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Economic Research Service Feed Outlook Summary (FDS-16e, May 12, 2016)

Core Content Overview

This report provides an outlook for U.S. and global feed grain markets for the 2016/17 marketing year, focusing on corn, sorghum, barley, and oats. It includes production, supply, use, and price projections, as well as international production trends and policy changes affecting global supply and demand.

U.S. Domestic Outlook

Corn

• Planting intentions indicate a 6% increase in area, projected at 93.6 million acres.
• Harvested area is estimated at 85.9 million acres, based on historical planting-to-harvest relationships.
• Yield is forecast at 168.0 bushels per acre, slightly below the 2015/16 estimate and the 2014/15 record.
• Production is expected to reach a record 14,430 million bushels, up 829 million from the previous year.
• Beginning stocks are at 1.8 billion bushels, the highest in 10 years.
• Imports are projected at 40 million bushels, down 15 million from the previous year.
• Total supplies are forecast at 16,273 million bushels, the highest ever.
• Domestic use and exports are up, with total use reaching 14,120 million bushels, breaking the 14-billion bushel barrier.
• Feed and residual use is projected at 5,550 million bushels, up 300 million from the previous year.
• Ending stocks are forecast at 2.2 billion bushels, down from the previous year.
• Farm price range is set at $3.05 to $3.65 per bushel, with a midpoint of $3.35, a 25-cent drop from the previous year's $3.60.

Sorghum

• Planted area is expected to decrease by 15%, leading to a 1.6 million-acre reduction in harvested area.
• Production is projected at 407 million bushels, down 190 million from the previous year.
• Supply is forecast at 473 million bushels, a 24% decline from 2015/16.
• Domestic use is split evenly between feed/residual and FSI uses, each at 100 million bushels.
• Exports are expected to drop by 95 million bushels due to lower shipments to China.
• Ending stocks are projected at 53 million bushels, down 7 million from the previous year.
• Price range is set at $2.85 to $3.45 per bushel, with a midpoint of $3.15, a 10-cent drop from the previous year's $3.25.

Barley

• Planted area is expected to decrease by 12%, leading to a 21 million bushel drop in production.
• Supply is projected at 310 million bushels, down only 1% from the previous year.
• Domestic use is virtually unchanged from 2015/16, with feed/residual use at 50 million bushels.
• FSI use is down slightly to 153 million bushels.
• Ending stocks are projected at 92 million bushels, down 5 million from the previous year.
• Farm price range is $4.30 to $5.10 per bushel, with a midpoint of $4.70, a 80-cent drop from the previous year's $5.50.

Oats

• Planted area is projected down 11%, leading to a 19% reduction in harvested area.
• Production is expected at 68 million bushels, down 22 million from the previous year.
• Supply is projected at 223 million bushels, down 10 million from the previous year.
• Domestic use is forecast at 168 million bushels, 2% below the previous year.
• Feed and residual use is projected at 90 million bushels, down 5 million from the previous year.
• Exports are expected at 2 million bushels, leading to total disappearance of 170 million bushels.
• Ending stocks are projected at 53 million bushels, down 7 million from the previous year.
• Price range is $1.70 to $2.10 per bushel, with a midpoint of $1.90, a 25-cent drop from the previous year.

International Outlook

Global Coarse Grain Production

• Production is projected at 1.3 billion tons, up 3.2% from the previous year but down 0.4% from the 2014/15 record.
• Average yield is expected to reach a record 4.04 tons per hectare, up 2.8% from the previous year.

China

• Intervention purchases will cease in 2016/17, and direct payments will be made to producers.
• Corn area is projected down 5.6% to 36.0 million hectares, but yield is up 2.8% to 6.1 tons per hectare.
• Production is expected to drop 6.6 million tons to 218.0 million, but coarse grain production is down 6.1 million to 225.7 million.
• Corn price is expected to fall significantly, with uncertainty about the magnitude.

EU

• Coarse grain production is forecast at 157.7 million tons, up 6.5 million.
• Barley production is projected at 60.7 million tons, the world's largest, but yields are expected to be below the previous year's record.
• Corn is expected to rebound from drought conditions in 2015/16.

South Africa

• Corn production is expected to rebound 6.5 million tons to 13.0 million.

Argentina

• Corn area is expected to increase by 25%, and production by 26%, due to policy changes.
• Corn production is forecast at a record 34.0 million tons.
• Sorghum and barley are expected to decline due to increased corn planting.

India

• Coarse grain production is projected at 41.7 million tons, up 3.4 million.
• Corn and millet are expected to expand, while sorghum area contracts slightly.

Russia

• Coarse grain production is forecast at 39.4 million tons, up 1.9 million.
• Corn area is expected to increase by 9%, with trend yields supporting a record production of 14.0 million tons.

Ukraine

• Coarse grain production is projected at 34.9 million tons, up 1.5 million.
• Corn production is expected to rise 2.7 million tons to 26.0 million.
• Barley production is forecast to decline 1.0 million tons to 7.8 million.

Southeast Asia

• Coarse grain production is expected to increase by 1.4 million tons to 33.4 million.
• Indonesia, Philippines, Vietnam, Thailand are expected to see modest increases in corn production.

Mexico

• Coarse grain production is forecast to rise 0.7 million tons to 31.2 million.
• Sorghum production is expected to increase 1.2 million tons to 6.9 million.
• Corn production is projected to decline 0.5 million tons to 23.5 million.

Canada

• Coarse grain production is expected to rise 0.4 million tons to 26.1 million.
• Barley and corn areas are expected to increase, while oats are projected to decline.

Middle East

• Coarse grain production is forecast at 20.6 million tons, down 2.9 million.
• Turkey's barley is expected to remain stable, but yield is projected to decline due to dryness.

Australia

• Coarse grain production is projected to decline 0.2 million tons to 12.4 million.
• Oats and barley areas are expected to decrease, offsetting increased sorghum yields.

North Africa

• Coarse grain production is projected at 10.1 million tons, the lowest in 9 years.
• Morocco's barley is expected to decline 2.5 million tons to 1.0 million.
• Egypt's corn is mostly irrigated, with stable production at 6.0 million tons.

Serbia

• Corn production is expected to rebound 1.0 million tons to 7.0 million, with coarse grain production up to 7.5 million.

Key Trends and Uncertainties

• U.S. corn supply is projected to reach a record high, leading to lower prices.
• China's corn price is expected to fall significantly due to policy changes.
• Global production is expected to increase slightly, but not enough to match the 2014/15 record.
• Weather plays a critical role in determining yields for many regions.
• Policy changes in Argentina and Russia are expected to boost corn production.
• Uncertainty remains around China's corn price decline and its impact on global markets.