December 30, 2008
US may see lower feed grain use in 2008-09
The feed grain demand outlook for 2008-09 has been lowered due to the world economic crisis and financial issues in the ethanol industry, according to the USDA.
World 2008-09 coarse grain ending stocks are now projected higher than beginning stocks. In previous months, forecasts showed global coarse grain stocks declining year-on-year. US corn and sorghum farm prices are also projected lower this month.
Feed grain supplies for 2008-09 are seen slightly higher from November, though supplies are down 18.7 million tonnes from 2007-08, reflecting a lower production year-on-year.
Total feed grain use is projected 9 million tonnes lower at 329.8 million tonnes this month. Domestic use of four feed grains is lowered 6.1 million tonnes this month, which could be due to a decrease in corn use for ethanol. A lower corn use for ethanol also pulls down the availability of distillers' grains and increases corn and sorghum feed and residual use.
Feed grain exports for 2008-09 are projected down 2.9 million tonnes this month. Ending stocks was increased 9.1 million tonnes to 41.8 million tonnes due to declines in export and domestic use. Ending feed grain stocks in 2007-08 totalled 45.1 million tonnes, and stocks are expected to continue declining during 2009.
Corn for food, seed and industrial use for 2008-09 is lowered 300 million bushels to 5 billion bushels this month. This is largely due to the decline in ethanol production, as prospects for the sector is diminishing. Financial issues for ethanol producers are reducing plant capacity utilisation for existing plants and delaying plant openings for those still under construction.
Falling gasoline prices have also led to high relative prices for ethanol, lowering blender incentives and slowing production.