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Summary of the Feed Outlook Report: March 2022

Core Content

This report provides an overview of the global and domestic outlook for grain markets, focusing on the impacts of the Russian military action in Ukraine on agricultural supply and demand conditions. It also includes updates on U.S. corn, sorghum, barley, and oat markets, as well as international production trends for coarse grains.

Main Points

Global Trade Outlook

• Impact of the Russian-Ukrainian Conflict: The military action in Ukraine has disrupted agricultural supply chains, especially in the Black Sea region, which is a key supplier of wheat, feed grains, and sunflower products.
• Ukrainian Corn Exports: Projected corn exports for Ukraine are sharply reduced to 27.5 million tons, a 18% drop from the previous month. This is due to damage to stored grain, logistical challenges, and the closure of Black Sea ports.
• Russian Corn Exports: Unchanged this month, as Russia can still export to Iran via the Caspian Sea and to Turkey.
• Global Corn Market Response: The reduction in Ukrainian corn exports has triggered a price spike, with global corn trade projected to decrease by 2.4 million tons. The U.S. is expected to increase corn exports by 2.0 million tons, but not enough to offset all losses from the Black Sea.
• Ukrainian Barley Exports: Projected to decrease by 0.2 million tons to 5.8 million tons. Exports for other coarse grains (sorghum, oats, rye) are slightly adjusted downward.
• Currency Depreciation: The depreciation of the Russian ruble and Ukrainian hryvnia has improved the price competitiveness of their exports.
• Key Markets for Ukrainian Corn: China, the European Union, Egypt, Iran, and Turkey are the main importers. However, imports in some countries like Egypt, Algeria, and Turkey are expected to fall due to higher global prices.
• Barley and Sorghum Exports: Barley trade is projected to increase due to higher Australian and Canadian exports. Sorghum exports are expected to rise slightly.

Domestic Outlook

• U.S. Corn Markets:
  • Corn exports are projected higher than in the February report, reaching 2,500 million bushels for 2021/22.
  • Corn use for fuel ethanol is projected at 3,350 million bushels, up 25 million bushels from the previous month.
  • Corn ending stocks for 2021/22 are projected at 1,440 million bushels, a 100 million bushel decrease from the February report.
  • The season-average farm price for corn is projected at $5.65 per bushel, up $0.20 from the previous report.
• Sorghum Markets:
  • Supply and use projections remain unchanged.
  • Ending stocks are projected at 127 million bushels, down from 150 million bushels in 2020/21.
  • Season-average farm price for sorghum is raised to $5.80 per bushel, up $0.35 from the February report.
• Barley Markets:
  • Supply and use projections remain unchanged for 2021/22.
  • Season-average farm price for barley is projected at $5.25 per bushel, up from $5.15 in the February report.
• Oat Markets:
  • Supply and use projections are unchanged.
  • Season-average farm price for oats is projected at $4.20 per bushel, up $0.20 from the February report.
• Grain Consuming Animal Units (GCAUs):
  • Projected at 100.5 million units for 2021/22, down from 101.2 million in 2020/21.
  • This is the lowest level since 2018/19, indicating a decline in energy feed demand from livestock.

International Production Outlook

• Global Coarse Grain Production:
  • Projected to increase by 1.5 million tons to 1,498.9 million tons.
  • This is due to improved production prospects in India, Russia, and Australia, offsetting declines in Argentina, South Africa, and the European Union.
• U.S. Coarse Grain Production:
  • Unchanged this month.
• Production by Country and Grain Type:
  • India: Corn production is projected at 32.5 million tons, up 2.5 million tons due to higher area and yields.
  • Russia: Corn production is estimated at 15.2 million tons, with a small increase.
  • Argentina: Corn production is projected at 53.0 million tons, down 1.0 million tons due to dry conditions.
  • South Africa: Corn production is revised lower to 16.3 million tons, affected by La Niña weather.
  • European Union: Corn production is estimated at 69.8 million tons, with reduced yields in France and Hungary.
  • Ukraine: Corn production is estimated at 41.9 million tons, with a slight decrease.
  • Barley: Australia's barley production is projected at 13.7 million tons, up 0.7 million tons.
  • Sorghum: Australia's sorghum output is projected at 2.3 million tons, up 0.3 million tons.
  • Oats: Global production is estimated at 22.7 million tons, with a slight decrease due to lower yields in Ukraine and Russia.

Key Information

• Global Corn Market:
  • The conflict has caused a sharp drop in Ukrainian corn exports, leading to a global corn trade reduction of 2.4 million tons.
  • Prices have surged due to supply constraints and geopolitical uncertainty.
• U.S. Domestic Markets:
  • High global prices are influencing U.S. cash markets, with corn prices rising to over $8.00 per bushel at Gulf Export terminals.
  • Ethanol use and corn exports are projected higher, driven by increased demand and available supplies.
• Grain Use and Stocks:
  • Ending stocks for corn are projected lower, with prices expected to rise.
  • Barley and sorghum prices are also projected higher due to tight supplies and strong demand.
• Geopolitical Impact:
  • The conflict has created uncertainty in global markets, affecting both supply and demand.
  • Insurance costs for shipping in the Black Sea have risen sharply, impacting trade logistics.

Conclusion

The Russian incursion into Ukraine has significantly disrupted global grain markets, particularly affecting Ukrainian corn exports and leading to price increases worldwide. The U.S. is responding with increased corn exports, but global corn trade remains lower due to the scale of the disruption. Domestic markets in the U.S. have also seen price increases, with ethanol use and export volumes rising. International production trends show mixed results, with some countries experiencing increased output while others face challenges due to weather and geopolitical factors.