels. US exports are reduced by 150 million bushels as high prices reduce demand and world feeders shift to more competitively priced wheat.

Total corn use for 2010/11 is forecast down 60 million bushels to 13,245 million bushels this month. Food, seed and industrial use (FSI) is reduced 10 million bushels to 6,420 million bushels. Lower use for ethanol, down 30 million bushels to 5,020 million, is partially offset by increases on other FSI categories. HFCS is increased 10 million bushels to 520 million as a result of expected increased exports to Mexico and the year-to-year pace through the third quarter. Glucose/dextrose and starch are both raised five million bushels to 265 million and 260 million, respectively. US exports for 2010/11 are reduced 50 million bushels to 1,825 million. Reductions in use leave ending stocks for 2010/11 up 60 million bushels compared with last month’s projection.

US Census Bureau trade revisions included changes for calendar year 2010. In the 2009/10 marketing year, corn exports are lowered seven million bushels to 1,980 million. FSI use is raised 22 million bushels to 5,961 million because of revisions to monthly ethanol production estimates by the US Energy Information Administration. Together, the revisions lower feed and residual use 15 million bushels to 5,125 million for 2009/10.

Corn prices received by farmers for 2011/12 are projected at $6.20 to $7.20 per bushel, up 70 cents on both ends of the range this month. The marketing year average reflects higher prices for corn with tighter ending stocks and tight global feed grain supplies. The 2010/11 corn price range is narrowed $0.05 at each end for an estimated range of $5.20 to $5.30 per bushel.

US Sorghum Production Lower
US sorghum production for 2011/12 is forecast at 241 million bushels, down 59 million from last month and 104 million bushels below last year. Expected area harvested for grain is forecast sharply lower at 4.4 million acres and down 420,000 from 2010/11. Based on conditions on 1 August, yield is lowered by 10.6 bushels per acre this month and is projected 17.0 bushels per acre below the previous season. Hot dry weather in Texas, Kansas and Oklahoma has reduced prospects for the 2011 sorghum crop. As of 8 August, 27 per cent of the US sorghum crop was rated good to excellent, compared with 66 per cent a year earlier.

Total use of sorghum in 2011/12 is projected down 55 million bushels this month to 245 million due to tight supplies. Feed and residual is cut 25 million bushels to 55 million as it may be difficult to put together enough sorghum to encourage feedlots to switch rations to include sorghum. Sorghum FSI use is lowered 10 million bushels to 80 million, with lower expected use for fuel ethanol. Export prospects are reduced 20 million bushels to 110 million as demand from Mexico is expected to remain strong but supplies will be a constraint. US ending stocks projected at 22 million bushels represent minimal 'pipeline' stocks.

Total use for sorghum in 2010/11 is forecast at 360 million bushels, unchanged from last month. Feed and residual use remains forecast at 125 million bushels. Sorghum used for ethanol is expected lower during the summer quarter, with tightening supplies cutting FSI use 10 million bushels to 85 million. Exports are raised 10 million bushels to 150 million, reflecting strong sales in July and the ongoing pace of shipments. Ending stocks for 2010/11 are virtually unchanged at 27 million bushels.

Sorghum prices received by farmers for 2011/12 are expected to average $6.00 to $7.00 per bushel, up 90 cents on both ends of the range from last month, as reductions in domestic feed grain supplies raises prices for all feed grains. The 2010/11 average sorghum price is narrowed $0.05 on each end of the range to $5.15 to $5.25 per bushel.

US Barley Production Prospects Up
US barley production for 2011/12 is forecast at 168 million bushels, down four million bushels from last month and down 12 million from 2010. Based on conditions on 1 August, producers expect yields to average 70.4 bushels per acre, up 0.8 bushels from last month. Production is expected to reach record lows on lower harvested acreage and yield as compared with last year. Area harvested for grain is forecast at 2.4 million acres, slightly lower than last month's estimate and down three per cent from 2010. On 8 August, 72 per cent of this year's US crop was rated in good-to-excellent condition, compared with 83 per cent a year ago.

Total barley supplies in 2011/12 are lowered 4 million bushels this month to 268 million, as a result of lower production. Domestic use is forecast at 210 million bushels, unchanged this month. With lower supply and steady use, this month's ending stocks are projected down four million bushels to 58 million, compared with 89 million in 2010/11.

US Census Bureau revisions for calendar year 2010 increased barley exports for 2009/10 slightly. Exports for 2010/11 were reduced slightly. Imports were reduced 0.5 million bushels to 9.5 million.

Prices received by farmers for barley in 2011/12 are expected to average $5.80 to $6.90 per bushel, raised 15 cents on both ends of the range this month. This compares with $3.86 per bushel for 2010/11. Although prices for feed barley are expected to increase largely in line with those for corn and sorghum, price gains will be limited for malting barley as much of the crop is produced under contract.

US Oats Production at Record Low
US oats production for 2011/12 is forecast at 57 million bushels, increased slightly from a month ago. This would be down 24 million from 2010/11, and if realised, the lowest production on record. Harvested area is forecast at 0.9 million acres, unchanged from last month and a record low. Based on conditions on 1 August, producers expect yields to average 61.6 bushels per acre, an increase of 1.1 bushels from the July forecast but a decrease of 2.7 bushels from last year. On 8 August, 52 per cent of the oat crop in the nine major producing States was rated as good to excellent, compared with 77 per cent last year.

Total oats supplies for 2011/12 are edged up this month to 215 million bushels. Oats use estimates remain unchanged with total use at 169 million bushels.

US Census Bureau revisions for calendar year 2010 result in minor changes in oats exports for 2009/10 and raise exports for 2010/11 0.2 million bushels to an estimated 2.8 million. Census data indicate 2010/11 imports reached 85.1 million bushels, up 2.1 million from the previous month's forecast. Small increases in imports for marketing years 2009/10 and 20010/11 produced corresponding changes in feed and residual use. FSI for 2010/11 was reduced two million bushels to 74 million.

Prices received by farmers in 2011/12 are expected to average $3.40 to $4.00 per bushels, up 20 cents on both ends of the range. This compares with $2.52 per bushel for 2010/11.

US Hay Production Slips in 2011/12
All US hay production in 2011/12 is forecast at 132.0 million tons, down 13.6 million from 2010/11 due to extremely hot and dry weather. The all-hay yield is expected to be 2.29 tons per acre, down from 2.43 tons per acre in 2010/11. Harvested acres are forecast at 57.6 million acres, down 2.3 million from last year and the lowest all hay area on record going back to 1919.

Alfalfa hay production is forecast at 65.0 million tons, down four per cent from last year.

Based on crop conditions on 1 August, yields are expected to average 3.36 tons per acre, down 0.04 tons from last year. If realised, this will be the second highest yield since 2005. Harvested area is forecast at 19.3 million acres, unchanged from June but down three per cent from the previous year's acreage.

Other hay production is forecast at 67.0 million tons, down 14 per cent from last year.

Based on conditions on 1 August, yields are expected to average 1.75 tons per acre, down 0.2 tons from last year. If realised, this will be the lowest US yield since 1988. Harvested area, forecast at 38.3 million acres, is unchanged from June but down four per cent from last year.

Roughage-consuming animal units (RCAUs) in 2011/12 are estimated to be down from 2010/11. Even with lower RCAUs, the sharp drop in hay production leaves hay supply per RCAU down at 1.94 tons, compared with 2.10 tons in 2009/10.

With tighter hay supplies, prices have risen sharply in recent months. The preliminary July 2011 estimate for the average price received by farmers for all hay was $170 per ton, compared with $112 per ton in July 2010. The preliminary July estimate for alfalfa hay was $189 per ton, compared with $117 per ton last season. The preliminary July estimate for hay other than alfalfa and alfalfa mixtures was $119 per ton, compared with $97 per ton a year ago.

[Mustang Sally Farm]

Global Coarse Grain Production Down Due to US Drop
World coarse grain production is down 14.0 million tons this month to 1,136.3 million tons, mostly because of reduced US prospects. In contrast, foreign production is projected up 1.7 million tons to 797.5 million, mostly due to increased corn and barley prospects. Foreign corn production is up 2.2 million tons this month to 532.5 million, led by increased prospects in Brazil. Foreign barley production is up 0.8 million tons to 128.7 million, boosted by improved prospects for Ukraine. EU oats production increased this month, boosting projected world production slightly. Global rye and mixed grains are each reduced 0.8 million tons this month as EU production prospects are reduced, mostly due to excessive rain during harvest in Poland and Germany.

Brazil's 2011/12 corn crop is projected up 2.0 million tons to 57.0 million, supported by increased area prospects. Planting for the main crop starts in September, and recent price increases for corn relative to those for other crops support expanded area, even in Brazil where climatic conditions often make soybeans less risky than corn. Brazil's estimated corn crop for 2010/11 remains at 55.0 million tons, with upward revisions reported for the main crop offsetting declining prospects for the second crop.

Ukraine's corn production prospects are increased 1.0 million tons to 16.5 million based on increased reported area. Favourable soil moisture during seeding and attractive prices encouraged corn plantings. EU corn production prospects are increased 0.8 million tons this month to 60.1 million, with improved yield prospects in Germany and increased reported area for Romania, Italy, Slovakia and Bulgaria more than offsetting lower-than-expected area in France.

Egypt's corn production prospects are cut 0.8 million tons to 5.9 million because producers are reported to have shifted area to rice, likely due to relaxed government controls. Canada's corn production prospects are trimmed 0.3 million tons to 11.0 million as yield prospects in Ontario are reduced by delayed crop development and dry conditions in some locations. Lower area and trimmed yield prospects are reducing Croatia's corn production prospects 0.2 million tons to 2.0 million. Ongoing drought in northeast Kenya is reducing corn production prospects 0.2 million tons to 2.8 million; the drought is also extending into Somalia, cutting 2011/12 corn production prospects in half to 60,000 tons. However, corn production in Kenya for 2009/10 and 2010/11 is revised 0.3 million tons and 0.4 million higher this month. Corn production for 2010/11 is also raised this month for India, the EU and Indonesia, more than offsetting a small decline for Mexico. A decline in 2010/11 Mexican sorghum production is more than offset by an increase for Argentina.

Barley production prospects in Ukraine for 2011/12 are up 1.0 million tons this month to 8.5 million. Nearly complete harvest data reveal higher-than-expected yields. Argentina's 2011/12 barley production prospects are increased 0.4 million tons to 3.1 million based on increased area prospects. The export quota regime for wheat makes barley an attractive alternative winter grain for producers who wish to avoid the uncertainty of the government's wheat export policy. Argentina's 2010/11 barley area was increased slightly, boosting production 0.05 million tons to 2.95 million. India reported a slightly higher barley yield, boosting 2011/12 production 0.07 million tons to 1.57 million, a rabi crop harvested months ago. China's winter grain harvest report also boosted barley yield slightly, increasing production 0.05 million tons to 2.6 million.

EU barley production prospects for 2011/12 are reduced 0.6 million tons this month to 51.5 million. Spring dryness in France and Germany, compounded by excessive harvest rains in Germany, trimmed barley yields. Also, Spain reported lower barley area. Kazakhstan reported no increase in barley area for 2011/12, reducing barley production prospects 0.1 million tons to 2.1 million. Croatia also reported no growth in barley area, reducing production prospects slightly.

World 2011/12 Beginning Stocks Increased This Month
Global coarse grain beginning stocks for 2011/12 are increased 3.6 million tons this month to 160.9 million. Foreign countries account for 2.1 million tons of the increase. Argentina's coarse grain beginning stocks for 2011/12 are boosted 0.7 million tons to 2.7 million with increased corn production estimated for 2009/10 and increased sorghum production for 2010/11. Area harvested is estimated higher. EU coarse grain beginning stocks for 2011/12 are increased 0.6 million tons to 15.7 million, mostly due to reduced barley feed use estimated for 2010/11. Beginning stocks are also increased for India, Indonesia, Russia, Kenya, and several other countries. Beginning stocks for 2011/12 are reduced 0.5 million tons for South Africa based on increased 2010/11 corn exports. Mexico's beginning stocks are also trimmed.

Global Coarse Grain Use Prospects Reduced
World coarse grain disappearance in 2011/12 is projected down 8.4 million tons this month to 1,150.0 million. Foreign use is forecast down 2.7 million tons to 849.5 million as strong prices ration demand. EU coarse grain domestic use is cut 2.0 million tons this month to 146.5. Coarse grains are being displaced by feed wheat in animal rations, cutting EU feed and residual prospects 2.7 million tons to 108.2 million. EU 2010/11 coarse grain feed use estimated for 2010/11 is also reduced this month. However, based on demand prospects reported by USDA's Foreign Agricultural Service posts in the EU, food, seed and industrial use in 2011/12 is boosted 0.75 million tons to 38.3 million, with most of the increase attributed to barley used for malting. Canada is also expected to have coarse grain feed use displaced by competitively priced wheat, cutting coarse grain feed and residual use 0.7 million tons this month to 14.2 million tons. South Korea and Thailand are expected to import wheat for feed, displacing coarse grains and trimming feed and residual use 0.5 and 0.2 million tons, respectively. Egypt, with reduced corn production prospects, has feed and residual forecast 0.3 million tons lower this month.

Partly offsetting the aforementioned declines are increased 2011/12 use prospects for Saudi Arabia, up 0.8 million tons, based on increased barley imports; India, up 0.5 million, with increased use estimated for 2010/11; Indonesia, up 0.3 million, due to growing feed demand; China, up 0.2 million, due to increased barley malting for beer production; and several other countries, up by smaller amounts.

Foreign Coarse Grain Ending Stocks Projected Higher
World coarse grain ending stocks in 2011/12 are projected down 2.0 million tons this month to 147.2 million but foreign stocks are forecast up 2.1 million tons to 126.6 million, roughly offsetting half the drop in US stocks. Increased foreign production and reduced coarse grain feed use because of ample supplies of competitively priced wheat combine to boost prospects for foreign ending stocks.

Brazil's coarse grain ending stocks in 2011/12 are increased 2.0 million tons to 8.5 million this month, supported by increased corn production prospects. Ending stocks for Brazil are still expected to decline for the fourth consecutive year. Saudi Arabia's coarse grain stocks are up 0.3 million tons to 1.6 million, based on strong barley imports. However, Saudi stocks are also expected to decline for the fourth straight year. Smaller increases are expected for Thailand, Ukraine, Turkey, Viet Nam and several other countries. Partly offsetting these increases are reduced stocks forecast for South Africa, down 0.5 million tons to 4.0 million, due to recent strong corn export shipments. Smaller reductions in stock prospects are expected for Mexico and some other countries.

US Corn Export Prospects for 2011/12 Reduced
US corn exports in trade year 2011/12 are projected at 45.0 million tons, down 3.0 million this month – down 150 million bushels to 1.75 billion for the local marketing year – due to tight US supplies and high corn prices, increased competition from other exporters and declining world corn trade caused by increased availability of competitively priced feed quality wheat.

World corn trade in 2011/12 is projected to reach 92.8 million tons, down 0.9 million this month. EU corn imports are reduced 1.0 million tons to 4.0 million because of increased production and feed use of wheat. EU wheat feed use is forecast up 2.0 million tons this month. South Korea, Thailand and Viet Nam have reduced corn imports forecast this month – down 0.5 million tons, 0.1 million and 0.1 million, respectively – due to increased import prospects for feed quality wheat. Partly offsetting are increased corn imports expected for Egypt, up 0.5 million tons, and Kenya, up 0.15 million, because of reduced production prospects.

Ukraine, with increased corn production prospects, is projected to export 8.5 million tons in 2011/12, up 1.0 million this month. Argentina, with increased estimated beginning stocks, is projected to export 17.5 million tons of corn in 2011/12, up 0.5 million tons this month. Canada's corn export prospects are increased 0.5 million tons this month to 1.0 million as the recent strong pace of sales and shipments is expected to slow but not cease in 2011/12. South Africa has shipped corn in recent months at a pace that indicates that port capacity and transportation infrastructure problems are not as severe as previously thought. Its corn export prospects for 2011/12 are boosted 0.3 million tons this month to 2.3 million. Croatia's 2011/12 corn exports are trimmed 0.15 million tons to 0.1 million due to reduced production prospects.

US 2011/12 Sorghum Export Prospects Drop
Sharply reduced US production prospects are limiting sorghum export prospects for 2011/12. Exports are projected down 0.4 million tons to 2.9 million – down 20 million bushels to 110 million for the local marketing year). Argentina's sorghum exports for the 2011/12 October-September trade year are boosted 0.3 million tons to 2.0 million, supported by increased production in the 2010/11 March-February local marketing year. EU sorghum imports are trimmed slightly for 2011/12.

US sorghum exports for 2010/11 are increased 0.2 million tons to 3.8 million this month based on the recent pace of sales and shipments and strong demand from Mexico. Demand growth in Mexico stems from reduced production prospects, especially in Tamalipas. According to Census data, US sorghum exports for October-June reached 2.9 million tons. Sorghum grain inspections in July 2011 were 0.3 million tons, up 50 per cent from a year earlier. As of 4 August, outstanding sales were 0.4 million tons, down just two per cent from last year at this time, supporting prospects for shipments in August and September 2011.

US 2010/11 Corn Exports Slump
US corn exports for 2010/11 are forecast down 2.0 million tons to 46.0 million – down 50 million bushels to 1.825 billion for the local marketing year. The pace of export sales and shipments has fallen short of expectations in recent months as US corn prices have not been competitive with feed-quality wheat, and other exporters have shipped aggressively. The 2010/11 forecast is down seven per cent from the previous year. Census exports for October-June reached 34.1 million tons, down five per cent from the previous year. July export inspections were only 3.9 million tons, down 14 per cent from a year ago. Moreover, as of 4 August, outstanding export sales reached only 5.7 million tons, down 23 per cent from the same week last year. With US corn in Southern States damaged by drought, less new-crop corn than usual is likely to be available for shipment in September 2011.

Partly offsetting the drop in US export prospects for 2010/11 are increased exports forecast based on the recent pace of shipments for Argentina, up 0.5 million tons; India, up 0.4 million; South Africa, up 0.3 million; Canada, up 0.2 million; and Thailand, up 0.05 million. Import forecast adjustments based on the pace of recent shipments include Japan, down 0.6 million tons; Viet Nam, down 0.3 million; Thailand, down 0.1 million; Indonesia, up 0.5 million; Turkey, up 0.2 million; and the United States and Kenya, up by smaller amounts.

August 2011

[Mustang Sally Farm]

US corn exporters fear Colombia-Canada FTA
//29 Aug 2011
 Exporters of corn in the US are afraid they will lose market share in Colombia now this Latin American country has signed a free trade agreement with Canada.
 

With the implementation of the free trade agreement (FTA) between Colombia and Canada on August 15, US exports will be facing Canadian feed wheat as a new competitor for American corn.
 
 
 
US Grains Council trade sources indicate that Colombian buyers have placed orders for 125,000 mt of Canadian feed wheat in the 10 days since the agreement went into effect and as such eroding US corn sales opportunities in the Colombian corn market.
 
 
 
The ratification of a US-Colombia FTA for corn is still pending and as a result US corn is still taxed with a 15% duty. In contrast, corn from Brazil and Argentina is taxed 6.7% and now Canadian wheat is now duty-free.
 
 
 
In 2007, Colombia imported  3 million tons of corn with the United States enjoying a 93% market share. Since then the US market share has shrunk to 20% in 2010.

[Mustang Sally Farm]

Feed Outlook – September 2011
The US corn yield has dropped and this is expected to boost prices, according to the latest report from the USDA Economic Research Service.
 

The US corn yield forecast for 2011/12 dropped 4.9 bushels per acre this month to 148.1 bushels. Corn production prospects are reduced 417 million bushels to 12.5 billion, just 0.4 per cent higher than the previous year despite a 4.6 per cent increase in planted area. Sustained high corn prices are expected to reduce use, with feed and residual down 200 million bushels and ethanol use and exports each down 100 million. US ending stocks are down 42 million bushels to 672 million, as high prices maintain a stocks-to-use ratio near five per cent. World corn ending stocks are boosted this month as foreign production responds to sustained high prices. The US share of world corn trade is projected to fall below 50 per cent for the first time in 30 years.


DOMESTIC OUTLOOK

Feed Grain Supply and Use Down
US feed grain production in 2011/12 is forecast at 328.1 million metric tons, down 10.5 million from last month’s forecast and slightly below the 2010/11 estimate of 330.0 million. Sharply reduced corn yield and production this month swamp a small sorghum production increase. Forecast beginning stocks are down 0.5 million tons from last month and down 21.1 million from last year. Feed grain supplies in 2011/12 are forecast at 357.3 million tons, down 11.1 million from last month primarily due to lower carry-in and the decreased yield forecast for corn. Feed grain supplies are down 23.3 million tons from last year’s estimate.

Projected feed grain use for 2011/12 dropped 10.2 million tons this month to 337.6 million as sustained high prices are expected to constrain demand. Total use is forecast down 16 million metric tons from the 2010/11 projection. Feed and residual drops 5.1 million tons from last month as high grains prices constrain livestock profitability and the smaller forecast corn crop reduces residual disappearance. Feed and residual is projected at 123.2 million tons for 2011/12, compared with the 2010/11 projection of 133.0 million. Projections for food, seed and industrial (FSI) uses and exports each slipped 2.5 million tons from last month. Lower projected corn use for ethanol reduces feed grain FSI use.

For 2010/11, feed grain FSI is raised 254,000 tons this month due to increased corn use for high-fructose corn syrup and glucose and dextrose. Exports are also raised by the same amount to 50.6 million this month, reflecting August corn shipments. This lowers projected ending stocks by 500,000 tons to 27.0 million.

Feed Use
When converted to a September-August marketing year, feed and residual use for the four feed grains plus wheat in 2011/12 is projected to total 128.5 million tons, down 5.7 million from last month and down seven per cent from the 2010/11 forecast of 138.2 million. Corn is estimated to account for 94 per cent of the feed and residual use in 2011/12, up from an estimated 92 per cent in 2010/11.

The projected index of grain-consuming animal units (GCAU) for 2011/12 is 94.5 million units, slightly higher than the 2010/11 estimate of 92.9 million. The grain used per GCAU in 2011/12 is expected to be 1.36 tons, down from an estimated 1.49 tons in 2010/11. Sustained high grain prices and lower residual disappearance are expected to cause the reduction in grain disappearance per GCAU. In the index components, GCAUs are decreased slightly for dairy, hogs, layers and broilers from last month.

USDA’s Quarterly Hogs and Pigs report will be released on 24 September and will provide an indication of sow farrowing intentions into early 2011. Higher feed prices are expected to slow pork production gains and reduce feed use.

Corn Yield Cut, Production Slips this Month
US corn production in 2011/12 is forecast at 12.5 billion bushels, down 417 million from last month and only 50 million bushels above 2010/11, despite a 4.6 per cent increase in planted area. Based on conditions on 1 September, the national average corn yield is forecast at 148.1 bushels per acre, down 4.9 bushels from the August forecast and 4.7 bushels per acre below the 2010/11 yield. The current yield forecast for 2011/12 is 16.6 bushels below the 2009/10 record and would be the lowest yield since 2005/06. Despite this lower yield, production is forecast to be the third highest ever, with the second highest planted area since 1944.

Projected beginning stocks for 2011/12 are lowered 20 million bushels this month to 920 million, reflecting higher estimates of exports and FSI use during the 2010/11 season. Projected imports for 2011/12 were reduced five million bushels, and if realised, the 15 million bushels imported will be half the level imported during the 2010/11 crop year. The reduced imports primarily reflect slower shipments from Canada due to lower production there. The resulting corn supply for 2011/12 is projected at 13.4 billion bushels, 442 million below last month’s projection and 753 million below 2010/11. Estimated 2010/11 supplies were unchanged this month at 14.2 billion bushels.

Feed and residual use for 2011/12 is lowered 200 million bushels this month, as tighter supplies and higher prices trim feed demand. Residual disappearance is also expected to decline with the smaller crop. The export projection is cut 100 million bushels as US supplies tighten relative to other producers. FSI use was lowered 100 million bushels on lower projected ethanol production based on reduced prospects for fuel consumption reported by the Energy Information Administration. Projected 2011/12 ending stocks are lowered 42 million bushels from last month to 672 million bushels as strong prices maintain ‘pipeline’ stocks relative to use of about five per cent.

Projected 2011/12 corn prices are increased 30 cents on each end of the range for an average of $6.50 to $7.50 per bushel, reflecting tighter supplies and reduced ending stocks. The 2010/11 estimated price was reduced five cents to $5.20 per bushel from the mid-point of last month’s estimated range.






Sorghum Production Advances
US sorghum production is forecast at 244 million bushels for 2011/12, an increase of 3.5 million bushels over the August forecast reflecting higher than expected yields in Texas. At the forecast level, this year’s production is still 101 million bushels below the 2010/11 harvest. Based on conditions on 1 September, the sorghum yield forecast was increased 0.8 bushels per acre to 55.6 bushels per acre. However, yields are 16.2 bushels per acre lower than last season due to drought in the southern growing regions. In Kansas, the top producing state, producers are expecting a yield of 55 bushels per acre, unchanged from last month and 21 bushels below the 2010 estimate. Producers in Texas, the second largest sorghum-producing state, expect the crop to yield 52 bushels per acre, up two bushels from last month but down 18 bushels from last year.

This month’s increased projected supplies are reflected in a forecast 3.5-million-bushel increase in ending stocks for 2011/12 compared to August.

The sorghum farm price is forecast 30 cents per bushel higher on each end or the range this month to $6.30 to $7.30 per bushel, supported by tight supplies and higher corn prices. The 2010/11 farm price forecast is lowered five cents from the mid-point of last month’s projected range to $5.15 per bushel.






The increase in production boosts 2011/12 projected supply 3.5 million bushels to 270.759 million. Sorghum supply and use for 2010/11 was unchanged this month.

Barley and Oats Unchanged
US barley and oats production was not revised in the September Crop Production report. Any production revisions will be reported in the Small Grains 2011 Summary to be released 30 September 2011. No changes are made this month in barley or oats supply and use.

For the 2011/12 marketing year, the projected season-average farm price for all barley is reduced 35 cents per bushel on each end of the range to $5.45 to $6.55 per bushel. While prices for feed barley are expected higher with rising feed grain values, reported prices for malting barley have been lower than expected. Much of the malting barley crop is raised under contract with prices set last winter and spring before planting. The 2010/11 estimated price for all barley is unchanged at $3.86 per bushel.

The 2011/12 projected oats price is unchanged at $3.40 to $4.00 per bushel. Stronger corn prices for 2011/12 are expected to support other feed grain prices; however, a substantial portion of the 2011/12 oat crop has already been marketed at prices well below current levels. The 2010/11 estimated price for oats is unchanged at $2.52 per bushel.

INTERNATIONAL OUTLOOK

Increased Foreign Coarse Grain Production Partly Offsets US Drop
World coarse grain production in 2011/12 is projected at 1,131.2 million tons, down 5.1 million this month but foreign production is up 5.4 million tons to 802.9 million. Most of the large changes in 2011/12 production this month are for corn. Global millet production is up 0.4 million with increased production for Russia and Ukraine, while barley is up 0.2 million with increases for Ukraine and the EU more than offsetting a 0.7-million-ton drop for Morocco caused by excessive rains during the harvest. World oats and rye production are nearly unchanged this month, with foreign sorghum and mixed grain production unchanged.

Foreign corn production for 2011/12 is up 4.8 million tons this month as increases for Brazil, Argentina, Ukraine and the EU more than offset reductions for Egypt and Canada. Brazil’s corn production in 2011/12 is projected to reach a record 61.0 million tons, up 4.0 million. The Brazilian Government published its final estimate of 2010/11 corn production at 57.5 million tons, up 2.0 million from last month’s USDA forecast, with increased area and production for the second crop. Despite the late corn planting and early cut-off of rains in Mato Grosso, the seven per cent area expansion for all of Brazil in 2010/11 supported record corn production. Current strong corn prices compared to soybean prices are expected to support corn area expansion for the first-crop 2011/12 corn just now being planted in Southern Brazil, while the high prices of both corn and soybeans are expected to encourage expanded area in the Center-West for double-cropped soybeans and corn. Total corn area in 2011/12 is projected up five per cent to 14.5 million acres, supporting another record corn crop.






The strong prices for corn compared to soybeans are also expected to support corn area in Argentina, forecast up 12.5 per cent from a year earlier. Increased area is boosting projected 2011/12 corn production 1.5 million tons this month to a record 27.5 million tons.

Corn production prospects for Ukraine are increased 1.5 million tons to 18.0 million based on early harvest reports and the good condition of the crop. Favourable temperature and rainfall during the season in most areas is confirmed by satellite imagery. Good corn yield prospects boost projected EU 2011/12 corn production 1.0 million tons this month to 61.0 million. Improved crop prospects are reported for Romania, France, Hungary, Poland and Bulgaria.

Corn production prospects are reduced dramatically this month for Egypt, down 2.1 million tons to 3.8 million. The government is not effectively limiting access to irrigation water for rice, and with rice more profitable than corn, Egyptian producers are planting rice in place of corn. Egyptian corn area is projected to drop 39 per cent to 0.52 million hectares in 2011/12, the lowest in the USDA database back to 1960, and production is expected to be the smallest since 1985/86.

Canada’s corn yields are projected lower this month as the growing season has been less than ideal, with Ontario suffering from some of the same problems as neighboring Ohio. Canada’s 2011/12 average corn yield is forecast down 14 per cent from the previous year’s record.

Corn production prospects for the Philippines are also down slightly (0.1 million tons) due to reduced area prospects.

Increased Foreign Beginning Stocks Support 2011/12 Supplies
Foreign coarse grain beginning stocks for 2011/12 are increased 2.5 million tons this month to 135.9 million, more than offsetting the 0.5-million-ton US decline. Foreign supplies (production plus beginning stocks) for 2011/12 are projected up 8.0 million tons this month, with a 5.4-million-ton increase in production.

Most of the foreign increase in coarse grain beginning stocks is from a 1.9-million-ton increase for corn. Brazil, with increased 2010/11 corn production, is projected to carry in 10.0 million tons of corn, up 1.3 million this month. Ukraine’s 2011/12 carry-in is raised 0.5 million tons this month and Paraguay’s is boosted 0.3 million, due to reduced 2010/11 export sales and shipments reported for the final months of the marketing year. Partly offsetting is a 0.2-million-ton reduction in beginning stocks for China because of a reduction in 2010/11 estimated imports.

World barley beginning stocks for 2011/12 are up 0.5 million tons this month to 26.1 million, mostly due to a Statistics Canada report revealing stocks 0.3 million tons higher than forecast last month by USDA. Russia’s barley stocks are boosted 0.1 million tons due to increased 2010/11 imports. Several other countries have smaller changes in barley beginning stocks.

Global oats beginning stocks for 2011/12 are up 0.2 million tons to 3.1 million, with increases for Canada and Chile. Beginning stocks of rye are reduced slightly, and sorghum is unchanged.

US Changes Cut Global Coarse Grains Consumption Prospects
World coarse grain use in 2011/12 is projected down 5.9 million tons this month to 1,144.1 million due to reduced US use. However, foreign consumption is forecast up with increased supplies. Foreign use is forecast up only 1.7 million tons to 851.2 million, as high prices limit consumption gains. Foreign corn use is up only 0.3 million tons as changes are mostly offsetting, with reductions for Egypt and Canada offset by increases for Brazil, Colombia and changes in the sum of world trade. While the sum of local marketing year exports increased slightly this month, imports declined 0.5 million tons, increasing global disappearance.

Brazil’s corn use for 2011/12 is projected up 1.5 million tons this month to 52.0 million tons, while the previous year is estimated up 0.7 million tons to 49.5 million. Expanding poultry and pork production for domestic use and meat exports supports the five per cent growth in corn use estimated for 2010/11 and projected for 2011/12. Colombia’s 2011/12 corn use is up 0.2 million tons this month to 5.4 million based on growth in poultry production.

Corn consumption in Egypt for 2011/12 is cut 1.7 million tons to 10.4 million. Sharply reduced corn production and uncertain economic prospects cut expected food, seed and industrial use 0.6 million tons to 1.6 million, and faltering poultry production is expected to cut feed and residual use 1.1 million tons to 8.8 million. Reduced production in Canada is expected to reduce corn feed use to 6.3 million tons, down 0.5 million this month.

World barley consumption in 2011/12 is projected up 1.0 million tons this month to 137.1 million. Increased use is projected for Saudi Arabia, up 0.5 million tons this month to 7.1 million. The Saudi Government has backed up assurances of maintaining ample supplies for feeding sheep and camels by importing aggressively in recent weeks. Syria has also imported at a stronger rate than expected, boosting use prospects 0.2 million tons to 1.2 million. Russia, with increased beginning stocks and no incentive to build stocks during 2011/12, is expected to increase use, boosting domestic consumption 0.3 million tons this month to 14.3 million. Chile’s barley use is up slightly this month. However, with reduced production prospects, barley use in Morocco is forecast down 0.1 million tons to 3.2 million.

Increased millet production in Russia and Ukraine is boosting consumption 0.4 million tons this month. Increased oats supplies in Chile boost prospects for 2011/12 use 0.1 million tons this month.

World Corn and Coarse Grain Ending Stocks Increased This Month
Global coarse grain ending stocks for 2011/12 are projected up 2.8 million tons this month to 150.0 million. Foreign stocks are up 3.7 million tons, more than offsetting the decline in US prospects. Foreign corn stocks are up 3.9 million tons, barley is down 0.3 million, and sorghum and oats are each up 0.1 million.

Brazil’s corn ending stocks for 2011/12 are up 2.8 million tons this month to 11.0 million. A combination of sharply increased production prospects and no government programme to subsidise transport for export or domestic use is expected to result in corn stocks building in Brazil during 2011/12. This month, corn ending stocks are boosted 0.5 million tons each for Argentina, Ukraine, Paraguay and the EU. Increased production boosts ending stocks prospects for Argentina, Ukraine and the EU but slow imports by Brazil are expected to cause stocks to build in Paraguay. Corn ending stocks prospects are reduced 0.5 million tons for Egypt due to reduced production, 0.2 million for China because of reduced 2010/11 imports, 0.1 million for the Philippines due to reduced area, and slightly for Chile.

Barley ending stocks prospects for 2011/12 are cut 0.6 million tons each for Morocco and Russia. Reduced production is expected to cut stocks in Morocco, while strong demand for exports and domestic use is likely to limit Russia’s barley stocks. Partly offsetting are increased stocks prospects for Canada, up 0.4 million due to increased beginning stocks revealed by a stocks survey;for the EU, up 0.3 million due to increased production; and for Saudi Arabia, up 0.2 million based on increased imports and government policy.

US Corn Exports Lowered as Competitors Increase Share
Sustained high prices for US corn are encouraging competitors’ production and exports. In 2011/12, for the first time since 1971/72, the US share of the world corn market is expected to fall below 50 per cent. This month, US corn exports for trade year 2011/12 are reduced 3.0 million tons to 42.0 million – down 100 million bushels to 1.65 billion for the September-August local marketing year. Reduced US production and high prices are expected to limit demand, including exports. As of 1 September, outstanding export sales were 13.2 million tons, down from 15.1 million a year earlier.

High corn prices relative to those for other crops are helping boost competitors’ production. Ukraine, with expanded area and record yields is expected to export 10.0 million tons of corn, up 1.5 million this month. Brazil and Argentina, in the Southern Hemisphere, have increased 2011/12 production prospects this month but that production will be available for only a portion of the October-September trade year. Trade year 2011/12 export prospects for the two countries are up 0.5 million tons each to 8.5 and 18.0 million, respectively. EU corn exports are up 0.5 million tons to 1.5 million, boosted by increased production and attractive prices outside the EU. Both Romania and Bulgaria are in a good position to ship to markets outside the EU.

Canada’s corn export prospects for 2011/12 are cut in half, down 0.5 million tons to 0.5 million, because of reduced production prospects. Paraguay’s exports are reduced 0.2 million tons to 1.5 million due to weak import demand from neighbouring Brazil.

[Mustang Sally Farm]

World corn trade forecast for 2010/11 was adjusted down 0.3 million tons to 91.7 million tons. Argentina’s exports are raised 0.5 million tons to 15.0 million and Ukraine’s are reduced 0.5 million to 5.5 million, both based on the pace of shipments in recent months. Imports by Brazil, China and Chile are each trimmed 0.2 million tons because of the slow pace of recent shipments and purchases.

The pace of US shipments for 2010/11 supports the 46.0 million tons forecast for the October-September trade year. Census data for October through July reached 38.3 million tons, and August grain inspections were 3.7 million. If the August Census number comes in a bit higher than inspections, as is normal, and if September 2011 shipments fall modestly from those of the previous year, exports will be on pace. The 2010/11 local marketing year (September-August) exports are increased 10 million bushels to 1,835 million based on the August inspections.

World Sorghum Trade Boosted Slightly
Global sorghum trade in 2011/12 is projected up 0.2 million tons this month to 6.2 million. Australia’s export prospects are increased 0.2 million tons to 1.0 million. Import prospects for Colombia and Chile are each increased 0.1 million tons based on increased imports estimated for the previous year.

World sorghum trade forecast for 2010/11 is reduced slightly, with a 0.2-million-ton increase for Argentina more than offset by a 0.3-million-ton reduction for Australia. Australia’s shipments to Japan have lagged expectations, trimming Japan’s imports 0.3 million tons to 1.3 million. However, Argentina’s shipments to Colombia and Chile exceeded expectations.

US sorghum exports for 2010/11 are on pace to reach 3.8 million tons for the trade year and 150 million bushels for the local year based on August inspections of 3.3 million, slightly above a year earlier.

Global Barley Trade Prospects Increase
World barley trade for 2011/12 is increased 0.9 million tons this month to 15.4 million. Saudi Arabia has been buying aggressively and has demonstrated it intends to maintain ample supplies. Saudi imports are increased 0.7 million tons this month to 7.0 million. Syria’s imports are increased 0.2 million tons to 0.5 million due to strong demand.

[Mustang Sally Farm]

Tuesday, November 01, 2011
Crop Prices Treading Water
US - Following wide swings in September and early October, the prices of corn, soybeans, and wheat have traded in relatively narrow ranges in the last half of October. Narrow trading ranges reflect the lack of new information and, in some cases, conflicting demand indicators.


Since 12 October, December 2011 corn futures have traded in a range of about $.40, with a high near $6.65. That contract is now about $1.40 below the late August high. Basis levels remain generally strong and are at record levels for this time of year in some markets.

Demand news tends to be mixed for corn. Ethanol production since 1 September has been near the level of a year ago, suggesting corn consumption in that market remains at record levels. Spot market margins for ethanol producers have increased sharply since reaching record low levels in June. Calculated margins are near the highs reached in 2007.

Declining corn prices and higher ethanol prices have both contributed to the improved margins. Ethanol production looks to be large for the next two months, with more uncertainty in 2012 after the blender’s tax credit expires.

The pace of feed use of corn is not known. Use should be supported by the large number of cattle on feed, but weekly placements of broiler-type chicks continue to run six to eight per cent under the level of a year ago. Considerable uncertainty about feed and residual use of corn has been created by the surprisingly low level of consumption implied for the 2010-11 marketing year and by the unknown level of wheat feeding. The December Grain Stocks report will shed more light on that issue.

US corn exports are expected to be at a nine year low of 1.6 billion bushels during the current marketing year, 235 million bushels less than exported last year. Exports are expected to be negatively influenced by the large supply of corn and wheat in the rest of the world. Exports need to average about 30.8 million bushels per week to reach the projected level.

Export inspections during the first eight weeks of the year averaged 27.3 million bushels per week. The Census Bureau will release an estimate of September exports on 10 November. Export sales have been large so that cumulative export commitments stood at 806 million bushels on 20 October, 25 million larger than commitments of a year earlier.

China has purchased 78 million bushels of US corn. That is equal to the USDA projection of Chinese imports from all origins this year. While the level of outstanding sales is encouraging, small sales in the week ended 20 October and recent announcements that several importers are buying corn from other sources has created some concern about the strength of export demand for US corn.

Since 12 October, November 2011 soybean futures have traded in a range of about $.75, with a high of $12.76. That contract is now about $2.70 below the late August high. Prices have been pressured by the slow pace of domestic crush, generally favorable weather conditions in South America, and a modest pace of exports.

The USDA forecasts that exports this year will be 125 million less than the record of last year. The pace of exports and export sales are slow compared to the torrid pace of a year ago. Last year, two-thirds of US exports for the entire year had been sold by late October, as China was a large buyer early in the year.

Over 40 per cent of the total marketing year exports were shipped in the first quarter of the year and only seven per cent in the last quarter of the year. While trailing last year’s pace, export commitments as of 20 October accounted for nearly half of the USDA’s projected exports for the year. That compares to the average of only 42 per cent for the five years from 2005-06 through 2009-10.

Since 13 October, December 2011 wheat futures at Chicago have traded in a range of about $.45, with a high of $6.53. That contract is now about $1.80 below the late August high. Prices have been pressured by large production in the rest of the world, forecasts of much smaller exports, and prospects of abundant year-end stocks.

The USDA projects 2011-12 marketing year exports at 975 million bushels, 314 million less than exported last year. Exports during the first quarter of the year (June through August) were 30 million bushels larger than those of a year earlier. The USDA projection, then, implies that exports during the last three quarters will be 344 million bushels (33.6 per cent) less than those of a year ago.

As of 27 October, cumulative export inspections were only 10.5 million bushels less than the total of a year ago. Outstanding sales as of 20 October stood at only 166 million bushels, 109 million less than sales of a year earlier. Exports are clearly slowing in the face of large foreign crops.

Crop prices received some brief support from the aversion of a financial meltdown in Europe, but concerns about global economic conditions continue. The USDA’s Crop Production report on 9 November will provide updated forecasts of the size of the US corn and soybean crops. Unless those forecasts are lower than expected, crop prices may drift back to the lows established in early October.

[Mustang Sally Farm]

Friday, November 04, 2011
Record Corn Crop Unlikely to Meet Demand
CHINA - China reaped its seventh record corn crop in eight years during the harvest now ending. That still won't be enough to meet demand, driving a fivefold gain in imports as prices head for the highest-ever annual average.




Farmers in Shenyang, Liaoning province, harvest the corn crop. The country's demand for corn has risen 50 per cent since 2000 while the harvest grew by 38 per cent.
[Photo: China Daily]Production reached 189.2 million tons in the harvest that began in September, which was 6.7 per cent more than a year earlier, according to a survey of growers in the seven main producing regions carried out by Geneva-based SGS SA for Bloomberg. Imports in the marketing year that began last month may jump to 5 million tons from 1 million tons, according to the median estimate of 10 analysts and traders surveyed by Bloomberg.

While the supply predicted in the SGS survey would exceed the estimates of the US Department of Agriculture (USDA) by more than 7 million tons, rising imports show that farmers are failing to grow enough grain for livestock feed. The fivefold expansion in China's economy in the past decade reported by the World Bank has spurred a change in diets. The dairy herd has almost tripled since 2000, and per capita pork consumption rose 26 per cent in the nation of 1.34 billion people, USDA estimates show.

"It's an amazing crop, but demand is just too strong," said Dan Cekander, director of research at Newedge USA LLC in Chicago, who toured cornfields in Jilin Province, the top grower, during September. "Everybody has been projecting a record crop, and yet domestic prices are historically high, and the Chinese government just bought US corn."

Corn futures on the Chicago Board of Trade rose 2.3 per cent to $6.4325 a bushel this year and averaged $6.90, heading for the highest-ever annual figure.

The grain will probably reach $7.25 in the first quarter, Cekander said. Prices in Jilin jumped 17 per cent and touched a record 2,430 yuan a ton ($9.67 a bushel) on Sept 19, according to Shanghai JC Intelligence Co, the nation's biggest independent agricultural researcher.

On 13 October, the USDA announced that China bought 900,000 tons of corn, the most since a 1.45 million-ton purchase in 1994.

Corn outperformed this year's 14 per cent drop in the Standard & Poor's GSCI Agriculture Index of eight commodities and the 8.2 per cent decline in the MSCI All-Country World Index of equities. Treasuries returned 8.8 per cent, Bank of America Corp indexes show.

Chinese demand has risen 50 per cent since 2000 as output gained by 38 per cent, according to USDA data. Only the US grows and uses more. China, which became a net importer for the first time in 14 years in 2010, is "entering a golden age for consumption," Morgan Stanley analysts led by Hussein Allidina said in a report 25 October.

[Mustang Sally Farm]

Tuesday, November 08, 2011
Soybean Export Progress
US - Since the first of October, November 2011 soybean futures have traded in a range of $1.20, with a high of $12.72. The price of that contract is currently about in the middle of the recent trading range and $2.50 below the contract high reached on 31 August.


A number of factors have contributed to the lower prices since August and to the weakness since mid-October. These factors include early forecasts of another large South American soybean harvest in 2012. That forecast has been supported by generally favorable weather conditions in Brazil and Argentina in the early part of the planting and growing season.

A slow start to the 2011-12 marketing year domestic soybean crush and lagging soybean oil export sales have also contributed to the negative tone. In addition, concerns about world economic and financial conditions have cast a shadow over the future demand for soybeans.

The USDA’s forecast of the size of the 2011 US harvest increased by 29 million bushels in September, but the October forecast was back near the August forecast. Expectations about the November yield forecast are mixed, with the average reported expectation near the October forecast of 41.5 bushels. The forecast will be released on 9 November, with the final estimate of crop size due to be released on 12 January, 2012.

Another major negative factor for the soybean market has been the perception that export demand for US soybeans is weak. The USDA currently forecasts 2011-12 marketing year US soybean exports at 1.375 billion bushels. That is 40 million bushels below the September forecast and 125 million bushels below the record level of exports in 2009-10 and 2010-11.

The current pace of exports and export sales are certainly much slower than that of last year. Through the first nine weeks of the current marketing year, soybean export inspections totaled 257 million bushels, compared to 393 million bushels during the same period last year. Unshipped export sales of soybeans as of 27 October stood at 484.3 million bushels, compared to 752.2 million on the same date last year. Export commitments are lower for all major destinations except Mexico.

Comparison of the pace of exports and export sales this year to those of last year may not be appropriate for judging the strength of export demand. Last year, export business was concentrated in the early part of the marketing year. Exports during the first quarter of the year accounted for 41.2 per cent of the marketing year total. That compares to the average of 32 per cent in the previous five years.

Exports in the first half of the year accounted for 78 per cent of the total. That is similar to the total for the 2009-10 marketing year, but compares to a more typical 67 per cent in the period 2005-06 through 2008-09. Last year, export commitments (shipments plus outstanding sales) in late October accounted for nearly 71 per cent of marketing year exports.

China was a very aggressive buyer early in the marketing year. In the previous five years, export commitments in late October accounted for an average of 44.4 per cent of marketing year exports, in a range of 57.5 percent (2009-10) to 37.7 per cent (2005-06).

This year, export commitments as of 27 October represented 49.5 per cent of the current USDA projection of marketing year exports. Except for the past two years, commitments represent the largest percentage of actual marketing year exports since 1997-98. Commitments are 23 per cent larger than at this time in 2008-09, when marketing year exports totaled 1.279 billion bushels.

There may be reasons to be concerned about soybean export demand, but the current magnitude of sales does not appear to be particularly troublesome. The recent pace of sales, however, has been very low. To reach the USDA projection for the year, new sales will need to average 15.5 million bushels per week from November 2011 through August 2012.

For the two weeks ended 27 October, new sales averaged only eighht million bushels per week. The pace of new sales and weekly shipments need to be followed closely to gauge the potential for marketing year exports. In addition, the monthly Census Bureau export estimates should be monitored as those are the official export estimates. The estimate of September 2011 exports will be released on 10 November.

Typically, the difference between the USDA export inspection estimates and the Census Bureau estimates are small early in the year. In recent years, however, that difference has often become larger later in the marketing year. By the end of the year, Census Bureau estimates were about 40 million bushels larger than USDA inspection estimates in the three years from 2007-08 through 2009-10. Last year, Census Bureau estimates for the year exceeded export inspections by only 14 million bushels.

The USDA will release new forecasts of US and world soybean production and consumption for the current marketing year on 9 November. The market appears to be expecting the forecast of US marketing year exports to be below the October forecast. A smaller forecast seems premature based on the current status of sales and shipments.

[Mustang Sally Farm]

Wednesday, November 16, 2011
Positive Outlook for Aussie Grains Industry
AUSTRALIA - Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig, has welcomed the release of the Australian Grains 11.2: Grains outlook 2011–12 and industry productivity report, where the total summer crop area in 2011-12 is forecast to be 1.5 million hectares and 41 million tonnes.


The report, produced by the Australian Bureau of Agricultural and Resource Economics and Sciences, provides a summary of the outlook for crop production in Australia and analysis of productivity growth in the Australian grains industry.

Minister Ludwig said the report presented a positive outlook for the grains industry.

Minister Ludwig said: "Growing conditions over winter and spring were broadly favourable in Australia's major winter cropping regions and crops were generally reported to be in good condition.

"World wheat and coarse grains prices are forecast to remain relatively high in 2011–12 due to the relatively low availability of feed grains. Canola production is forecast to increase by seven per cent in 2011–12 to around 2.3 million tonnes.

"World oilseed prices are forecast to increase as a result of increased imports by China, higher oilseed crush, and growth in feed demand from livestock industries."

Rainfall of 25 to 100 millimetres was recorded in each of the winter months and boosted yield prospects, with crops looking promising across the states’ cropping zones.

Minister Ludwig continued: "Rainfall in late August and September replenished soil-moisture profiles and provided a good boost to crops in most regions.

"Increased availability of irrigation water is forecast to result in higher cotton and rice plantings.

"However, production will be down in some areas of Western Australia due to continuing dry conditions."

Total factor productivity growth for the cropping industry as a whole increased on average by 1.9 per cent a year between 1977–78 and 2008–09, while the estimated productivity growth in the mixed crop–livestock industry was 1.4 per cent a year.

[Mustang Sally Farm]

More Wheat and Canola in Canada, Less Corn and Soybean
08 December 2011
CANADA - Canadian grain producers harvested more canola and wheat this year than last, Statistics Canada reported Tuesday in its third and final estimates of this year’s Canadian crop. Barley output was up slightly - corn and soybean production were all down from 2010.

Corn / Maize, Soy, Wheat, Harvest
 


“In the West, farmers reported that hot, sunny weather during the summer helped them recover from a damp and late spring in certain areas. Similarly, weather patterns in the East returned to normal after a particularly wet spring, especially in Quebec’s Richelieu river valley,” the federal agency said when it published the results of its survey of 28,600 Canadian farmers.
 
Production of all Canadian wheats – spring, durum plus winter – were up on 2010, totaling 25.3 million metric tons. Canola production hit record levels.
 
In the wheat fields, total production was 9 per cent higher than last year, mostly because of a strong (5.5 per cent) increase in wheat yields in Saskatchewan and Alberta.
 
“A significant contributor to the overall production increase was durum wheat. Durum wheat production increased 36.4 per cent in Saskatchewan to 3.6 million tonnes and 47.1 per cent in Alberta to 620,500 tonnes. These increases followed substantial declines from 2009 to 2010,” Statistics Canada said.
 
In the west, canola production climbed by more than 10 per cent year on year to a record 14 million tonnes. Statistics Canada attributed this mostly to an increase in canola acreage, coupled with slightly higher yields. Canola production was up in Saskatchewan and Alberta, but down for a second year in Manitoba where farmers battled spring floods.
 
Canadian farmers harvested 7.756 million metric tons of barley, up 2 per cent from last year. This is still well back of 2009 production levels.
 
Lower yields cut into soybean production in Manitoba, Ontario and Quebec. Acreage in some provinces were at record levels.
 
“Ontario soybean production amounted to 3.0 million tonnes, a decline of 2.7 per cent or 81,600 tonnes from the all-time high set in 2010,” the federal agency said. “In Quebec, soybean production declined 0.9 per cent to 800,000 tonnes despite a record harvested area of 738,800 acres.”
 
Corn production was off in both Ontario and Quebec.
 
“With respect to corn for grain, Ontario production was down 6.6 per cent or 508,100 tonnes from 2010 to 7.2 million tonnes. Quebec production was down 14.1 per cent or 480,000 tonnes from 2010 to 2.9 million tonnes,” Statistics Canada said.

[Mustang Sally Farm]

Feed Outlook – December 2011
World 2011/12 corn production is forecast up 8.5 million tons this month to a record 868 million tons, mostly due to a large increase in China's production based on recently published government estimates, according to Tom Capehart and Edward Allen in the latest report from the USDA Economic Research Service.



Summary
World 2011/12 corn production is forecast up 8.5 million tons this month to a record 868 million tons, mostly due to a large increase in China’s production based on recently published government estimates. Global ending stocks are boosted six million tons to 127 million, down just one million from the previous year.

US feed grain supplies are increased slightly this month due to an increase in forecast oats imports from Canada, where supplies are plentiful. Expected corn use is down five million bushels due to reduced prospects for use in sweeteners. These changes are reflected in higher ending stocks. Sorghum export prospects are reduced due to very slow export sales, and feed and residual is raised. Forecast prices received by farmers are lowered for corn, sorghum, and barley.


DOMESTIC OUTLOOK

Feed Grain Use Slips on Lower Food Seed and Industrial Use
Forecast US feed grain supplies are edged upward, reflecting an increase in expected oats imports due to larger supplies in Canada and the strong pace of US imports in recent months. US feed grain supplies for 2011/12 are forecast at 357.6 million tons, compared with 380.5 million in 2010/11. Imports are forecast at 2.2 million tons, slightly higher than last month’s forecast. Production is unchanged this month.

Forecast US feed grain use is lowered slightly to 333.5 million metric tons. Lower forecast corn food, seed and industrial use accounts for the fractional decline.

Feed Use
On a September-August marketing year basis for 2011/12, US feed and residual use for the four feed grains plus wheat is projected to total 126.5 million tons, up slightly this month due to increased sorghum feed and residual use. Corn is expected to account for 92 percent of feed and residual use, compared with 94 percent last year.

The projected index of grain-consuming animal units (GCAU) in 2011/12 is 93.3 million units, virtually unchanged from last month and slightly higher than last season’s 92.9 million. Feed and residual per GCAU is estimated at 1.37 tons, compared with 1.39 tons in 2010/11. In the major index components, GCAUs are increased this month for cattle on feed and lowered for broilers.

Forecasts for US beef and turkey production are unchanged this month but broiler production is forecast lower, largely due to slower expected growth in average bird weights in the first part of 2012.

USDA’s November Cattle on Feed report indicated October placements in feedlots were one per cent below a year earlier but one per cent ahead of September placements. Cattle and calves on feed for slaughter in the United States in feedlots with capacity of 1,000 or more head totalled 11.9 million head on 1 November 2011. The inventory was four per cent above 1 November 2010. This is the second highest inventory on 1 November since the series began in 1996. Higher feed demand is expected despite high feed prices but lighter cattle weights may reduce some of the impact from the larger inventories.

This month, pork production was forecast higher as slightly higher carcass weights are expected. Federal-inspected average dressed weight of hogs in October was up slightly from September and up from 2010. Pork production was raised slightly for both 2011 and 2012. Higher feed costs are anticipated to moderate the increase in carcass weights by mid-2012.

Milk cow inventory on farms in the 23 major producing states was 8.48 million head, 111,000 more than October 2010, and 10,000 more than September 2011. Production per cow in the 23 major states averaged 1,787 pounds in October, 20 pounds above October 2010. Feed use for dairy is expected to advance slightly through mid-2012 as cow numbers and production per cow continue to increase. Milk production forecasts for 2011 and 2012 are raised slightly, reflecting higher growth in milk per cow and slightly higher cow numbers in 2012.

Corn Price Lowered
The forecast US corn price received by farmers for 2011/12 is reduced by $0.30 per bushel on both the high and low end of the range to $5.90 to $6.90 per bushel, reflecting recent market trends and abundant foreign supplies of corn and feed quality wheat. The season average price received by farmers in 2010/11 was $5.18 per bushel. Food, seed and industrial (FSI) use is lowered five million bushels due to lower expected first-quarter use for high fructose corn syrup (HFCS) due to the reduced export pace in recent months. The change in FSI is reflected in an increase in ending stocks to 848 million bushels, compared with last month’s 843 million. Total use is forecast at 12,605 million bushels, compared with 13,054 million in 2010/11.






Sorghum
Forecast 2011/12 US sorghum exports are lowered 20 million bushels, reflecting slowing year-to-date sales and shipments. Feed and residual use is raised by the same volume, leaving ending stocks unchanged.

Reflecting the lower corn price forecast this month, the projected sorghum price received by farmers for 2011/12 is also reduced $0.30 per bushel on both ends of the range, resulting in a forecast of $5.70 to $6.70 per bushel. The season average price received by farmers in 2010/11 was $5.02 per bushel.

Minor Changes for Oats and Barley
Forecast 2011/12 US oats imports are raised five million bushels to 95 million, reflecting abundant supplies in Canada due to a large crop and the strong US import pace in recent months. The increase results in higher projected ending stocks.

The projected range for 2011/12 oats prices received by farmers is narrowed $0.05 per bushel on each end to $3.20 to $3.60 per bushel. The season-average price received by farmers in 2010/11 was $2.52 per bushel.

There are no supply and use changes for barley this month. Forecast grower prices were reduced $0.25 on the upper end of the range and $0.15 on the lower end, for a 2011/12 forecast of $5.20 to $5.80 per bushel. The price reduction mostly reflects lower-than-expected malting barley prices to date. The 2010/11 season average farm price for barley in 2010/11 was $3.86 per bushel.


INTERNATIONAL OUTLOOK

Large Corn Crop in China Boosts Global Production
World 2011/12 coarse grain production is projected up 9.4 million tons this month to a record 1,145.2 million, mostly due to higher corn production reported for China. Foreign corn production is up 8.5 million tons to 554.8 million, foreign sorghum production is increased 0.6 million to 55.3 million, and foreign barley and oats production are each boosted 0.1 million tons to 129.9 million and 22.0 million, respectively.

China’s National Bureau of Statistics released estimates of national corn production this month, many months earlier than usual and with provincial detail for total grain. Both area and yield are increased from earlier projections, boosting 2011/12 production 7.25 million tons to a record 191.75 million. Area is up 0.2 million hectares this month to 33.4 million, a three per cent increase from the previous year. China’s corn area has increased for eight consecutive years. Good returns for planting corn have supported corn replacing other crops, especially soybeans.

The provincial data indicate strong area expansion in Inner Mongolia and Heilongjiang, the northern and western edge of corn production in China. Rainfall and temperatures through the growing season were mostly favourable, supporting record corn yields, up three per cent this month to 5.74 tons per hectare, and five per cent higher than a year ago. Satellite imagery, rainfall and temperature data confirm good crop conditions through the growing season in most areas, though there was dryness in Heilongjiang and some other parts of the Northeast during the late summer and fall. An overview of growing conditions for corn in China for 2011 indicates good but not exceptionally favourable, rainfall and temperatures. However, it is exceptional that a country as large as China had no corn areas with significant floods or drought.


The European Union (EU) corn crop is up 1.0 million tons this month to a record 63.9 million, as several countries revised production estimates based on harvest reports. The largest increase was reported for Romania; Bulgaria, France and Spain also had significant increases; Italy and the Czech Republic had small increases; and Hungary had a decline. Corn yields for the EU are record high, with favourable rains during key growth stages in most countries, with the exception of Hungary, which suffered from dry conditions. Serbia (not part of the EU but Hungary’s neighbour) also reported a slight reduction in corn production this month.

Canada’s corn production is up 0.7 million tons this month to 10.7 million. Statistics Canada published a production estimate based on harvest results that showed better yields than earlier expected. The delayed development of the crop caused by cool wet conditions in most of Ontario did not hurt corn yields as much as expected but the yield remains down eight per cent from the previous year’s record.

Corn production in Belarus is forecast down 0.4 million tons to 1.2 million this month as less-than-record yields are confirmed by government reports. Area and production remain at record levels.

Brazil reported larger sorghum area and production for both 2010/11 and 2011/12. Sorghum is used in parts of the Center-West of Brazil as a “cover crop” to protect soils from exposure to the sun during the dry season, and area is being maintained despite the relatively low grain yields. Sorghum production is raised 0.5 million tons for both years, to 2.2 million for 2011/12 and 2.3 million for 2010/11.

Australia’s sorghum production projected for 2011/12, still being planted, is up 0.2 million tons this month to 2.4 million. Good soil moisture and prices support area and yield prospects. However, for South Africa, sorghum production is cut 0.1 million tons to 0.1 million as area being planted is reported down significantly. South Africa’s barley yield prospects are slightly higher this month.

Australian yield reports boosted barley production 0.3 million tons to 8.5 million while increasing oats fractionally and reducing corn slightly. Statistics Canada reported lower barley yields, trimming production 0.1 million tons to 7.8 million but oats area was increased, boosting production 0.1 million to 3.0 million. There are also small reductions this month for Morocco’s barley and Mexico’s oats.

Reduced Beginning Stocks Partly Offset Increased Production
World coarse grain beginning stocks for 2011/12 are down 1.9 million tons this month to 166.2 million, partly offsetting the 9.4-million ton increase in production. Barley stocks are cut 0.8 million tons to 25.4 million, corn stocks are reduced 0.8 million to 128.3 million, rye stocks are trimmed 0.2 million tons to 1.8 million, and oats and sorghum are reduced slightly.

The Australian Bureau of Statistics revised 2010/11 barley production down significantly, cutting 2011/12 beginning stocks 1.2 million tons to 1.1 million. Instead of building barley stocks during 2010/11, as previously expected, Australia is now estimated to have reduced stock-holding. The drop in Australia’s 2011/12 barley beginning stocks more than offset a 0.3-million-ton increase for Belarus and small increases for Brazil, South Africa, and China.

South Africa’s corn beginning stocks for 2011/12 are down 0.8 million tons this month to 2.8 million, as the previous year’s production is estimated lower based on actual deliveries to market and estimated farm use and stocks retained by producers. Small increases for Belarus and Australia and a reduction for Argentina are comparatively insignificant. Rye stocks are reduced mostly for Belarus and Russia, oats are reduced slightly in Belarus and Australia, and sorghum is reduced in Australia and Mexico but raised in Brazil.

Global Coarse Grain Use Projected Higher
World coarse grain consumption for 2011/12 is forecast up 1.9 million tons this month to 1,150.7 million tons. Feed and residual use is projected up 2.1 million tons to 662.9 million, but food, seed and industrial use prospects are reduced. Most of the increased forecast use is corn and sorghum, with reductions for barley, oats and rye.

The largest increase in coarse grain use this month is for corn in China, with the 2011/12 feed and residual use increased 2.0 million tons to 134.0 million. Corn prices in China remain relatively high despite the very large harvest, evidence of strong demand. With the larger crop, corn use in Canada is boosted 0.5 million tons to 11.5 million, with 0.3 million of the increase in feed use and 0.2 million in food, seed and industrial use. Reductions in expected corn use in Belarus, the United States, South Africa and Australia are partly offsetting.

Global sorghum use for 2011/12 is projected up 0.6 million tons to 62.1 million, with increased feed use more than offsetting a small decline in food, seed and industrial use. Brazil’s feed use is up 0.5 million tons, almost the same as the US increase. Partly offsetting are decreases for Mexico, down 0.3 million tons, where sorghum is reportedly being replaced by imported wheat, and for South Africa, with reduced production prospects expected to limit food use.

Barley feed use in Ukraine is reduced 0.5 million tons to 2.9 million. With abundant supplies of other grains that can be used for feed, barley stocks are not expected to decline in 2011/12, so projected use was trimmed to meet stock expectations. Australia’s barley feed use is projected 0.1 million tons lower this month to 3.4 million due to tight beginning stocks and ample feed-quality wheat supplies. These decreases in barley feed use are partly offset by increased feed use projected for Belarus, up 0.2 million tons to 1.4 million tons due to increased supplies.

Oats use in 2011/12 is forecast lower this month for Canada, Belarus, and Mexico; rye use is projected lower for Russia, Belarus and the United States.

Global Coarse Grain Ending Stocks Prospects Increased but Still Tight
World coarse grain ending stocks for 2011/12 are up 5.5 million tons to 160.7 million, mostly due to increased corn stocks in China. China’s corn ending stocks are up 5.3 million tons to 57.0 million because the bumper crop is expected to facilitate the holding of corn as a hedge against future price increases. Other increases in corn ending stocks are for the EU, up 0.5 million tons due to the record corn crop; Serbia, up 0.4 million because of problems moving exports with low water on the Danube; and Canada, up 0.2 million due to increased production. The United States and Australia had smaller increases. Partly offsetting are reductions for South Africa, down 0.7 million tons due to reduced supplies and for Belarus and Argentina down by smaller amount.

World barley ending stocks are reduced 0.3 million tons to 22.6 million, with reductions for Russia (-0.4 million tons), Australia (-0.4 million), Argentina (-0.2 million), Canada (-0.1 million), and Morocco (small increase) more than offsetting increases projected for Ukraine (+0.5 million), Algeria (+0.2 million) and Belarus, South Africa and Brazil (small increases).

Oats ending stocks in Canada and rye ending stocks for Russia are each increased 0.1 million tons for 2011/12, accounting for most of the changes in global stocks for those grains. Changes in projected sorghum ending stocks are small, with declines for Australia, Mexico, South Africa and Japan, but an increase for Brazil.

World Corn Trade Prospects Reduced Slightly; US Exports Unchanged
Global corn trade projected for 2011/12 (October-September) is reduced 0.4 million tons this month to 94.0 million. EU corn import prospects are reduced 0.5 million tons to 3.0 million because of increased production and the slow pace of import licences. Serbia’s corn export prospects are cut 0.4 million tons to 1.6 million as low water in the Danube River has complicated logistics for moving grain, and slack EU import demand reduces the urgency of shipments and limits the willingness of importers to pay extra for alternative freight.


US corn exports for 2011/12 remain projected to reach 41.0 million tons (1.6 billion bushels for the September-August local marketing year). While US exports for October 2011 were reported by Census down eight per cent from a year earlier at 3.2 million tons, the November corn export inspections reached 3.8 million, an increase of 0.5 million tons over a year ago. As of 1 December 2011, outstanding sales were 12.8 million tons, up three per cent from the previous year. The 2011/12 forecast is down nine per cent from 2010/11, implying a significant slowdown in additional sales and shipments. Tight US corn supplies, relatively high US corn prices and competition from abundant feed-quality wheat in foreign markets are expected.

US sorghum exports for 2011/12 are reduced 0.5 million tons to 1.9 million – down 20 million bushels to 70 million for the September-August local marketing year. US sorghum supplies are tight because of a small crop, limiting export sales. As of 1 December 2011, outstanding sales reached only 187,400 tons, down from 720,700 a year ago. Prospects for an increase in sorghum sales seem limited as Mexico has turned to cheaper wheat to replace sorghum imports. Mexico’s sorghum imports for 2011/12 are reduced 0.3 million tons this month to 1.8 million. Australia’s sorghum export projection is increased 0.2 million tons to 1.2 million as a larger crop combines with prospects for a stronger share of Japan’s sorghum imports.

The five-million-bushel US oats import increase for the June-May 2011/12 local marketing year was due to strong shipments for the period July to September and is reflected in the 2010/11 October-September international trade year. With increased production this month, Canada’s oats export prospects for 2011/12 are increased slightly.

World barley trade for 2011/12 is projected slightly higher this month due to an increase in import demand from Algeria, doubling to 0.5 million tons this month. With a smaller crop, Australia’s barley export prospects are reduced but exports for Russia and Argentina are increased because of strong sales.