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Outlook Summary: U.S. and Global Corn and Grain Markets (October 2020)

Core Content

This report provides an overview of the U.S. and global outlook for corn and other coarse grains for the 2020/21 marketing year, based on the October World Agricultural Supply and Demand Estimates (WASDE). Key factors influencing supply, demand, and prices are discussed, with an emphasis on production changes, use projections, and trade dynamics.

Main Points

U.S. Corn Outlook

• Production: The U.S. corn crop for 2020/21 is projected at 14.722 billion bushels, a reduction of 178 million bushels from the previous month.
• Harvested Area and Yield:
  • Harvested area is forecast at 82.5 million acres, down nearly 1 million acres from the prior month.
  • Planted acres are 91.0 million, slightly below the previous month.
  • Yield is forecast at 178.4 bushels per acre, down 0.1 bushel from the September forecast.
• Use and Stocks:
  • Total use is reduced by 50 million bushels, with feed and residual and ethanol use each cut by 50 million bushels.
  • Ending stocks for 2019/20 are 1.995 billion bushels, 258 million bushels below the September WASDE estimate.
  • 2020/21 ending stocks are projected at 2.167 billion bushels, a 336 million bushel decrease from the previous month.
• Prices:
  • The projected average farm price for corn is $3.60 per bushel, up $0.10 from the September estimate.
  • 2019/20 corn prices averaged $3.56 per bushel, down from $3.61 in the prior year.

Sorghum Outlook

• Production: U.S. sorghum production is projected at 370.6 million bushels, up 12.7 million bushels from the prior estimate.
• Prices: Sorghum prices are projected to rise to $3.60 per bushel for the 2020/21 season, mainly due to the increased expected corn prices.

Barley Outlook

• Production: U.S. barley production is forecast at 3.6 million bushels, down 0.2 million from the previous month.
• Prices: Barley prices are expected to rise to $4.55 per bushel, up $0.10 from the previous month.
• Use and Stocks:
  • Barley feeding is reduced by 5.0 million bushels, while exports are up 1.0 million bushels.
  • Ending stocks for 2020/21 are projected to decrease by 6.6 million bushels.

Oats Outlook

• Production: Oats production is marginally higher than the previous month, at 65.4 million bushels.
• Imports: Oats imports are reduced by 2.0 million bushels, leading to a 1.6 million bushel decrease in total supply.
• Ending Stocks: Oats ending stocks are projected at 40.1 million bushels, a 1.6 million bushel decline from the September estimate.

Key International Developments

Foreign Corn Production

• Global Output: Foreign corn production is projected 3.0 million tons higher than the previous month, up 19.3% year-over-year.
• Major Contributors:
  • Sub-Saharan Africa (SSA), Serbia, India, and Canada are key contributors to the increase in foreign output.
  • Ukraine experienced a 3.2 million ton reduction in coarse grain production, including corn and barley, due to dry weather and lower yields.
• Stocks:
  • Global stocks are projected to decrease by 6.7 million tons (2%), primarily due to U.S. stocks dropping by 8.5 million tons (12.8%).
  • Foreign corn stocks are expected to increase by 2.2 million tons to 245.4 million bushels, with a notable increase in Mexico due to 2019/20 production revisions.

Corn Trade

• Global Trade: World corn trade for the 2020/21 crop year is projected to decrease by 1.6 million tons to 183.4 million tons, though still a record high.
• Export Changes:
  • Ukraine is projected to export 2.0 million tons less corn.
  • Serbia is expected to export 0.6 million tons more.
  • Argentina exports are increased by 1.1 million tons to 39.6 million tons.
  • U.S. exports remain unchanged at 58.0 million tons for 2020/21.
• Import Changes:
  • EU imports are reduced by 1.0 million tons to 24.0 million tons.
  • Iran imports are down 1.0 million tons to 9.0 million tons.
  • Kenya imports are reduced due to higher production.
  • Vietnam and Saudi Arabia are projected to import 0.5 million tons more each.
  • Iraq is expected to import 0.4 million tons of barley, due to high domestic stocks.

Key Trends and Drivers

• Supply Tightening: Lower U.S. production and reduced beginning stocks contribute to tighter supplies, pushing up corn prices.
• Ethanol Use: Reduced ethanol use due to lower gasoline and ethanol production has contributed to the overall reduction in corn use.
• Feed and Residual Use: Increased feed and residual use in the U.S. poultry and pork sectors, and in SSA, India, and others, have supported higher use.
• Weather Impact: Dry conditions in Ukraine have significantly reduced corn and barley yields.
• Trade Dynamics: The U.S. maintains stable export levels, while other countries like Serbia and Argentina see increased exports. The EU's reduced corn imports are linked to lower demand and higher prices.
• Seed Imports: Ukraine has seen a decline in hybrid seed imports, despite increased corn area, due to the depreciation of the hryvnia and the development of a domestic seed industry.

Conclusion

The 2020/21 outlook for corn and other coarse grains is shaped by a combination of reduced U.S. production, tighter supplies, and increased foreign output. Prices are projected to rise due to supply constraints, while trade patterns are shifting, with some countries increasing exports and others reducing imports. The report highlights the complex interplay between production, use, and trade in the global grain market.