February 18, 2013
US 2012-13 feed grain supply remains unchanged
Press release
The US feed grain supply for 2012-13 remained unchanged from last month''s projection at 318.3 million tonnes as supplies are projected at 11% below the 2011-12 marketing year level of 358.5 million tonnes.
According to the USDA, feed grain use is lowered slightly this month. At the projected 299.4 million tonnes, feed grain use is 9% below 2011-12 and the lowest since the 2004-05 marketing year. Carryout is projected at 18.9 million tonnes, 32% below 2011-12 and the lowest since 1995-96.
Usage is projected to exceed supply as lower corn production more than offsets higher production for sorghum, barley, and oats. Feed and residual use for the four feed grains plus wheat on a September- August marketing year basis is virtually unchanged this month at 126.5 million tonnes.
Reduced sorghum feed use is offset by increased prospects for wheat feed and residual during the March-May quarter. Grain-consuming animal units (GCAUs) are projected at 91.7 million units this month, up slightly from last month due to increases in forecast beef, pork, broiler, and turkey production. Feed and residual per animal unit in 2012-13 is unchanged this month at 1.38 tonnes per GCAU, compared with 1.41 tonnes in 2011-12.
Forecast US corn exports were lowered 50 million bushels this month based on the year -to-date pace of sales and shipments and stronger expected competition, particularly from Brazil. Corn production is forecast up this month for Brazil and Ukraine, and high US prices have enabled those countries to usurp some markets previously supplied by the US. This month''s 2012-13 export projection of 900 million bushels is 42% below last season''s 1,543 million and the lowest since 1971-72. Projected ending stocks for 2012-13 of 632 million bushels are up 30 million from last month. The projected stocks-to-use ratio at 5.6% is up from 5.3% last month and still the lowest since 1995-96.
The projected season -average corn price for 2012-13 was lowered US$0.05 per bushel on the low end of the range and US$0.35 per bushel on the high end of the range to US$6.75 to US$7.65 per bushel. The range is lowered US$0.20 at the midpoint to US$7.20 per bushel. Prices were lowered based on recent market trends and the volume of corn marketed to date. This compares to the previous record of US$6.22 per bushel in 2011-12.
Given the low stocks-to-use ratio projected for corn, increasing market prices are likely to ration demand for the balance of the year. The projected 5.6% stocks-to-use ratio translates into a 20.5-day supply of old-crop corn available for use at the beginning of the 2013-14 marketing year; however, some new-crop corn will be harvested and available for use before the September 1 start of the new marketing year.
Market developments result in modifications to all categories of sorghum domestic use this month. Sorghum feed and residual is cut 25 million bushels to 100 million in response to multiple industry reports of lower-than-expected sorghum feeding.
Despite this reduction, the 2012-13 estimate is 41% larger than the 2011-12 feed and residual figure. Season-to-season gains may obscure the fact that sorghum feed and residual for 2012-13 is the second-lowest since 1975 with 2011-12 being the lowest at 71 million bushels. Forecast sorghum food, seed, and industrial use is increased 20 million bushels to 80 million, a reflection of revised sorghum ethanol production estimates. On net, total domestic use is lowered five million bushels to 180 million.
Sorghum exports for 2012-13 are increased by five million bushels to 70 million based on the pace of exports to date. Exports are forecast to account for approximately 28% of total disappearance; this is the lowest proportion since 1996-97 when exports accounted for approximately 27% of total disappearance. The 2012-13 import figure is raised slightly to 1.088 million bushels following the release of trade data by the US Census Bureau. Further marketing year imports of sorghum are expected to be negligible.
The reduced outlook for corn prices contributes to a US$0.15-reduction in the sorghum average farm price to a midpoint of US$7.15 per bushel. The projected range of prices received by farmers in 2012-13 is reduced by US$0.30 on the high-end resulting in a sorghum price range of US$6.70 to US$7.60 per bushel.
The updated barley supply-and-use balance sheet reflects a modest downward revision to the export forecast. US Census Bureau trade data indicate a slightly slower-than projected pace of shipments abroad and supports a one-million-bushel cut in barley exports from 10 to nine million. Total use and ending stocks are updated in accordance with this change. The low-end of the barley price range is increased by US$0.05 to US$6.15 per bushel, and the high-end of the range is reduced by US$0.05 to US$6.65 per bushel. The average farm price midpoint is unchanged at US$6.40 per bushel. No changes to the oats supply and use forecasts or to the oats price forecast are made this month.