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Summary of the Outlook Report (June 14, 2018)

Core Content

This report provides an overview of the U.S. and global outlook for feed grains, including corn, sorghum, barley, and oats, for the marketing years 2017/18 and 2018/19. It highlights changes in supply, use, exports, and prices, with a focus on the impact of trade policies and weather conditions on production and trade dynamics.

Main Points

U.S. Corn Outlook (2018/19)

• Supply: Projected at 14,040 million bushels, down 80 million bushels from the previous month due to lower carryin from the 2017/18 crop.
• Use: Increased by 25 million bushels, driven by higher corn for ethanol, partially offset by lower feed and residual use.
• Exports: Remain unchanged at 2,100 million bushels, but the overall disappearance is higher due to increased ethanol use.
• Ending Stocks: Projected at 1,577 million bushels, down 105 million bushels from the previous month, the lowest since 2013/14.
• Prices: The projected average price for corn is raised by $0.10 per bushel, ranging from $3.40 to $4.40, with a midpoint of $3.90 per bushel.

U.S. Sorghum Outlook (2018/19)

• Exports: Revised upward from 165 million bushels to 215 million bushels, a 30.3% increase, due to the removal of China's anti-dumping duties.
• Use: Domestic disappearance is revised down by 50 million bushels, as sorghum is redirected to exports and ethanol production is reduced.
• Prices: Projected to increase by $0.10 per bushel, ranging from $3.20 to $4.20, with a midpoint of $3.70 per bushel.

U.S. Oats Outlook (2017/18 and 2018/19)

• Imports (2017/18): Revised upward by 3.0 million bushels to 87.0 million bushels, increasing total supply by 3.0 million bushels.
• Beginning Stocks (2018/19): Revised upward by 3.0 million bushels to 24.2 million bushels.
• Total Supply (2018/19): Increased to 185.2 million bushels.
• Ending Stocks (2018/19): Projected at 29.2 million bushels, up 11.4% from the previous projection.
• Prices (2018/19): Revised upward by $0.05 per bushel, ranging from $2.60 to $3.20, with a midpoint of $2.90 per bushel.

Domestic Animal Units and Feed Use

• Grain Consuming Animal Units (GCAU): Projected at 100.1 million units for 2018/19, up 1.5 million from the previous month.
• Feed and Residual Use per GCAU: Projected at 1.43 tons, down 0.1 tons from the previous month and 0.05 tons below 2017/18 levels.

Global Outlook

• World Coarse Grain Production (2018/19): Projected at 1,336.8 million tons, down 4.3 million tons from the previous month.
• World Coarse Grain Use (2018/19): Reduced by 2.0 million tons to 1,376.3 million tons.
• World Ending Stocks (2018/19): Projected at 181.6 million tons, the lowest in 5 years.
• Global Trade: World coarse grain exports are projected lower by 1.2 million tons, with a decline in corn and barley exports and an increase in sorghum exports due to China's policy shift.

Key Information

• China's Policy Shift: The removal of anti-dumping duties on U.S. sorghum in May 2018 led to a shift in global sorghum trade back to China, increasing U.S. sorghum exports.
• Brazil's Corn Production: Brazil's second-crop corn production for 2017/18 is projected at 85.0 million tons, a 13.5 million-ton decrease from the previous record.
• U.S. Exports: U.S. corn exports for the 2017/18 marketing year are projected at 2,300 million bushels, up 75 million bushels from the previous month.
• Weather Impact: Dry conditions in Brazil during April and May led to reduced corn yields and production, impacting global supply.
• Data Sources: The report references the USDA's Feed Grains Database, World Agricultural Outlook Board, and Foreign Agricultural Service for updated supply and trade forecasts.

Summary of Changes

• Supply Reductions:
  • U.S. feed grain supplies are projected down 2 million metric tons.
  • World coarse grain production is reduced by 4.3 million tons.
• Use Increases:
  • U.S. corn use for ethanol is projected higher due to increased sorghum exports to China.
  • Global sorghum use is up 1.2 million tons.
• Trade Adjustments:
  • U.S. sorghum exports are projected up 30.3% due to China's policy change.
  • Corn exports from Brazil are projected down, supporting U.S. export prospects.
• Stocks and Prices:
  • Ending stocks for U.S. corn are the lowest since 2013/14.
  • Corn prices are projected higher due to tighter supplies.
  • Sorghum prices are also projected higher, with a range of $3.20 to $4.20 per bushel.

Conclusion

The report highlights a tightening global coarse grain supply, particularly for corn, due to reduced production in key countries like Brazil and Russia. U.S. corn and sorghum exports are supported by policy changes and shifting global demand, leading to increased prices and lower ending stocks. The data underscores the importance of trade dynamics and weather conditions in shaping the outlook for feed grains.