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Outlook Summary: January 2022

Core Content

This report provides an overview of the U.S. and global outlook for major grains, including corn, sorghum, barley, and oats, for the 2021/22 marketing year. It highlights production trends, supply and use projections, and market price expectations, based on the USDA's January WASDE report.

Main Points

U.S. Corn Outlook

• Production: The U.S. corn crop for 2021/22 is projected at 15,115 million bushels, a 7% increase from 2020/21, driven by a 53-million-bushel increase in harvested area (from 85.1 million to 85.4 million acres), with the national yield remaining unchanged at 177.0 bushels per acre.
• Supplies: Total corn supplies for 2021/22 are projected at 16,375 million bushels, a 52-million-bushel increase from the December forecast.
• Use: Total corn use is projected at 14,835 million bushels, slightly higher than the December report, due to increased domestic use, particularly for ethanol.
• Exports: U.S. corn exports are projected at 2,425 million bushels, a 75-million-bushel decrease from the December forecast, due to increased global competition from Brazil, Argentina, and Ukraine.
• Ending Stocks: Ending stocks for 2021/22 are projected at 1,540 million bushels, up from the December forecast, with the stocks-to-use ratio at 10.4%.
• Farm Price: The season-average farm price for corn is unchanged at $5.45 per bushel. Cash prices have remained strong, with the Central Illinois average at $6.03 per bushel in December 2021.

Sorghum Outlook

• Production: Sorghum production for 2021/22 is revised down to 448 million bushels, a 23-million-bushel decrease from the December forecast, due to lower yields.
• Imports: Sorghum imports are projected at 310 million bushels, a 10-million-bushel decrease from the December forecast, as year-to-date exports and inspections have slowed.
• Ending Stocks: U.S. sorghum ending stocks are projected at 33 million bushels, down 3 million bushels from the December forecast.
• Farm Price: The season-average farm price for sorghum is unchanged at $5.45 per bushel, with the November 2021 average at $5.66 per bushel, reflecting tight supply conditions.

Barley Outlook

• Production: U.S. barley production is projected at 71 million bushels, significantly lower than the previous year due to drought conditions in the Northern Plains.
• Imports: Barley imports are raised to 9 million bushels, a 2-million-bushel increase, based on strong import activity in the September-to-November quarter.
• Ending Stocks: Ending barley stocks are projected at 57 million bushels, a 3-million-bushel decrease from the December forecast.
• Farm Price: The season-average farm price for barley is $5.15 per bushel, unchanged from the December forecast, but elevated from the 2020/21 price of $4.75.

Oat Outlook

• Production: U.S. oat production is projected at 40 million bushels, unchanged from the December forecast.
• Supply and Use: Total oat supplies are projected at 155 million bushels, a sharp decline from 2020/21 due to poor production conditions in the U.S. and Canada.
• Farm Price: The season-average farm price for oats is raised to $3.80 per bushel, an increase of $0.10, based on strong farm and cash prices received through November.

International Outlook

• Global Coarse Grain Production: Projected at 1,500.1 million tons, a 1.6-million-ton decrease from the previous month, with U.S. corn production up 1.4 million tons.
• Foreign Corn Production: Projected at 1,101.3 million tons, a 2.4-million-ton decrease, due to reduced output in Argentina, Brazil, Paraguay, the European Union, Mexico, and Kenya, partly offset by higher Ukrainian production.
• Other Grains: Barley and sorghum production are revised with mixed outcomes, while oats, rye, and millet also show changes across countries and regions.

Key Information

• Domestic Use Trends: Increased ethanol demand is a major driver of higher domestic corn use, which has offset lower export volumes.
• Weather Impact: Drought and heat affected corn yields in parts of the U.S. and South America, particularly in Brazil and Argentina, while the Western Corn Belt and Southern Plains saw strong basis levels due to limited supplies and higher prices.
• Market Dynamics: Strong cash and futures prices have been observed in the U.S., with the season-average corn price remaining stable despite increased supply.
• Global Competitiveness: U.S. corn faces increased competition from Brazil, Argentina, and Ukraine, which have improved production and export capabilities.
• Sorghum Adjustments: Lower yields in Kansas and South Dakota reduced sorghum production, while increased supply in other states led to a slight rise in ending stocks.
• Oat Market: Oat prices have risen sharply, but most of the production has already been marketed, reducing the influence of later prices on the season average.

Summary Table

Conclusion

The 2021/22 U.S. grain outlook is marked by increased production and supplies for corn, with a stable season-average farm price. However, exports face competition from other countries, and domestic use, especially for ethanol, has increased. Sorghum and barley production and use show mixed trends, with sorghum facing lower yields and barley affected by drought. Oats have seen a price increase but a decline in supply. International production trends indicate a decrease in global coarse grain output, with notable impacts in Brazil, Argentina, and Paraguay, while Ukraine and other regions show positive changes. Overall, the market remains tight with strong prices in certain regions, and future developments in weather and demand will play a critical role in shaping the outlook.