Total 2009/10 feed grain production increased due to a record corn crop. Total feed grain utilisation is projected up from 326.6 million tons in 2008/09 to 349.7 million in 2009/10 because of increased feed and residual use, exports, and food, seed and industrial use. Projected global coarse grain ending stocks are up 3.7 million tons this month to 180.2 million. US feed grain ending stocks are projected five per cent higher this month, and forecast season average prices are raised for corn, sorghum and barley. Hay supplies per roughage-consuming animal unit (RCAU) are up from last year, but silage production per RCAU is down.

DOMESTIC OUTLOOK

Feed Grains Supplies up for 2009/10

US feed grain supplies for 2009/10 are forecast at 399.6 million metric tons, up 6.2 million from last month and up 25.9 million from last year. The 2009 corn and sorghum crop are up month-to-month, but barley and oats production is unchanged. Beginning stocks are lowered slightly to 47.0 million tons, reflecting revision in 2008/09 corn and sorghum supply and use.

Total feed grain use is projected 3.7 million tons higher at 349.7 million this month. Domestic use of the four feed grains is raised 3.9 million tons this month to 294 million. This increase is the result of higher projections for feed and residual use offset slightly by lowered food, seed and industrial (FSI) use for corn. Feed grain exports for 2009/10 are lowered slightly this month to 55.8 million tons, as barley exports are reduced. The increase in supply is partially offset by the increase in domestic use. This results in ending stocks being increased 2.4 million tons to 49.8 million. In 2008/09, ending stocks for the four feed grains totalled 47 million tons.

Feed and residual use for the four feed grains plus wheat converted to a September- August marketing year is up 3.51 million tons to 152.67 this month because of increases in projected feeding of corn and sorghum, but is partially offset by lower wheat feeding. Grain-consuming animal units are forecast at 92.44 million, up from 91.71 million last month, due to increases in dairy, broiler, turkey and hog production forecasts in 2010. Feed and residual use per animal unit is raised slightly to 1.651 tons, up from 1.626 tons last month.

Small supply and use changes were made for feed grains in 2008/09; production is lowered 0.2 million tons to 325.7 million. Domestic use is lowered to 275.5 million with a 0.2-million-ton reduction in feed and residual use to 142.5 million tons. Ending stocks are also lowered slightly to 47.0 million tons for 2008/09. These changes are mainly due to lower estimated corn production for 2008/09.

Record Corn Yield for 2009/10

US corn production for 2009/10 is increased 230 million bushels this month to 13,151 million bushels. This month's increase is partly the result of a 131,000-acre increase in planted area and a 336,000-acre increase in harvested area. The average corn yield is also up 2.3 bushels from last month at 165.2 bushels per acre, which is 4.9 bushels above the previous record of 160.3 bushels per acre set in 2004. Beginning stocks are lowered one million bushels to 1,673 million this month based on a revision to the September 1 stocks estimate.

As a result of increased demand, domestic use is increased 140 million bushels this month to 11,020 million, up from 10,198 million bushels last year. Projected feed and residual use is raised 150 million bushels to 5,550 million, reflecting higher livestock feeding and higher September-November disappearance as indicated by December 1 stocks. In FSI use, corn used for high-fructose corn syrup (HFCS) in September-November 2009 was 106.4 million bushels, down from 110 million bushels during the same months in 2008. While the September-November period is not the usual high point in seasonal usage, the lower use does suggest less HFCS corn use for the year. Projected FSI use for 2009/10 is lowered 10 million bushels to 460 million bushels. All other corn used in FSI remains unchanged this month.

Corn used for fuel alcohol production in September-November 2009 is projected at 1,010 million bushels, up from 895 million bushels in the same period last year. Projected 2009/10 corn use for ethanol remains unchanged this month at 4,200 million bushels.

Exports remain unchanged this month at 2,050 million bushels for 2009/10. Total corn use for 2009/10 is projected up 140 million bushels this month to 13,070 million bushels, which is up 1,014 million from last year. Corn ending stocks for 2009/10 are expected to be 1,764 million bushels, up 89 million bushels from last month due to increased production. With increased domestic use and continued strength in the cash market and futures values, the 2009/10 season average farm price projection is raised 15 cents on both ends of the range to $3.40 to $4.00 per bushel.

Changes are also made this month to the 2008/09 corn supply and use tables. Corn area harvested is lowered slightly, which decreases production 10 million bushels to 12,092 million. Ending stocks are decreased one million bushels to 1,673 million for 2008/09. These revisions resulted in an offsetting nine-million-bushel decrease in 2008/09 feed and residual to 5,246 million bushels.

Sorghum Production Up in 2009/10

Sorghum production for 2009/10 is estimated at 383 million bushels, up 19 million from last month, but down 89 million from 2008/09. The upward revision to this year's production is based on increased yields. The average sorghum yield is 69.4 bushels per acre, up 5.4 bushels from last month and up 4.4 bushels from the previous year. Planted area for 2009/10 is increased 10,000 acres this month at 6.6 million, but harvested acreage is down 161,000 acres from last month at 5.5 million.

Forecast sorghum feed and residual use for 2009/10 is increased 10 million bushels this month. At 150 million bushels, this year's feed and residual use is down from 232 million bushels last year. With larger supplies, ending stocks for 2009/10 are projected 9 million bushels higher than last month at 58 million. The season average farm price is projected 20 cents higher on the low end of the range and 10 cents higher on the high end of the range to $3.05 to $3.55 per bushel. Prices received by producers have risen since the start of the marketing year, supported by rising values for corn.

 

Barley Trade Prospects Trimmed in 2009/10

US barley imports and exports are both lowered five million bushels based on the pace of trade to-date. This leaves projected ending stocks unchanged at 116 million bushels, up from 89 million in 2008/09.

Forecast barley prices received by farmers are increased 10 cents on the low end of the range to $4.20 to $4.60 per bushel.

Oats Ending Stocks Decline in 2009/10

US oats feed and residual use for 2009/10 is increase five million bushels this month, as a result of September-November disappearance. At 125 million bushels, this year's feed and residual use is up from 109 million bushels last year. With no changes in supplies, oats ending stocks for 2009/10 are projected 5 million bushels lower than last month at 69 million, down from 84 million in 2008/09. Based on prices received to date, the season average farm price is projected 10 cents lower on the high end of the range to $2.00 to $2.20 per bushel.

Hay Supplies up in 2009/10

Stocks of all hay stored on farms totalled 107.2 million tons on December 1, 2009, up 3.4 per cent from a year ago. Disappearance of hay from May-December 2009 totalled 62.3 million tons, compared with 64.2 million tons for the same period a year ago. Compared with stocks on December 1, 2008, hay stocks increased in most areas west of the Mississippi and portions of the Southwest.

Roughage-consuming animal units (RCAU) in 2009/10 are estimated at 69.77 million, down from 70.875 million in 2008/09. Plentiful supplies and lower RCAUs increases hay stocks to 1.54 tons per RCAU, up from 1.46 tons last year.

Hay production totalled 147 million tons for 2009, down three per cent from the October 1 forecast but up one per cent from the 2008 total. Area harvested is at 59.8 million acres, down one per cent from the October 1 forecast and down one per cent from 2008. The average yield at 2.47 tons per acre is down 0.07 tons from October but up 0.04 tons from the previous year.

Production of alfalfa hay and mixtures in 2009 is estimated at 71.0 million tons, down one per cent from the previous forecast, but up one per cent from 2008. Harvested area, at 21.2 million acres, is one per cent above both the October 1 forecast and the previous year. The average yield is 3.35 tons per acre, 0.08 tons below the previous forecast but 0.02 tons above 2008. Other hay production totalled 76.4 million tons, down 5 per cent from the October 1 forecast, but up slightly from 2008. Area for harvest, at 38.5 million acres, is down two per cent from October and down one per cent from last year. The average yield is estimated at 1.98 tons per acre, down 0.08 tons from October but up 0.03 tons from last year.

Corn silage production is estimated at 108 million tons in 2009, down three per cent from 2008. The US corn silage yield is estimated at a record high 19.3 tons per acre, up 0.6 tons from the previous record set in 2008. Acreage harvested for silage is estimated at 5.61 million acres, down six per cent from a year ago. Sorghum silage production is estimated at 3.68 million tons, down 35 per cent from 2008. Area harvested is 254,000 acres, down 38 per cent from the previous year. Sorghum silage yields averaged a record 14.5 tons per acre, up 0.7 tons per acre from last year. In Texas, the largest producing State, yield was at 16.0 tons per acre, up 1.0 tons from last year and the second highest yield on record. Total silage per RCAU in 2009/10 was 1.604 tons, down from 1.655 tons in 2008/09.

In the first eight months of the hay marketing year (May-April), hay prices have averaged 28 per cent lower in 2009 after the record highs seen in 2008. Alfalfa hay prices averaged $54.63 per ton below prices a year earlier during May through December. Other hay prices averaged $17.81 per ton below prices a year earlier during May through December. With ample supplies and lower input costs as compared to last year, farmers should expect lower prices for hay in 2009/10 in comparison to 2008/09.

INTERNATIONAL OUTLOOK

US Increase Boosts World Coarse Grain Production This Month

Global coarse grain production for 2009/10 is up 4.7 million tons this month to 1,093.9 million. A 6.3-million-ton US increase is partly offset by lower forecast foreign production, down 1.6 million tons to 743.7 million. Production of corn, barley, and mixed grains, is up this month, but production of sorghum, millet, oats and rye is reduced.

The largest production reduction is for India, where harvest reports indicate that the inconsistent monsoon damaged sorghum and millet production more than expected. Sorghum production is down 2.0 million tons to 6.0 million, as area harvested is slashed 1.0 million hectares to 7.8 million and average yield is cut 15 per cent. Given prevailing dryness, sorghum, a crop resistant to drought, was expected to expand plantings at a higher rate than occurred. Millet production is down 0.4 million tons to 7.6 million. Area is up 1.0 million hectares this month to 10.0 million, matching the previous year, but average yield is cut 15 per cent, more than offsetting the area increase. India's corn production estimate is unchanged this month at 18.5 million tons, with a 0.9-million-hectare cut in area offset by higher reported yields.

Mexico's 2009/10 projected corn production is reduced 0.5 million tons to 22.0 million as dryness in July caused a reduction in area in the southern plateau. Mexico's 2008/09 corn crop is reduced 0.8 million tons this month to 24.2 million (still a record crop) as area and yield estimates are revised lower based on official government data.

Australia's 2009/10 sorghum production is reduced 0.15 million tons to 1.85 million based on constraints on area due to irrigation water allocations. Norway's barley, oats and rye production is trimmed for 2009/10 as the historical series was revised. There are also small reductions in corn and sorghum production in El Salvador and barley in Uruguay based on reduced yields.

Argentina's 2009/10 corn production projection is increased 1.0 million tons this month to 15.0 million. Ample rains in December and early January have encouraged late plantings and boosted the yield potential of corn, some in the early stages of reproduction. Both projected area and yield are increased.

Government production reports in Kazakhstan indicate increased barley area, yield and production as late season growing and harvesting conditions were favourable. Production is up 0.5 million tons to 2.6 million. EU mixed grain production is up 0.3 million tons based on reported production in Poland.

Global coarse grain beginning stocks for 2009/10 are reduced slightly this month to 188.7 million tons. Argentina's 2008/09 corn ending stocks are reduced 0.7 million tons to 0.4 million as strong exports tightened old-crop carry-out. Mexico's 2009/10 beginning stocks are reduced this month due to 2008/09 production revisions. However, Brazil's 2009/10 corn beginning stocks are increased as exports have been sluggish. Increased EU 2008/09 corn imports boosted 2009/10 beginning stocks. For Serbia, reduced 2007/08 feed use and revised 2008/09 production and trade boosted 2009/10 beginning stocks of corn.

Foreign Coarse Grain Use Reduced, Ending Stocks Increased

Foreign coarse grain use is projected down 3.1 million tons this month to 808.1 million. The biggest drop is for India, with food consumption down 2.3 million tons due to reduced production of sorghum and millet. Mexico's corn feed use is projected down 0.5 million tons due to reduced production. Norway's coarse grain feed use is reduced 0.2 million tons due to reduced production of small grains. Smaller reductions in projected use are forecast for El Salvador, Ecuador, Russia, China and Australia. However, barley feed use is up 0.4 million tons for Saudi Arabia and 0.1 million in Kazakhstan.

Reduced foreign coarse grain use more than offsets reduced supplies, leaving 2009/10 ending stocks up 1.3 million tons to 130.4 million. The largest increase is for Brazil, up 0.7 million tons this month due to reduced corn exports in the 2008/09 local marketing year. EU ending stocks are up 0.6 million tons, with increases for corn and mixed grain. Argentina is up 0.3 million tons due to increased corn production. Kazakhstan is up 0.2 million tons because of increased barley production. Mexico is up 0.2 million as increased imports and reduced use more than offset reduced production. There are smaller increases this month for India, Saudi Arabia, Ecuador and Colombia. These increases were partly offset by a 0.7-million-ton cut for Ukraine's barley as feed estimates were revised back to 2005/06. There were also small reductions for Australia, Norway, Serbia, Uruguay, Croatia, El Salvador and Taiwan.

Global Coarse Grain Trade Boosted Modestly

World 2009/10 coarse grain trade is increased 0.7 million tons this month to 110.8 million. Corn trade accounts for most of the increase, up 0.6 million tons to 84.9 million. Barley trade is up slightly, but 2009/10 trade forecasts for sorghum, oats and rye are steady this month.

Mexico's corn imports for 2009/10 are increased 0.5 million tons this month to 9.5 million because reduced production for both 2008/09 and 2009/10 tightened domestic supplies. Brazil's 2009/10 October-September trade year corn imports are increased 0.2 million tons to 0.7 million due to the strong recent pace of shipments from Paraguay. This increase boosted Brazil's 2008/09 April-March local marketing year 0.2 million tons to 1.2 million. Partly offsetting is a 0.1 million-ton reduction in 2009/10 corn imports for Ecuador as 2008/09 trade data confirm a reduced level of import demand. Other 2008/09 corn import changes based on more complete trade data include a 0.3-million-ton increase for the EU to 2.8 million; a 0.15-million ton increase for Taiwan to 4.55 million; small increases for Mexico, Serbia, and South Africa; and reductions of 0.2 million for Chile, Saudi Arabia, and Ecuador, with a smaller reduction for El Salvador.

Corn export changes for 2009/10 include an increase of 0.5 million tons for Argentina and a 0.5-million ton reduction for Brazil because Argentina has been more competitive recently. The Government of Argentina has been more generous with export quota, boosting old-crop exports at the end of their local marketing year. Favourable new-crop prospects also encourage Argentina's 2009/10 export prospects. Serbia's 2009/10 exports are boosted 0.5 million tons this month to 2.0 million based on a post report from the US embassy. Serbia's corn exports have access to EU markets. Also, Russia's corn exports are increased 0.1 million tons to 0.2 million as post harvest exports have exceeded expectations.

US exports remain unchanged this month at 52.0 million tons (2.05 billion bushels for the September-August local marketing year). October and November Census export data and grain inspections for December indicate a slow early-season shipping pace because the corn harvest was late and heavy soybean shipments occupied the export facilities. However, at the end of December 2009 outstanding export sales were 45 per cent higher than those of a year earlier, so the pace of corn export shipments is expected to accelerate in coming months.

January 2010