January 2, 2004

 

 

Global Corn Outlook Positive

 

The entire month-to-month increase in feed grain production is due to a fractional increase in corn, which is forecast at a record 10,278 million bushels. Corn exports for 2003/04 are forecast at 1,875 million bushels, up 75 million from last month.

 

Projected U.S. 2003/04 corn exports were increased 1.5 million tons to 47.5 million this month because of reduced competition and firm demand. Corn production in Argentina was forecast down 2 million tons because high soybean prices and planting delays caused by dry soils are causing producers to switch some acres from corn to soybeans.

 

Also, global corn trade is projected up slightly this month to 77 million tons, with strong buying boosting import forecasts for Japan and Taiwan.

 

Projected 2003/04 foreign coarse grain supplies were reduced modestly this month with declines of less than 1 million tons each in production and beginning stocks.

 

However, foreign coarse grain use was increased more than 2 million tons, dropping projected ending stocks. Global coarse grain ending stocks projected at 108 million tons will be the lowest since 1975/76.

 

2003/04 Feed Grain Production Increased From Last Month

 

U.S feed grain production for 2003/04 was raised slightly to 279.3 million tons, up from 244.9 million tons in the previous year. This month-to-month increase is caused by a 1-bushel-per-acre increase in the average corn yield. Total feed grain supply is projected at 312.9 million tons, up from 292.3 million in 2002/03.

 

The only change on the use side was a nearly 2-million-ton increase in exports to 53 million tons.

 

Exports in 2002/03 were 45.9 million tons. The month-to-month increase in feed grain exports stems entirely from corn. Total feed grain use is projected at 274.4 million tons and the stocks-to-use ratio is 14

percent.

 

The projected index for grain consuming animal units(GCAU) is 88.2, up fractionally from last month. GCAU were 87.8 million in 2002/03.

 

Minor Changes Made for 2002/03 Situation

 

The following changes were made for 2002/03:

 

Corn

• Imports lowered to 14 million bushels from 15million, based on actual census numbers.
  
  
• Exports lowered slightly to 1,592 million bushels, based on actual census numbers.
  
  
• Feed and residual raised 7 million bushels to5,642 million, reflecting trade changes. 

Record Corn Crop Forecast at 10,278 Million Bushels

 

Forecast corn production in 2003/04 was raised fractionally this month to 10,278 million bushels, up nearly 1.3 billion bushels from the weather-damaged crop of a year earlier. The month-to-month change is caused by a 1-bushel-per-acre increase in average yields, which are expected to be 143.2 bushels per acre. Both average yields and corn production are expected to be records in 2003/04; previous records

for both were set in 1994/95.

 

Corn objective yield data on November 1 indicate ear counts in the combined seven objective yield States (Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio, and Wisconsin) are at a record high, 4 percent above the previous high in 2000 and 6 percent above last year. Indicated ear counts are the highest on record in six of

the seven objective yield States.

 

U.S. corn: Central Illinois cash and average farm price, September 2001-October 2003Economic Research Service, USDA Feed Outlook/FDS-1003/November 14, 2003 3including Ohio, Indiana, Iowa, Nebraska, and North Dakota. Yields were lowered in only three States, Wisconsin, Virginia, and Delaware.

 

The only change made on the use side this month was a 75-million-bushel increase in exports to 1,875million. These exports are up 283 million bushels from 2002/03. Total corn utilization in 2003/04 is forecast at 10,025 million bushels, up from 9,533

million bushels the previous year. The stocks-to-use ratio is 13.5 percent compared with 11.4 percent last year. The 2003/04 corn season-average farm price remains projected at $1.90-$2.30.

Forecast Foreign 2003/04 Coarse Grain Production and Beginning Stocks Down This Month

 

The foreign coarse grain production projection was reduced 0.85 million tons this month as large declines for Argentina and Eastern Europe were mostly offset by increased prospects for Ukraine and several others.

 

This month, corn production prospects in Argentina dropped 2.0 million tons to 14 million because high soybean prices and planting delays caused by dry soils are causing producers to switch some acres from corn to soybeans. Also, a poor start to the growing season has reduced yield prospects 0.3 ton per hectare to 5.0. The dryness has also reduced sorghum yield prospects slightly. However, timely rains during October in most of the corn areas of Buenos Aires facilitated corn plantings, limiting the deterioration in corn production prospects.

 

Corn production prospects in Eastern Europe were reduced 0.85 million tons this month because of the effects of summer drought. Forecast 2003/04 corn production in Hungary was reduced 0.7 million tons to 4.6 million. Production prospects in Bulgaria also declined. However, to the East in Ukraine and Southern Russia summer rains were much more favorable. Corn production prospects for the former Soviet Union were increased 1.3 million tons to nearly 11 million. Favorable growing conditions also boosted corn in Indonesia, North Korea, and Vietnam.

While forecast foreign 2003/04 corn production was reduced 1 million tons to 349 million, foreign barley production increased slightly to 130 million mostly because of a 0.4-million-ton increase in production estimated for the UK. Changes in the production forecasts were small for sorghum, oats, and rye.

 

Foreign coarse grain beginning stocks for 2003/04were reduced 0.55 million tons to 112 million mostly because of a 0.9-million-ton reduction in China, the result of trade data showing larger-than-expected corn exports in 2002/03. Revisions to EU corn production for 2002/03 boosted stocks, partly offsetting the changes for China. Foreign production plus beginning stocks are forecast at 715 million tons for2003/04, down significantly from 755 million estimated for the previous year.

 

Forecast Foreign Coarse Grain Use Boosted This Month

 

Projected 2003/04 foreign coarse grain use increased 2.4 million tons this month to 696 million. China's expected corn feed use increased 1.0 million as meat production expansion continues. EU coarse grain use for 2003/04 is up 0.7 million tons, as barley and sorghum feed consumption were increased this month as demand from the livestock sector has been strong.

 

Corn consumption and imports were boosted this month for Japan and Taiwan because of the recent strong pace of purchases. Even with this month¡¯s modest increases in foreign feed grain use expected in 2003/04, the growth in use is expected to be fairly small at 1.5 percent.

 

However, that is a turn around from 2002/03 when foreign coarse grain use is estimated down slightly from the previous year.

 

U.S. Corn Exports Up 1.5 Million Tons on Reduced Competition and Firm Demand

 

Global coarse grain trade projected for 2003/04(October-September) was nearly unchanged this month at nearly 102 million tons. Increased corn trade was offset by reductions for barley. The EU is expected to consume more barley domestically, and purchases by Saudi Arabia have been slow recently.

 

However, with increased corn imports forecast this month for Japan and Taiwan, corn trade was increased 0.5 million tons to 77 million. However, increased freight rates and reduced exportable supplies from China and Argentina are contributing to higher prices for many importers, and 2003/04 corn trade is projected down slightly from the previous year.

 

U.S. corn exports are expected to reach 47.5 million tons in the 2003/04 October-September international year and 47.6 million tons or 1.875 billion bushels for the September-August local marketing year. The 1.5-million-ton increase in U.S. exports this month is supported by a 1-million-ton drop in expected exports by Argentina and the 0.5-million-ton expansion in world corn trade forecast this month.

 

U.S. corn exports in 2003/04 are projected up 6.5 million tons or 16 percent compared with the previous year's low level. Early-season trade information confirm the expansion. In September, according to Census data, corn exports reached nearly 3.8 million tons, up 24 percent from the previous year. Grain inspections for October indicate another month of 3.8 million tons of corn shipments, up 18 percent

compared with a year ago. Also, as of October 30,2003, according to U.S. Export Sales, outstanding sales of corn reached 10.2 million tons, up 34 percent compared with a year ago.