FEED YEARBOOK--SUMMARY March 21, 1997 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. The complete text of the FEED YEARBOOK (FDS-1997) will be available 2-3 working days following release of this summary. ------------------------------------------------------------------------------ Feed Grain Supply and Use Rebounds in 1996/97 Despite very low carryin stocks, the 1996/97 U.S. feed grain supply is up an estimated 11 percent from a year earlier. Increased acreage and yields boosted U.S. feed grain production 28 percent in 1996, led by gains in corn. With the larger supply and prices down from the record highs of the 1995/96 marketing year, total feed grain disappearance is expected to increase despite weaker exports. In 1997, market considerations will play a more critical role in farmers' planting decisions, reflecting the growing impact of new farm legislation allowing more flexibility. Corn production in 1996 was up 26 percent from the poor crop in 1995. High prices provided strong incentives to increase acreage, but poor weather prevented some planting and delayed the crop in many areas. Generally late frosts allowed the crop to develop and final yields were better than expected over much of the summer. Grain sorghum production was up 74 percent and the largest since 1992. Farmers increased acreage in response to high prices, and the opportunity to realize a return on large amounts of failed wheat acres in Kansas and cotton acres in Texas. Strong prices encouraged barley producers to increase plantings, despite a very large increase in spring wheat acreage, and production rose 10 percent from 1995. Production of oats continued downward to a new low in 1996, dropping 4 percent due to reduced acreage. U.S. imports of oats are expected to rise sharply in 1996/97. Hay prices have been strong all during the 1996/97 May-April hay marketing year, mainly because adverse weather reduced the quantity and quality of the 1996 hay crop. Alfalfa hay production in 1996 was down 6 percent. Yields declined 5 percent as dry conditions late in the season reduced yields from second and third cuttings across many northern areas. In the southern United States, however, mild temperatures and ample precipitation during August and September led to additional cuttings and helped boost yields. Hay stocks on December 1, 1996, were down 4 percent from a year earlier, with the biggest declines in the eastern Corn Belt and Lake States. Domestic feed grain disappearance will be up sharply in 1996/97, but will not recover to the record high of 1994/95. Feed and residual use is projected up 19 percent because of increases in corn, sorghum, and barley. Sorghum feed and residual use is expected to be the highest in several years due to more abundant supplies and lower prices relative to corn. Food, seed, and industrial use of feed grains is expected to rebound but will not match its 1994/95 high. Ending stocks of feed grains are projected to increase significantly in 1996/97, about doubling from the extremely small carryover of the previous year. Strong prices and shortages of corn forced many grain consumers to adjust use in 1995/96. Feed and residual use of corn was cut 15 percent as livestock feeders were forced to change production plans. Industrial use of corn, which generally shows little reaction to changes in prices, did decline for some types of use. In particular, ethanol production was cut sharply from the previous year as producers were caught between high corn costs and slowly rising ethanol prices. World coarse grain production is forecast to increase sharply in 1996/97, more than offsetting reduced beginning stocks, and boosting supplies, which were extremely tight in 1995/96. While the United States accounts for the largest gains, foreign production is expected to reach a record high. World coarse grain consumption is projected to increase 3.5 percent in 1996/97, as increased supplies reduce prices and generally strong global economic growth boosts demand for meat. World poultry production is projected up in 1997, laying the foundation for strong feed demand in several countries. U.S. corn exports are forecast at 1.9 billion bushels in 1996/97, down 15 percent from a year earlier, because of increased competition. The U.S. share of world coarse grain trade is expected to fall from recent highs in 1994/95 and 1995/96, but remain well above earlier years this decade when China was a larger exporter. High prices in 1995/96 encouraged several foreign producers to expand production. Foreign exporters are expected to raise their share of world coarse grain trade in 1996/97, led by an increase in EU barley exports. Argentina and China will also expand corn exports. Special articles in this report examine market factors affecting ethanol production and factors shaping corn exports by China and Argentina. Another article examine issues in the Canadian barley sector that may affect U.S. imports. A final special article shows how Russia's rising imports of U.S. poultry products have partially offset its reduced imports of U.S. feed grains. Printed copies of the FEED YEARBOOK will be available in about two weeks. For more information, contact Peter Riley (202) 501-8512. Text of the full report will also be available electronically. For details, call ERS Customer Service (202) 219-0515. END_OF_FILE