Feed outlook: Record U.S. corn crop forecast for 2014/15

Farm Forum

The March 31 Prospective Plantings report indicated that U.S. farmers intend to plant 91.7 million acres of corn for the 2014/15 marketing year, 4 percent less than was planted for 2013/14. Assuming normal mid-May planting progress and summer weather, production is forecast at 13.9 billion bushels, just 10 million bushels over last season. With increased carryin stocks, projected supplies in 2014/15 are 2 percent higher than in 2013/14. Exports are forecast down 200 million bushels to 1,700 million bushels due to expected competition from South America. Exports, in combination with unchanged food, seed, and industrial (FSI) use, and lower feed and residual use result in a higher carryout and support a price range of $3.85 to $4.55 per bushel for 2014/15, down from the $4.50 to $4.80 projected for 2013/14. For 2013/14, higher projected exports and FSI use this month reduce projected ending stocks, raising the projected price range 10 cents on the low end of the range.

World coarse grain production for 2014/15 is projected down 1 percent from 2013/14, but higher beginning stocks support a small increase in supplies. Global coarse grain use is projected to grow more slowly in 2014/15 than in the previous year, as pork and poultry diseases limit meat production growth. World ending stocks are projected up slightly, with most of the increase in the United States.

Projected 2014/15 Feed Grain Supplies To Set Record

U.S. feed grain production for 2014/15 is projected at 368.4 million metric tons, down less than a million from 2013/14 when delayed plantings and midsummer dryness resulted in below trend yields, particularly in the Western Corn Belt. This season, corn yields are expected to return to trend levels, but total harvested feed grain acreage is forecast 4.5 percent lower. Production forecasts are smaller for sorghum and barley crops and larger for corn and oats. Yields, at 3.93 tons per acre, are projected up 4.5 percent over last year. Projected plantings are based on USDA’s March 31, 2014, Prospective Plantings report. Harvested area is projected down for corn, sorghum, and barley but up slightly for oats. Total feed grain supplies are up nearly 2 percent from 2013/14 to a record 403.3 million tons, supported by increased beginning stocks of corn.

For 2013/14, larger forecast barley and oats imports increase raise total supplies slightly to 395.6 million tons.

Feed and Residual Use Expected To Slip in 2014/15 The 2014/15 feed and residual use for the four feed grains plus wheat on a September-August year is projected 141.5 million tons, compared with 141.9 million estimated for 2013/14. Total grain consuming animal units (GCAUs) are projected 0.4 million units lower at 89.3 million. GCAUs per ton of feed and residual are projected at 1.58 tons per GCAU in 2014/15, incrementally higher than in 2013/14. Forecast red meat and poultry production for 2013/14 is lower this month on lower pork and broiler production. Pork supplies are limited due to low pigs per litter caused by the Porcine Epidemic Diarrhea Virus (PEDv), and poultry production is lowered on the pace of slaughter and offset by heavier egg sets and chick placements.

Corn Production for 2014/15 Projected To Set Record

Forecast U.S. corn production, at 13,935 million bushels, would exceed last season’s record production by just 10 million bushels. Although projected planted acres are lower than those in the past 3 years, and harvested acres are lower than in the previous 2, the current acreage forecast combined with trend yields produces a massive crop. The projected 2014/15 corn yield is 165.3 bushels per acre, compared with 158.8 bushels in 2013/14.

The supply forecast of higher production, combined with beginning stocks of 1,146 million bushels and imports of 30 million, provides corn supplies of 15,111 million in 2014/15, 330 million greater than in 2013/14.

Projected 2014/15 Disappearance Slips, Builds Carryout

Lower projected exports and feed and residual use combine with stable projected food, seed, and industrial (FSI) use to dampen disappearance by 250 million bushels for 2014/15, compared with 2013/14. At 13,385 million bushels, reduced total use leaves projected ending stocks at 1,726 million bushels, up 580 million from the 2013/14 projection.

Competition from other corn producers dampens the U.S. export forecast for 2014/15 by 200 million bushels to 1,700 million. The 50-million-bushel decline in feed and residual is largely due to lower expected production of red meat and broilers. At 5,250 million bushels, feed and residual is down only 1 percent from 2013/14.

Corn for Ethanol Set To Increase, Raising FSI Use for 2013/14 and 2014/15

Projected U.S. 2013/14 ethanol production is raised 50 million bushels this month to 5,050 million as weekly data indicate strong production in April. Although gasoline consumption is almost flat, maintaining ethanol use near the blend wall level, higher exports in recent months support an increase in production. Prospects for ethanol exports are enhanced by limited exportable supplies in Brazil, the world’s major ethanol exporter.

Other FSI use categories are adjusted for 2013/14. Corn used for high fructose corn syrup (HFCS) is lowered 10 million bushels to 490 million this month on a slower year-to-date shipment pace and lower export demand for U.S. HFCS in Mexico. Small adjustments were made in beverage and manufacturing and cereals and other products categories. Corn for seed in 2013/14 is projected at 24.1 million bushels down from 24.6 million in 2012/13. Total FSI for 2013/14 is projected at 6,435 million bushels, up from 6,051 million in 2012/13.

For 2014/15, FSI categories are mostly unchanged except for small increases in beverage and manufacturing and cereals and other products. Corn for seed is lowered to 23.2 million bushels based on reduced planted acreage for the 2014/15 crop. Corn used for ethanol in 2014/15 is projected unchanged from 2013/14. Total FSI use is also unchanged at the projected 6,435 million bushels.

Corn Prices Advance

The 2014/15 season-average farm price is projected at $3.85 to $4.55 per bushel with a midpoint of $4.20 per bushel, compared to the initial projection of $3.50 to $4.30 per bushel at USDA’s February Agricultural Outlook Forum. Relative to the February outlook, May projections reduce supplies and increase exports, thus reducing ending stocks. For 2013/14, strong export demand, higher forecast FSI use, and tighter ending stocks drive an increase of $0.05 in the midpoint of the $4.50 to $4.80 per bushel price range. The 2014/15 corn price range midpoint is 10 percent lower than the 2013/14 midpoint.

Barley Planted Acres Down in Key Production States

The U.S. barley crop is projected at 196 million bushels in 2014/15, down nearly 9 percent from the 2013/14 estimate of 215 million. Lower expected production is largely driven by a decline in projected planted acres in North Dakota, Montana, and Washington, where collectively, 265,000 fewer acres are expected to be sown to barley. Planted acres for the United States are projected down 9 percent relative to 2013/14 levels, which, if realized, will be the third-lowest estimate of planted acres on record.

Barley yields for 2014/15 are projected at 70.0 bushels per acre and are based on 1990-2013 trends. Gradually improving transportation conditions between Canada and the United States support a slight increase in imports to 25 million bushels in 2014/15, up from 17 million in 2013/14. Barley feed and residual for 2014/15 is expected to be equivalent to that for 2013/14, at 60 million bushels.

Prices received by farmers for barley in 2014/15 are expected to average $4.45 to $5.25 per bushel with a midpoint of $4.85 per bushel. This compares with the average $6.10 per bushel price received by farmers in 2013/14 and is largely a function of a general decline in feed grain prices and particularly, corn prices.

Hay Stocks Report Indicates More Abundant 2014 Supplies

The May 9 USDA-NASS Crop Production report indicates that U.S. hay stocks on farms on May 1, 2014, totaled 19.18 million tons, a 35-percent increase over the 2013 figure of 14.16. With December 1, 2013, stocks reported at 89.30 million tons, the implied December-May disappearance is 70.13 million tons, up from the 62.39 million tons reported for the same period in 2012/13. Increased year-to-year hay disappearance was encouraged by relatively more abundant hay supplies, estimated at 150.1 million tons in 2013/14 and up from 141.3 million in 2012/13, and lower prices: $179 per ton for 2013/14 compared to an average of $187 per ton for the 2012/13 marketing year.

The Prospective Plantings report indicates that producers intend to harvest nearly the same number of hay acres in 2014 as in 2013, approximately 58.3 million acres total. In combination with declines in livestock numbers, hay supplies available per RCAU are expected to rise in 2014/15. Increased hay supplies and a decline in the price of other animal feeds are likely to put downward pressure on hay prices through 2014.