FEED YEARBOOK May 7, 2002 April 2002 FDS-2002 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- FEED YEARBOOK is published annually by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. This release contains only the text of the FEED YEARBOOK--tables and graphics are not included. Printed copies of this Yearbook will be available from the USDA order desk. Call, tool-free, 1-800-999-6779 and ask for stock # ERS-FDS-2002, $21. ERS-NASS accepts MasterCard and Visa. ---------------------------------------------------------------------------- Summary For 2001/02, food, seed, and industrial (FSI) use of feed grains is projected at a record 57.9 million tons, up 4 percent from a year earlier. By contrast, feed and residual use and exports are down slightly. Rising FSI more than offsets the small decline in feed and residual use and exports, leaving total disappearance up fractionally. Feed grain ending stocks for 2001/02 are projected at 45 million tons, down 15 percent from last year and the lowest since 1997/98. Feed and residual use of the four feed grains plus wheat in September-August 2001/02 are expected to be down marginally from the 165 million tons used in September-August 2000/01. The grain used per grain consuming animal unit (GCAU) in 2001/02 is 1.83 tons compared with 2000/01's 1.85 tons. Corn production during 2001/02 was 9.5 billion bushels, down 4 percent from a year earlier due to lower harvested area. Yields increased slightly to 138.2 bushels per acre, the second highest on record. Beginning stocks were up from the previous crop year, but supply is down 2 percent. Total domestic use is projected at a record 7,870 million bushels, up 65 million from 2000/01, and the sixth straight year of rising total domestic use. The current year-to-year increase is caused by an increase in FSI use since feed and residual use is down slightly. Corn exports are projected at 1,925 million bushels, down 10 million from 2000/01 and the lowest since 1997/98. Total use is projected at a record 9,795 million bushels, up slightly from a year earlier and above production. Thus, ending stocks are down 278 million bushels to 1,621 million. The 2001/02 season-average farm price is forecast at $1.85-$1.95 per bushel, compared with $1.85 in 2000/01. Corn FSI use in 2001/02 is expected to total 2,045 million bushels, up from 1,967 million in 2000/01. FSI use would represent 21 percent of total corn use, up 1 percentage point from 2000/01. Corn use in 2001/02 is expected to be up for high-fructose corn syrup (HFCS), starch, alcohol, cereals and other products, and seed, but glucose and dextrose use are projected to be down. Corn used to make ethanol for all of 2001/02 is forecast at 685 million bushels, up 9 percent from 2000/01. Monthly ethanol production reported by the Department of Energy set record- highs in barrels per day in October and November 2001 and again in January 2002. Sorghum production in 2001/02 was 514.5 million bushels, up more than 9 percent from a year earlier. An 858,000-acre increase in harvested area to 8.6 million is behind this year-to-year increase. Sorghum beginning stocks were down nearly 24 million bushels to 41.8 million due to the small 2000/01 crop. Total 2001/02 sorghum supply is 556.3 million bushels, up 4 percent from last year. Total domestic use in 2001/02 is forecast at 260 million bushels. In contrast, sorghum exports are projected at 250 million bushels, up 5 percent from last year and well above the 5-year average of 222 million bushels. Mexico is by far the most important destination for U.S. sorghum, followed by Japan. Sorghum prices received by farmers are forecast at $1.80-$1.90, compared with $1.89 in 2000/01. Barley production in 2001/02 is estimated at 249.6 million tons, down 22 percent from 2000/01 and the lowest since 1953/54. An 18-percent decrease in harvested area and a 5- percent drop in yield caused this year-to-year decline. Total domestic use is forecast at 267 million bushels, down 10 percent from a year earlier due to lower feed and residual use. Exports are forecast at 28 million bushels, down from 57.6 million last year. Barley ending stocks for 2001/02 are forecast at 83.8 million bushels, down from 106.3 million last year and the lowest since 1995/96. The 2001/02 barley prices received by farmers are forecast at $2.20-$2.30 per bushel, compared with $2.11 in 2000/01. In addition to lower beginning stocks, oats supplies in the 2001/02 marketing year are down from a year earlier because of decreased production and imports. Production in 2001 was 117 million bushels, 33 million below 2000. Total use of oats in 2001/02 is expected to equal 230 million bushels, down 29 million from a year earlier. Ending stocks are forecast down 25 percent from the 73 million in 2000/01. Food use and seed use are each expected to increase 2 million bushels from the 2000/01 level. Feed and residual use in 2000/01 is expected to be down 18 percent from the 189 million bushels used in 2000/01. Prices received by farmers for oats in 2001/02 are expected to average about $1.55, compared with $1.10 in 2000/01 and the highest since 1997/98 when oat prices averaged $1.60 per bushel. According to the March 31 Prospective Plantings report, growers intend to plant 79 million acres of corn in 2002, up 4 percent from last year's actual plantings of 75.8 million. Sorghum growers intend to plant 9 million acres of sorghum in 2002, down from 10.3 million acres the previous year. Barley growers intend to plant 5.08 million acres, up 2 percent from a year ago. Farmers indicated they intended to harvest 2.531 million acres of oats for grain in 2002, up 33 percent from 2001. Hay production in 2001 totaled 157 million tons, up 3 percent from the revised 2000 total. Acreage harvested was up 6 percent, but the average yield is down slightly. The average yield, at 2.47 tons per acre, is down slightly from the previous year. Stocks of all hay on farms on December 1, 2001, were up 5 percent from 2000's revised 106 million tons. Farmers in March indicated they planned to harvest 63.7 million acres of hay in 2002, compared with the 63.5 million acres harvested in 2001. World coarse grain production is expected to increase more than 2 percent in 2001/02, but corn production is forecast to increase less than 1 percent because of the smaller U.S. crop. World area increased most for barley and sorghum, partly in response to relatively favorable prices during planting, and yields rebounded from the drought-reduced levels in several major countries. Global coarse grain beginning stocks were down. World coarse grain consumption is expected to increase nearly 2 percent, slightly above trend, after declining the previous year. Also, consumption is forecast to remain much larger than production, dropping world ending stocks 19 million metric tons to 168 million. U.S. corn exports for the October-September 2001/02 trade year are forecast at 49 million tons, up less than 2 percent. Reduced competition from Argentina, China, and Brazil is mostly offset by increased exports from Eastern Europe and large supplies of inexpensive wheat for feeding. Global coarse grain trade is expected to decline despite relatively low prevailing prices. Feed Grain Supply and Use LOWER PRODUCTION AND INCREASED USE TIGHTEN FEED GRAIN ENDING STOCKS IN 2001/02 Feed grain production dropped 4 percent while total use is expected to increase slightly, leaving expected ending stocks down 15 percent from 2000/01. U.S. feed grain production in 2001 is estimated at 261.7 million tons, down from 272.9 million the previous year and the lowest since 1997/98. The large 2000 crop led to an 8- percent increase in beginning stocks, to 52.7 million tons. Total feed grain supply is projected at 316.7 million tons, down more than 2 percent from last year. On the use side, total feed grain disappearance is projected to increase based on record levels of ethanol and high fructose corn syrup production. For 2001/02, food, seed, and industrial use is projected at a record 57.9 million tons, up 4 percent from a year earlier. By contrast, feed and residual use and exports are down slightly. Rising FSI use more than offsets the small declines in feed and residual use and exports, and total disappearance is projected up fractionally. Feed grain ending stocks for 2001/02 are projected at 45 million tons, down 15 percent from a year earlier and the lowest since 1997/98. Corn acreage is trending upwards while the acreage for other feed grains is trending down. This has been caused by expansion of corn acres outside of the traditional corn belt due to policy changes that allow for greater planting flexibility. At the same time, yield increases for sorghum, barley, and oats have been lower than yield increases for corn. The Prospective Plantings Report for 2002 indicates that as of early March, farmers intended to plant more corn, barley, and oats in 2002/03 than they did last year. Sorghum acres are down slightly. The biggest increase in planted area came from oats, a response to sharply higher prices this year. The higher oats price stems mainly from a small U.S. crop in 2001/02, a significant production shortfall in Canada, and quality problems in Scandinavia. LOWER CORN PRODUCTION AND RECORD USE LED TO A MODEST PRICE RECOVERY IN 2001/02 A 5-percent drop in harvested area (partially offset by a slight increase in yield) led to a 400-million-bushel drop in production to 9,507 million. Total domestic corn use for 2001/02 is projected at a record 7,870 million bushels, up 65 million from last year. Prospective exports are down 10 million bushels from a year earlier and are the lowest since 1997/98. Corn Crop Down 4 Percent from 2000/01 Corn production in 2001/02 was 9.5 billion bushels, down 4 percent from the previous year's near record. There was a 5- percent drop in planted and harvested area, while yields increased slightly to 138.2 bushels per acre, the second highest on record. The decline in planted area was caused in part by high energy prices (especially natural gas) when farmers were making planting decisions. Natural gas is the primary input in producing nitrogen fertilizers, and tight supplies of natural gas led to a sharp increase in nitrogen costs. Furthermore, some manufacturers scaled back production leaving farmers unsure if they would have adequate supplies of fertilizer. Beginning stocks in 2001/02 were up 181 million bushels from a year earlier to 1,899 million. Despite these increases, however, the smaller 2001/02 crop will lower supply 2 percent to 11.4 billion bushels. A dry, early spring allowed corn planting to begin early and progress near a record pace in the southern and eastern Corn Belt. Northwestern Corn Belt farmers experienced frequent planting delays due to persistent precipitation. High temperatures and moisture shortages stressed the corn crop in the Corn Belt and southern Great Plains in the early part of August. However, lower temperatures and increased moisture in many parts of the Corn Belt alleviated many of the problems. August conditions were extremely dry in Michigan and the Northeast, which greatly reduced yield prospects. By contrast, growing conditions in the mid- Atlantic and Southeast were nearly ideal for corn. Below-normal temperatures in September delayed corn ripening and drying throughout most of the Corn Belt. Dry weather allowed corn to mature and harvest to progress rapidly in the Southeast. Harvest progressed ahead of normal in Illinois and Indiana until mid-October when heavy precipitation halted harvest. Rain also slowed harvest progress in Ohio and other eastern Corn Belt States. The corn harvest moved slowly across the northern and western Corn Belt in early October. Harvest was well behind pace in Iowa, Minnesota, and Wisconsin and some late-planted corn was harvested for silage instead of grain. In Nebraska, precipitation was below normal the last half of October, allowing harvest to proceed rapidly. The 2001 objective yield data for corn recorded the second- highest ear counts per acre for the combined seven objective yield States (Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio, and Wisconsin). Record-high ear counts were recorded in Illinois, Indiana, Ohio, and Wisconsin. In Iowa, ears per acre were the third highest on record. However, the Nebraska and Minnesota Objective Yield Surveys indicated below- average ears per acre. Increased Food, Seed, and Industrial Use Leads to Record- Large Domestic Utilization Total domestic use is projected at a record 7,870 million bushels, up 65 million from last year. This is the sixth straight year where total domestic use has increased. The current year-to-year increase is caused by an upsurge in food, seed, and industrial (FSI) use. FSI use is projected at a record 2,045 million bushels, up 4 percent from last year. This follows a long-term growth pattern for corn FSI. Food and industrial use is up for every use category except glucose and dextrose, but ethanol and high fructose corn syrup drove the year-to-year increase. Feed use (including residual) is projected at a record 5,825 million bushels, down only 13 million bushels from 2000/01. Corn exports are projected at 1,925 million bushels, down 10 million from 2000/01 and the lowest since 1997/98. Total use is projected at a record 9,795 million bushels, up slightly from a year earlier and larger than production. Increased total use and lower supply will drop ending stocks 278 million bushels to 1,621 million. The stocks-to-use ratio for 2001/02 is projected at 16.5 percent, down 3 percentage points from last year and the lowest since 1997/98. 2001/02 Corn Prices Above Last Year's Levels Tighter stocks have led to a modest increase in corn prices this year. The 2001/02 season-average farm price is forecast at $1.85-$1.95 per bushel, compared with $1.85 last year. The midpoint of this range would be the highest since the 1998/99 season-average farm price of $1.94. Although corn prices have risen for 2 straight years, they are still generally considered to be in the doldrums. The benchmark Central Illinois cash corn price reached $2.00 per bushel in August 2001, compared with $1.49 in August 2000. This was the highest monthly Central Illinois cash price since the $2.01 in December 2000. Prices have fallen below $2.00 since August. During the main harvest period (September-November), prices averaged $1.89, up 11 cents for the same period a year earlier. Prospective Corn Plantings Increase in 2002 In early March, corn growers indicated that they intended to plant 79 million acres of corn in 2002, up 4 percent from last year's actual plantings of 75.8 million. Actual plantings could change due to weather conditions or a changing market situation. The new farm bill (which at time of writing was in conference committee) could also potentially affect 2002/03 corn plantings. Expected acreage is up in many areas of the United States and in virtually all of the Corn Belt. Corn plantings are expected to be down in Pennsylvania, Oklahoma, Kansas, and Colorado because of concerns about dry conditions. Farmers intend to plant 32 percent of their acreage with corn developed using biotechnology, up 6 percentage points from 2001. If these intentions are realized, 22 percent of the acreage will be planted with corn containing bacillus thuringiensis (Bt), up 4 percent from 2001. Eight percent of the acreage will be planted to herbicide-resistant varieties developed using biotechnology, up 1 percent from last year. Stacked-gene varieties, which contain both insect and herbicide resistance developed through biotechnology, will be planted on 2 percent of acreage, up 1 percent from 2001. SORGHUM PRODUCTION AND USE INCREASE IN 2001/02 A larger 2001/02 sorghum crop raised total supply by 20 million bushels. Total use is also up and the stocks-to-use ratio is 9.1 percent, compared with 8.4 percent a year earlier. 2001/02 Sorghum Production Up 44 Million Bushels Sorghum production in 2001/02 was 514.5 million bushels, up more than 9 percent from a year earlier. An 858,000-acre increase in harvested area to 8.6 million is behind this year-to-year increase. Increased sorghum was planted on failed winter wheat and cotton acres as farmers strived to make a crop on some of the land. The 2001/02 sorghum yields were 59.9 bushels per acre, down 1 bushel from a year earlier. This is the lowest yield since 55.6 bushels per acre was reported in 1995/96. While trending up, yield growth has been much more modest for sorghum than for corn. This has diminished the appeal of growing sorghum. Sorghum tends to be grown in drier areas because it can generally handle drought and heat stress better than corn. However, corn has expanded into areas outside of the traditional Corn Belt, including land considered marginal because of low moisture or a short growing season. Since recent farm legislation has allowed greater planting flexibility (most notably the 1996 Farm Act), corn and soybean production has expanded in the northern and western tiers of the Corn Belt. This is an important reason why sorghum acres have been declining. Sorghum beginning stocks were down nearly 24 million bushels to 41.8 million due to the small 2000/01 crop. Total 2001/02 sorghum supply is 556.3 million bushels, up 4 percent from a year earlier. However, sorghum supplies are still substantially lower than the 5-year average of 652 million bushels. Kansas continues to lead the Nation in sorghum planted and harvest acres and production for both grain and silage. Although acres harvested for grain in Texas (the second- largest producing State) increased from last year, drier conditions reduced yields and total production. Total Sorghum Use Increases 16 Million Bushels in 2001/02 Total domestic use in 2001/02 is forecast at 260 million bushels, as a 10-million-bushel increase in FSI use is expected to partially offset a 5-million-bushel decrease in feed and residual use. Record ethanol production is behind much of the FSI increase. Although corn is the dominant starch source used for ethanol, sorghum is the main grain used in a few plants, especially in areas where there is concentrated production. Some plants use both corn and sorghum in the course of a year, depending on price and availability of each. In contrast to domestic uses, sorghum exports are projected at 250 million bushels, up 5 percent from last year and well above the 5-year average of 222 million bushels. Mexico is by far the most important destination for U.S. sorghum, followed by Japan. From September to February (the last month for which the Bureau of the Census has export data), U.S. sorghum exports to Japan were 793,000 tons, up 211,000 from the same period a year earlier. Sorghum exports to Mexico between September and February were 2.7 million tons, up more than 178,000 from the previous year. In the first half of the 2001/02 marketing year, sorghum export prices (f.o.b. Gulf ports) averaged 105 percent of the corn price, fractionally lower than last year. 2001/02 Sorghum Prices Forecast at $1.80-$1.90 Sorghum prices received by farmers are forecast at $1.80- $1.90, compared with $1.89 in 2000/01. The sorghum price is expected to average 97 percent of the corn price, down from 102 percent last year but still above the historic relationship of 92-93 percent. Sorghum Acres Projected To Decline in 2002/03 Since the mid-1980s, there has been a downward, but irregular trend in sorghum acres. Sorghum plantings periodically spike when adverse weather creates problems for other crops, as was the case in 2001/02. Another example is from 1992 when sorghum acreage rose more than 2 million acres, largely reflecting the replanting of failed cotton land in Texas. In 1996, plantings increased 3.7 million acres when sorghum was planted on failed wheat acres in Kansas and Texas and on failed cotton acres in Texas. In 1999, sorghum acreage was down in Texas mainly due to an increase in cotton planted area. According to the 2002 Prospective Plantings report, growers intend to plant 9 million acres of sorghum in 2002, down from 10.3 million acres the previous year. If these intentions are realized, this would be the lowest harvested area on record since 1929. The central and southern Plains States are projected for most of the acreage declines. Fewer acres are also expected in Illinois, Louisiana, Mississippi, and Missouri. Plantings in Kansas and Texas are projected down 5 percent and 23 percent, respectively. BARLEY PRODUCTION AND USE DECREASE IN 2001/02 Lower barley production led to an 80-million-bushel decline in total supply. Total use is down by 58 million bushels from a year earlier and prices have increased. 2001/02 Barley Production Dropped 69 Million Tons in 2001/02 Barley production in 2001 is estimated at 249.6 million tons, down 22 percent from 2000/01 and the lowest since 1953/54. An 18-percent drop in harvested area and a 5- percent drop in yield caused this year-to-year drop. Planted area, which has trended downward since the 1960s, was 5 million acres in 2001, compared with 5.9 million the previous year. In 2001/02, harvested area was 4.3 million acres, the lowest since 1898's 4.1 million. Yields were 58.2 bushels per acre in 2001/02, the lowest since 1997/98. Beginning stocks for 2001/02 were reported at 106.3 million bushels, down nearly 5 percent from a year earlier and the smallest since 1996/97. The United States is forecast to import 23 million bushels of barley in 2001/02, down from 29.2 million a year earlier. Total barley supply in 2001/02 is forecast to be 378.8 million bushels, down 18 percent from last year and the lowest in modern times. On the northern High Plains, soil moisture shortages hindered planting progress while planting in the upper Mississippi Valley was slowed by surplus moisture. Planting accelerated in Montana in early May 2001 and gained momentum in Minnesota and North Dakota near mid-May. Emergence lagged until late May but neared completion slightly ahead of normal. Warm July temperatures in the northern Great Plains and mild weather in the Pacific Northwest, eastern Corn Belt, and Atlantic Coast helped barley development in those regions. In Minnesota, barley fields headed much later than normal, but in the Pacific Northwest heading proceeded slightly ahead of normal. Above-normal temperatures in the northern Great Plains ripened barley fields quickly, and dry weather aided harvest in August. Harvest in Minnesota and North Dakota were virtually complete by September 9, while harvest in Idaho, Montana, and Washington rapidly neared completion. Total Use Forecast at 295 Million Bushels Total domestic use is forecast at 267 million bushels, down 10 percent from a year earlier. The bulk of this year-to- year decrease comes from feed and residual use, which is forecast at 95 million bushels, down 23 percent. Food, seed, and industrial (FSI) use is projected at 172 million bushels, virtually identical to 2000/01. The main element of FSI use is barley malt. Exports are forecast at 28 million bushels, down from 57.6 million last year. The vast majority of barley exports are feed barley, and exports can vary significantly from year to year. The Middle East, especially Saudi Arabia, is traditionally a key destination of U.S. feed barley. While the European Union and Australia are the primary feed barley suppliers to Saudi Arabia, shipments from Russia, Ukraine, and Eastern Europe are up this year due to large supplies at cheap prices. Barley ending stocks for 2001/02 are forecast at 83.8 million bushels, down from 106.3 million last year. The stocks-to-use ratio is projected at 28.4 percent, down from 30.1 percent a year ago. This is the lowest stocks-to-use ratio since 1996/97, and the tightening supply situation has led to a modest increase in prices, especially for malting barley. Barley Prices Increase 2001/02 Barley prices received by farmers are forecast at $2.20-$2.30 compared with $2.11 last year. Through March 2002, feed barley prices averaged $1.72 per bushel, compared with $1.73 for the same period a year earlier. June-March 2001/02 malting barley prices have averaged $2.60 per bushel compared with $2.44 a year earlier. The spread between malting and feed barley is 88 cents, compared with 71 cents a year ago. These relatively high malting prices are indicative of tighter stocks for malting barley as compared with feed barley. Prospective Plantings According to the 2002 Prospective Plantings report, growers intend to plant 5.08 million barley acres, up 2 percent from a year ago. Increases in 11 barley-producing States were partially offset by decreases in eight States. In Montana, 1.25 million barley acres are expected, up 150,000 from a year earlier. Minnesota area is expected to be 210,000 acres, up 50,000 from last year when cool, wet weather limited planting. North Dakota is expected to plant 1.5 million acres, unchanged from a year earlier. Fewer acres are expected in California due to dry conditions and concerns over water availability. OATS SUPPLIES DOWN IN 2001/02 Oats supplies in 2001/02 are expected to be down 14 percent from 2000/01. Total use also is expected to be down 11 percent, with almost all the decrease in feed and residual use compared with 2000/01. In addition to lower beginning stocks, oats supplies in the 2001/02 marketing year are reduced from a year earlier because of decreased production and imports. Production in 2001 was record-low at 117 million bushels, 33 million below 2000. Lower harvested area and yields caused the decrease in production. Planted acreage, at 4.4 million acres, was down nearly 2 percent from 2000, but harvested acreage was down 18 percent to 1.9 million acres. Oats yields were down from 2000 in Washington, Oregon, Idaho, Wyoming, Utah, and Montana because of below-normal precipitation during the summer. Also in all these States except Montana, the number of acres harvested for grain as a percentage of total planted is down from the year earlier, suggesting yields might have been even lower if more acres had been harvested for grain. Oat yields were also down in North and South Dakota, Minnesota, and Wisconsin, where plantings were slowed by wet weather. As a result, fields headed out much later than normal and harvest began late. More of the oats may have been harvested for forage in these States, because the percentage harvested for grain was down from the previous year. In Indiana, Illinois, and Iowa, oats yields were up from the previous year, in spite of cool weather in late May and June that hindered development. In Iowa and Illinois, the percentage harvested as grain was below the year earlier. Oats are not likely to challenge corn for more acreage because of their lower yield per acre. In 2001, average oats yields were 61.3 bushels per acre, while corn yields were 138.2 bushels per acre. Gross returns per acre of oats in 2001 will likely be around $95, in contrast to corn's gross returns of $255-$283. Variable cash expenses are much higher for corn than oats, but in 2000 the value of production, less operating costs, was $85.16 per acre for corn, compared with $25.53 for oats. (See the ERS Farm Income Briefing Room at http://www.ers.usda.gov/Briefing/FarmIncome/costsandreturns. htm.) Oats Imports Weaken Imports in 2001/02 are expected to total 95 million bushels, down from 106 million in 2000/01. The United States imports oats primarily from Canada, with lesser amounts from Finland and Sweden. All three countries tend to have cooler summers that are conducive to production of the heavy white oats favored by the food processing industry and many horse enthusiasts. Weather problems reduced the crops and exportable supples in the oats-growing regions of Canada, Sweden, and Finland. As a result, imports are forecast to comprise about one-third of the U.S. oats supply in 2001/02. Total use of oats in 2001/02 is expected to equal 230 million bushels, down 29 million from a year earlier. Ending stocks are forecast down 25 percent from the 73 million in 2000/01. Food use is expected to increase 2 million bushels from the 2000/01 level. Feed and residual use in 2001/02 is expected to be down 18 percent from the 189 million bushels used in 2000/01. Prices Up from Last Year Prices received by farmers for oats in 2001/02 are expected to average about $1.55, compared with $1.10 in 2000/01. Simple average prices from June 2001 through March 2002 were $1.62, compared with $1.13 during the same period last year. However, since most oats were marketed early in the crop year before prices strengthened, the weighted average price received by farmers will likely be below the simple average price. Prospective Plantings On March 1, 2002, farmers indicated they intended to harvest 2.531 million acres in 2002 for grain, up 33 percent from 2001. If intentions are realized, planted and harvested acres would be the highest since 1995. Planting intentions are higher than last year's final planted acreage in 17 States. Intentions are unchanged in six States and down in five. LDPs SUPPORT FEED GRAIN FARMERS INCOME The 1996 Farm Act contained key policy tools to assist farmers when market prices are low. The key provisions are the ' nonrecourse marketing assistance loans' and ' loan deficiency payments' (LDPs). Producers that entered into Production Flexibility Contracts with the U.S. Department of Agriculture are eligible to participate in these programs. For the 1996-2002 crops, producers who participate in the Production Flexibility Contract (PFC) program receive PFC payments that are not linked to either market prices or current production on a farm. The 1996 Farm Act appropriated a fixed amount of money to be paid among participating producers each crop year. The determination of eligible bushels for each producer remained the same as in the earlier program, that is, contract acres times program yield times 0.85. The national average program yield for 2001/02 corn is 102.7 bushels per acre. In 1996, the only sign-up for the 1996-2002 crops, 98.3 percent of the eligible base of 82.1 million acres were enrolled. However, base acres on farms that were in the Conservation Reserve Program (CRP) during the signup period are allowed to sign up when the CRP contract expires. Payment bushels on the 2001/02 crop total about 7.1 billion bushels, or the equivalent of 75 percent of 2001 corn production. The PFC payment rate for the 2001/02 crop was $0.269 per bushel. In 2001, with grain prices especially low, Congress enacted an emergency payment to PFC contract holders of $0.307 per bushel for corn, $0.368 per bushel for sorghum, $0.23 per bushel for barley, and $0.025 per bushel for oats. Nonrecourse marketing assistance loans provide interim financing to eligible producers of feed grains and other commodities covered by the program. Producers pledge their feed grains as collateral and obtain a loan based on the loan rate established in their county by the Farm Service Agency of USDA. As of April 25, 2002, feed grain producers had outstanding loans on 913 million bushels of 2001-crop feed grains. The value of the outstanding loans totaled $2.3 billion, yielding an average loan value of $1.82 per bushel for corn, $1.67 for sorghum, $1.62 for barley, and $1.16 per bushel for oats. The loans may be forfeited to the Commodity Credit Corporation at maturity or repaid at the loan repayment rate at or before maturity. The loan repayment rate may actually be less than the loan rate (plus interest) if the local price--called the posted county price (PCP)--falls below the local loan rate. The PCP--calculated each day the Federal Government is open--is based on terminal market prices and fixed differentials to each county, largely reflecting transportation and other marketing factors. When a farmer repays the loan at a PCP that is lower than the loan rate, the difference between the loan rate and the PCP is called a ' marketing loan gain.' If the PCP is under the county loan rate, plus any accrued interest on the day the producer repays the loan, accrued interest on the loan is waived. If the PCP is below the county loan rate, eligible producers may opt for an LDP in lieu of securing a loan. They can place the crop under loan or opt for an LDP through the end of March for barley and oats and May for corn and sorghum of the following year of harvest. The LDP rate is the amount by which the county loan rate exceeds the PCP on the date the application is made. Feed grains cannot be placed under loan once an LDP is paid. If producers take their LDPs and immediately sell their crop and if the PCP accurately reflects local prices, they effectively receive a per-unit revenue equal to the loan rate, partly from the market and partly from the government. After an LDP is accepted, the farmer can sell the crop and avoid storage expense or hold it in the expectation of a price rally later in the marketing season. For the 2001/02 corn crop, producers have already received about $1.1 billion in LDPs and marketing loan gains (MLGs), and these payments are likely to reach around $1.3 billion for the crop year. Thus, average gross returns per bushel for corn in 2001/02, including market returns, LDP, and MLG, is expected to total about $2.04 per bushel. Because of relatively high prices, marketing loan benefits for sorghum and oats in 2001 are small. The average payment rate looks particularly low when weighted across all production. Sorghum producers have received $4.2 million in LDPs and MLGs and are forecast to receive around $5 million. Average per-bushel returns for sorghum, including government payments, may total about $1.86. LDPs and MLGs for barley and oats are forecast to total about $15 million and $2 million, respectively. Average prices with government payments included are about $2.31 per bushel for barley and $1.57 per bushel for oats. Hay Situation and Outlook HAY PRODUCTION AND PRICES INCREASE Hay production in 2001 increased 3 percent from 2000, and stocks on December 1, 2001, were up 5 percent from a year earlier. Yet, hay prices are stronger in 2001/02, following increases in 2000/01. Stocks of all hay on farms on December 1, 2001, were up 5 percent from 2000's revised 106 million tons. The 20 States with increases in hay stocks more than offset stock decreases in 27 States. Hay stock increases in the Gulf Coast, central Great Plains, and southern Corn Belt States in 2001 can be attributed to increases in hay production. The increases in stocks from those States ranged from 5 percent in Texas to 164 percent in Louisiana. Roughage consuming animal units (RCAUs) in 2001/02 are estimated to be down 306,000 units from 2000/01's 72.5 million. Hay stocks on farms on December 1, 2001, were 1.5 tons per RCAU, up 5 percent from the year earlier. Hay production in 2001 totaled 157 million tons, up 3 percent from the revised 2000 total. Acreage harvested, at 63.5 million acres, was up 6 percent from 2000. The average yield, at 2.47 tons per acre, is down 0.07 ton from the previous year. Texas retained its position as the top producer of all hay, with 10.8 million tons, compared with 2000's drought-reduced production of 8.9 million. South Dakota, California, and Kansas ranked second, third, and fourth, respectively, in all hay production. Alfalfa hay production in 2001 totaled 80.3 million tons, fractionally lower than the 2000 total. Harvested acreage, at 23.8 million acres, is up 3 percent from the previous year. Yields averaged 3.37 tons per acre, compared with 3.48 tons per acre in 2000. California continues to lead in alfalfa hay production. South Dakota replaced Minnesota as the second-leading producer. Growers seeded 3.26 million acres of alfalfa and alfalfa mixtures during 2001. This is up 6 percent from the 2000 seeded acreage of 3.065 million acres. The newly seeded acres of alfalfa and alfalfa mixtures will normally be harvested for dry hay for the first time in the year following the initial planting. The newly seeded acres in 2000 were the equivalent of 13 percent of the acres of alfalfa and alfalfa mixtures harvested for hay in 2001. Production of all other hay in 2001 totaled 76.4 million tons, up 7 percent from the 2000 total, with an 8-percent increase in harvested acres accounting for the change. Average yield in 2001 was 1.93 tons per acre; in 2000 they were 1.95 tons per acre. In 2000, the National Agricultural Statistics Service started a forage estimate program. The purpose is to measure annual production of forage crops not reported as hay, with an emphasis on total alfalfa production. Acres, production, and yield are reported for haylage and greenchop together, and for total forage production. Forage combines haylage and greenchop production with hay production on a dry-weight basis (13 percent moisture). Alfalfa production is reported both as hay and combined with other forage crops. This report includes eight forage-producing States (Michigan, Minnesota, New York, Pennsylvania, Vermont, Washington, West Virginia, and Wisconsin). Over one-third of the haylage and greenchop produced by the eight reporting States was in Wisconsin. On a forage basis, Wisconsin would become the number two producing all-hay State and the top alfalfa hay producing State. Corn silage production for 2001 is estimated at 102.4 million tons, slightly above the revised 2000 level of 102.2 and the largest production since 1985. Silage yield decreased to 16.6 tons per acre, compared with 16.8 tons a year earlier. Farmers harvested 6.148 million acres for silage, a 1-percent increase. More corn acres were cut for silage because of low forage supplies in the Great Plains and late plantings in Minnesota and Wisconsin. Sorghum for silage production is estimated at 3.728 million tons, an increase of 34 percent from 2000. Area cut for silage was up 28 percent and yield was up 5 percent. Total corn and sorghum silage production per RCAU is 1.47 tons, compared with 1.45 tons in 2000. All hay prices received by farmers during May-March 2001/02 averaged $96 per ton, up from $84 in May-March 2000/01. In the 2000/01 May-April hay marketing year, prices received by farmers for all hay weighted by marketings were $85 per ton, up from $77 in 1999/2000. Alfalfa hay prices received by farmers in 2001/02 will be higher than a year earlier. In the first 11 months of the 2001/02 marketing year, alfalfa hay prices averaged $104.30 per ton, 18 percent above the simple average of $88.44 for the same months in 2000/01. In the 2000/01 marketing year, the weighted average for alfalfa hay prices was $89 per ton, and $80.20 and $88.10 in 1999/2000 and 1998/99, respectively. Hay other than alfalfa in 2000/01 had a weighted average price of $70.90 per ton, compared with $66.80 in 1999/2000 and $71.80 in 1998/99. In the first 11 months of 2001/02, the simple average price was up 4 percent from the same months in 2000/01. Prospective Harvested Acreage Farmers in March indicated they planned to harvest 63.7 million acres of hay in 2002, up slightly from the 63.5 million acres harvested in 2001. Increases are intended in 21 States, offsetting expected declines in 18 States. Oregon, up 13 percent, has the greatest increase where producers are responding to strong prices and an increase in cattle numbers. California expects to increase harvested acres by 6 percent in response to the strong dairy market. Record-high acreages are expected in Florida, Idaho, Missouri, New Mexico, Texas, and Utah. Producers in Montana intend to harvest 10 percent fewer acres than last year, when they harvested large acreages of CRP and grain hay. Feed and Residual Use FEED USE ESSENTIALLY UNCHANGED Feed and residual use is expected to be unchanged from last year because of little change in animal numbers. Increased hog numbers, poultry, and egg production are forecast to be offset by reduced beef and milk production, keeping feed use about unchanged. Feed and residual use of the four feed grains plus wheat in September-August 2001/02 is expected to be down marginally from the 165 million tons used in September-August 2000/01. Corn is expected to represent 90 percent of feed and residual use in 2001/02, unchanged from 2000/01 but up from 1999/2000. The index of grain consuming animal units (GCAUs) for 2001/02 is expected to be up less than 1 percent from 2000/01's 89 million. The grain used per GCAU in 2001/02 is 1.83 tons, compared with 2000/01's 1.85 tons. In the index components, GCAUs for hogs, broilers, turkeys, and layers are up from the previous year, however, declines in dairy and cattle on feed are more than offsetting. Dairy cows on January 1, 2002, totaled 9.1 million head, down 73,000 head from 2001. Dairy cow numbers are expected to decline as the year progresses. But, with increased production per cow, milk production in 2002 is expected to be about 168.4 billion pounds, compared with 165.2 billion in 2001. Thus, feed use by the dairy industry will continue relatively strong. The number of cattle on feed on January 1, 2002, totaled 13.7 million head, down from 14.2 million the previous year. The calf crop in 2001 was down 1 percent from 2000. Feeder cattle supplies outside feedlots were nearly the same on January 1, 2002, as a year earlier. Cattle on feed on April 1 were up nearly 1 percent, as poor grazing conditions forced more cattle into feedlots. Placements during March were up 8 percent from a year earlier with larger numbers placed weighing over 700 pounds. Feeder cattle supplies outside feedlots on April 1 were down 1 percent from a year earlier. Thus, placements of cattle on feed in 2002 are likely to be down from 2001, particularly with favorable spring-summer grazing conditions. Feed needs in the second half of the calendar year would be less, particularly in the fall quarter. Broiler production in 2002 is expected to increase 2-3 percent from 2001, slightly below the 2000 increase. Cumulative placements (an indication of future flock size) in broiler hatchery supply flocks have been increasing in 2002, and cumulative placements will be slightly higher by next fall than a year earlier. Broiler prices were up 3 cents per pound in 2001 compared with 2000, but are expected to be unchanged to down 3 cents in 2002. Egg producers are expected to produce 7.2 billion dozen eggs in 2002, up 1 percent from 2001. Egg prices were 2 percent lower in 2001 than in 2000, but low grain prices have encouraged producers to continue increasing production. In 2002, turkey production is forecast at 5.625 billion pounds, up 1 percent from the 5.562 billion produced in 2001. Overall, feed demand by the poultry sector is expected to remain strong but not expand as much as in prior years. Pork production in 2002 is expected to be up 1 percent from the 19 billion pounds produced in 2001. Hog farmers responding to the March 1 survey of hog producers indicated that they intended to increase the number of sows farrowing in March-May 2002 by 1 percent relative to the prior year, and in June-August 2001 by 1 percent. The forecast increase in pork production suggests feed needs for the pork sector will be stronger in 2001/02. Food, Seed, and Industrial Use Of Corn FOOD, SEED, AND INDUSTRIAL USES OF CORN TO INCREASE IN 2001/02 Food, seed, and industrial (FSI) use of corn is expected to rise 4 percent from a year earlier in 2001/02. Corn used for ethanol will post the largest increase. Corn FSI use in 2001/02 is expected to total 2,045 million bushels, up from 1,967 million in 2000/01. FSI use would represent 21 percent of total corn use, up 1 percentage point from 2000/01 and 1999/2000. Corn use in 2001/02 is expected to be up for high fructose corn syrup (HFCS), starch, alcohol, cereals and other products, and seed, but glucose and dextrose use are projected to be down. Corn used for HFCS in 2001/02 is projected at 553 million bushels, up 3 percent from 2000/01. HFCS is primarily used in soft drinks. Although sales have expanded as companies add soft drink machines, the rate of growth has slowed recently as consumers use more bottled water and other beverage alternatives. Mexico continues as an important customer for HFCS, but shipments have been below year-ago levels in January and February because of a tax on soft drinks sweetened by HFCS. The tax was suspended in early March for 7 months, so shipments may resume. In 2001/02, corn used to make glucose and dextrose is forecast to about equal the 221 million bushels used in 2000/01, which was off slightly from the year before. In the first 6 months of the marketing year, corn used to produce glucose and dextrose was essentially the same as last year. In 2001/02, corn used in starch production is expected to be up nearly 1 percent from the 248 million bushels used in 2000/01, even though use was down 2 percent in the first half of the marketing year. Starch use normally increases when the economy strengthens because starch is used in a myriad of products, including wallboard and paper. Corn used to make ethanol for all of 2001/02 is forecast at 685 million bushels, up 9 percent from 2000/01. Monthly ethanol production reported by the Department of Energy set record highs in barrels per day in October and November 2001 and again in January 2002. The refining industry is gearing up for the conversion from methy tertiary butyl either (MTBE) to ethanol by California by January 2003. The California ban on using MTBE has been delayed but at least some of the California gasoline producers had conversion plans under way prior to the announced delay, and may use ethanol even though it is not immediately required. This ethanol production reflects higher use of capacity and the new plants that have been added in the last year to take advantage of various State-level ethanol production incentives. Also, the low corn prices have encouraged additional production. Beverage and manufacturing alcohol production in 2001/02 is expected to use 131 million bushels of corn, about unchanged from the estimated 130 million in 2000/01. World Coarse Grain Outlook Global Coarse Grain Production Up in 2001/02, But Consumption Larger World coarse grain production is expected to increase more than 2 percent in 2001/02, but corn production is forecast up less than 1 percent because of the smaller U.S. crop. World area increased most for barley and sorghum partly in response to relatively favorable prices during planting, and yields rebounded from drought-reduced levels in several major countries. Global coarse grain beginning stocks were the lowest since 1997/98. World coarse grain consumption is expected to increase nearly 2 percent, slightly above trend, after declining the previous year. Also, consumption is forecast to remain much larger than production, dropping world ending stocks 19 million tons to 168 million, the smallest since 1995/96. Foreign Coarse Grain Production Rebounds in 2001/02 Foreign coarse grain production is expected to reach 616 million tons in 2001/02, the fourth-largest ever. Foreign area for barley increased, largely because of better harvest weather in the former Soviet Union and Eastern Europe, where average yields also increased sharply. Sorghum area increased mostly because of better weather conditions in Sudan. Eastern Europe's coarse grain production rebounded strongly from severe drought in 2000/01. Growing conditions in 2001/02 were generally favorable, but average yields failed to reach 1999/2000 levels. Coarse grain production increased nearly 16 million tons to 52 million, equal to the average annual production during the 1990s. Corn production in the region increased more than for other coarse grains. Serbia's corn crop more than doubled the previous year's output, Romania's almost doubled, and Hungary had its largest corn crop in 10 years. Coarse grain production in the former Soviet Union (including the Baltics) is estimated up nearly 12 million tons in 2001/02. A favorable exchange rate and relatively strong world barley prices encouraged the expansion of barley area, and a favorable growing and harvest season led to a high percentage of planted area being harvested for grain. Strong barley yields in Russia and Ukraine more than offset reduced corn yields. Average barley yields in Russia reached the highest in 11 years, while Ukraine's barley yields were the highest in 7 years. The region's barley production increased nearly 10 million tons, and rye and oats production each increased 2 million. However, corn production declined more than 1 million tons because of hot, dry summer weather in some areas just north of the Black Sea. China's coarse grain production in 2001/02 increased more than 4 million tons to an estimated 118 million. Area increased as prices were boosted by the previous year's drought. However, drought again struck some major corn- growing regions in northeast China and the North China Plain. In addition, freeze damage also reduced yields. But the drought in 2001/02 was not as severe as in the previous year, and coarse grain production increased slightly. Coarse grain production in Sub-Saharan Africa is expected to increase nearly 7 million tons in 2001/02. South Africa's corn production is rebounding from the previous year's drought. However, dryness in Zimbabwe during January, February, and March reduced prospective corn yields and production from last year's low levels. Sorghum production in Sudan is forecast up over 1 million tons as generally favorable weather increased area and yields. North Africa's coarse grain production rebounded some from 2 years of drought, increasing nearly 2 million tons. Egypt's corn, with the largest share of the region's production, is irrigated, and production was boosted by an expansion in area. However, barley production across much of the rest of the region is grown on rainfed, marginal land. Some areas suffered drought again in 2001/02, and production in Tunisia fell compared with the previous year. Production was not as bad as a year earlier in Algeria and Morocco, and barley production more than doubled in Morocco. Coarse grain production increased 2 million tons in Mexico because of delayed but abundant rains and expanded area for the corn crop. Corn production reached a near-record 19 million tons. Parts of the Middle East recovered from drought in 2001/02, but problems persisted. The region produced almost 15 million tons, a modest increase from the previous 2 years, but down from the 18-million-ton average of 1993/94 to 1998/99. Syria's barley production increased tenfold to 1.3 million tons, but barely exceeded 50 percent of the 1988 record. Drought in key parts of the Anatolian Plateau reduced barley production in Turkey, and Iran's production was also reduced by drought. India's coarse grain production declined as producers planted less area, but average yields increased. Coarse grain production in the rest of South Asia was relatively stable. Canada's coarse grain production declined almost 1.5 million tons in 2001/02. Drought in parts of the western prairie provinces dropped barley yields, and production fell 2 million tons. Oats production, at less than 2.8 million tons, was the smallest since 1991. Canada's corn production increased more than 1 million tons because of increased planted area, but growing conditions were almost as bad as the previous year's cold, wet season in Ontario, and average yields barely increased. South America's coarse grain production is expected to drop almost 9 million tons in 2001/02. Brazil and Argentina planted more soybeans and less corn. Except for dry conditions for the second-crop corn in parts of the south, growing conditions in Brazil have been generally favorable. However, conditions have not been as exceptionally good as the previous year, and record-average yields will not be matched. Brazil's corn production is forecast down almost 6 million tons. Argentina's corn crop is forecast to drop almost 3 million tons. Prolonged rains and flooding forced some area intended to be planted to corn to be switched to other crops. Also, despite the late planting and spotty dry conditions, Argentina's corn yields are expected to be higher than last year. The European Union's (EU) coarse grain production is estimated down almost 2 million tons in 2001/02. Planting conditions were too wet for winter barley in much of Spain, France, and the UK. Even though Germany reached record barley yields, boosting production there, EU barley production dropped almost 4 million tons. EU corn area continued to expand in 2001/02, but average yields did not, limiting the corn production increase to just over 1 million tons, with most of the increase in Spain. Record yields in Germany boosted EU rye production almost 1 million tons, but adverse conditions in Sweden and Finland caused a small decline in oats production. 2001/02 Beginning Stocks Down from a Year Ago, But Still Ample Global coarse grain beginning stocks in 2001/02 are estimated at 187 million tons, down almost 23 million from the previous year. Although down dramatically, coarse grain stocks are not considered tight, and more of those stocks are in the United States. Foreign coarse grain beginning stocks in 2001/02 are down more than 26 million tons to the lowest level since 1988/89. China is estimated to have had the world's largest coarse grain stocks, beginning 2001/02 with almost 82 million tons compared with nearly 53 million for the United States (both mostly corn). However, a drought in China in 2000/01 led to a reduction in stocks by 21 million tons. The United States had the second largest corn crop ever, and U.S. stocks rose by 4 million tons. The EU and Canada are also reported to have started 2001/02 with somewhat reduced coarse grain stocks. Global Coarse Grain Consumption Forecast Up Almost 2 Percent in 2001/02 World coarse grain consumption in 2001/02 is forecast at nearly 898 million tons, up more than 17 million from the previous year. Foreign coarse grain consumption is projected up nearly 2.5 percent, while U.S. consumption is expected to grow much more slowly. While some countries are suffering from weak economic performance, limiting income growth and the increases in meat consumption associated with higher incomes, increased foreign production is encouraging use. The largest increase in coarse grain consumption in 2001/02 is forecast for Eastern Europe, up 6 million tons from a year earlier. Increased production has reduced grain prices in the region and triggered an increase in animals for feeding. However, coarse grain consumption remains below pre-drought levels. It will likely take a number of years before use in some of the countries in the region completely recovers. Increased production and low prices are similarly expected to boost coarse grain disappearance in the former Soviet Union by more than 5 million tons. In Sub-Saharan Africa, coarse grains are mostly used for human consumption, and with increased production, consumption is forecast up almost 5 million tons. In India, much of the coarse grain use is also for human consumption, but with reduced production, consumption is forecast down slightly. In China, coarse grain consumption is projected up nearly 5 million tons. Corn stocks are presumed large enough to allow continued growth in the feed-for-livestock sector, even though production remained relatively low for a second year, and corn exports are expected to continue despite the end of direct subsidizes with entry into the World Trade Organization (WTO). Meat demand growth is expected to continue as incomes in China grow with economic expansion. China's consumption increase is expected to be concentrated in corn. Sorghum use is expected to expand slightly because of increased production. Barley consumption and imports for use in beer production are expected to be stable. North Africa is expected to increase coarse grain consumption in 2001/02 by more than 1 million tons because of increased production. However, consumption growth in Egypt is expected to be slower than a year earlier. Coarse grain consumption in the Middle East is projected up slightly in 2001/02. Several years of drought have reduced stocks in Iran, and consumption is expected to decline. Reduced production and macroeconomic problems are contributing to reduced consumption in Turkey. However, in Saudi Arabia, sheep flocks decimated by Rift Valley disease are expected to recover, increasing feed demand for barley, and corn imports for poultry are expected to continue to expand. Disappearance is also expected to rise in countries with increased production, such as Syria. EU coarse grain consumption is expected to expand slightly as increased corn feeding offsets a decline in barley use caused by reduced supplies. Coarse grain consumption in Latin America is expected to decline slightly in 2001/02. A sharp drop of almost 2 million tons is forecast for Argentina, with reduced production and an ongoing economic crisis. However, this decline is mostly offset by increased consumption in Brazil and Mexico. In Brazil, the export-led poultry and pork sectors continue to grow. Mexico's feed-for-livestock sector continues to expand to meet growing local demand. Several Asian countries are expected to reduce coarse grain consumption by a combined total of over 1 million tons. Japan, the world's largest meat and feed grain importer, is mired in economic stagnation. South Korea is increasing meat imports under WTO rules and this has reduced beef feeding, dropping import demand for feed grains. Also, the use of wheat for feeding continues to cut into coarse grain feed use in South Korea. Taiwan's feed grain imports and consumption are expected to decline as meat imports increase with entry into the World Trade Organization. Global Coarse Grain Ending Stocks To Drop in 2001/02 for a Third Year World coarse grain stocks are projected to drop 19 million tons in 2001/02 to 168 million tons, with U.S. stocks declining less than 8 million. Foreign coarse grain stocks are forecast down 12 million tons, a drop of 9 percent. Global ending stocks have only been lower twice in the last 20 years, in 1983 and 1995. However, much of the drop in global stocks over the last 2 years has been in estimated stocks for China, down almost 39 million tons. The actual level of China's Government corn stocks are a state secret, and the Chinese Government likely has only a rough estimate of corn stocks held on small farms and households. China appears to have reduced government corn stocks, perhaps moving to a more commercial basis, and to be less preoccupied with food security and self-sufficiency. Eventually, China's corn supplies are expected to become tight enough so that China emerges as a major corn importer and much less of an exporter, but the timing of this switch is highly uncertain. Global coarse grain stocks excluding China are much more stable than with China included and show a decline in recent years from almost 113 million tons in 1998/99 to less than 104 million forecast for 2001/02. These stocks (excluding China) are the lowest since 1996/97. Coarse grain ending stocks in the former Soviet Union are forecast up over 5 million tons due to a huge jump in production, limited growth in domestic use, and constrained export infrastructure. Similarly, East Europe's stocks are projected up almost 3 million tons. EU coarse grain ending stocks, mostly barley and rye, are forecast up more than 1 million tons because of reduced exports and increased imports (including feed wheat). Canada is expected to reduce coarse grain stocks by over 1 million tons, and Brazil's stocks are forecast down almost 1 million because production in both countries declined while consumption continued to increase. Small declines in coarse grain ending stocks are also forecast for the Middle East and South Asia. Global barley, rye, and sorghum stocks are forecast up in 2001/02. Barley and rye stocks are expected to increase especially in Russia and the EU, while sorghum stocks are expected to increase from relatively low levels in the United States and Mexico. Corn stocks are expected to drop much more than for other coarse grains because the United States' and China's stock reductions are nearly all corn. U.S. CORN EXPORTS UP AS GLOBAL COARSE GRAIN TRADE SHRINKS IN 2001/02 U.S. corn exports for the October-September 2001/02 trade year are forecast at 49 million tons, up less than 2 percent. Reduced competition from Argentina, China, and Brazil, is mostly offset by increased exports from Eastern Europe and large supplies of inexpensive wheat for feeding. Global coarse grain trade is expected to decline despite relatively low prevailing prices. Global Coarse Grain Trade Forecast Down 4 Percent in 2001/02 World coarse grain trade is projected down nearly 4 million tons to 99 million in 2001/02, because several of the most important importers are reducing imports significantly, while only the European Union(EU) (up nearly 1.0 million tons) and Canada (up 0.4 million) are expected to increase imports significantly. East Europe's coarse grain imports in 2001/02 are forecast down 1.2 million tons because production is rebounding from drought, reducing the need to import. South Korea's coarse grain imports are forecast down 1.2 million tons, with the decline largely caused by a reduction in cattle feeding, as meat imports increase, and by low-priced feed wheat. Imports by the Middle East are expected to decline by 0.8 million tons. The largest part of the decline is in Syria, where barley production rebounded. Turkey is forecast to import less despite reduced production because of severe economic problems and an unfavorable exchange rate limiting demand. Japan's coarse grain imports are forecast down 0.8 million tons because of increasing meat imports and declining domestic meat production. Mexico is projected to reduce coarse grain imports 0.6 million tons because of increased production. Smaller but significant declines are forecast for Venezuela, Malaysia, and Taiwan. Political and economic problems are slowing corn imports to markets such as Venezuela and Colombia. China's coarse grain imports, mostly malting barley, are expected to be stable. Competition for Corn Exports Reduced in 2001/02 Combined corn exports from the three Southern Hemisphere exporters are down more than 1.8 million tons. The 3.2- million-ton drop in Argentina's expected exports is much larger than the increase for Brazil. Production in South Africa is forecast to increase in 2001/02, but high internal prices are likely to limit exports. Argentina is expected to harvest a significantly smaller corn crop in 2001/02. The decline in Argentina's forecast corn production is less than the drop in Brazil. Brazil emerged as the world's third- largest corn exporter in 2000/01 with record corn production and received a price premium in some markets for 'GM-free' corn. Brazil's forecast corn exports are expected to increase 1.6 million tons to 4.3 million in 2001/02 (October-September). However, little is expected to be exported in the second half of October-September 2001/02. Competition from the Northern Hemisphere is also down because the drop in 2001/02 corn exports forecast for China more than offsets the increase for East Europe. Despite a second year of drought-reduced production, and increased corn prices in China, government (including provincial) stocks were reportedly ample, and shipments of corn sold before China's entry into the World Trade Organization were maintained well into the October-September marketing year. As the year progresses, internal corn prices above those of competing exporters and the lack of direct export subsidies are expected to slow the pace of China's exports. China's corn exports are forecast at 4 million tons, down 3.3 million from a year ago. Eastern Europe's corn exports, mostly from Hungary, are forecast up 2.0 million tons in 2001/02 because of increased production. Romania and Serbia have not been as successful at moving increased corn production into international markets. World barley trade is forecast to remain at just over 16 million tons in 2001/02. EU barley exports are forecast down almost 2 million tons to 4 million, as the European Commission is not subsidizing exports through free market restitutions, but is licensing 'free market' barley exports only with zero restitutions and are not subsidizing sales from intervention stocks. Canada's barley exports are expected to drop by nearly half to only 1.0 million tons because of drought-reduced production. However, Australia, Russia, and Ukraine, with increased production, are expected to increase exports enough to maintain global barley trade. Purchases by the largest importer, Saudi Arabia, are forecast down 0.5 million tons, and U.S. barley imports are expected to decline with tight supplies in Canada. However, increased EU imports of inexpensive barley from the Black Sea area are expected to offset declines in barley imports elsewhere. Unlike previous years, global feed barley prices in 2001/02 have dropped compared with corn prices. In the past few years, relatively high barley prices encouraged increased exports from Australia and the United States. Global sorghum trade is also expected to remain relatively stable in 2001/02. The United States, with higher production, is forecast to increase exports more than 0.5 million tons, but with smaller crops, exports from Argentina and Australia will be down. Mexico and Japan will remain the major import markets. World rye trade is expected to expand in 2001/02 because rye is the one grain export subsidized by the EU, which has large government stocks. However, customers for rye are hard to find, and Japan remains the largest importer. Global oats trade is forecast down 24 percent in 2001/02 (October-September) despite high prices. Supplies of quality oats from the major exporters (Canada, Sweden, and Finland) are down because of weather-related production problems, including drought in Canada and too much rain at harvest in parts of Finland and Sweden. U.S. oat imports in October- September are expected to drop by about a third because of limited supplies in exporting countries, despite a reduced U.S. crop and high prices. U.S. Corn Exports in 2000/01 Forecast Up Less Than 1 Million Tons U.S. October-September 2001/02 corn exports are forecast at 49.0 million tons, up slightly from 48.1 million exported a year earlier. Shipments during the first months of the year have dropped, but are expected to increase in the latter half. According to U.S. Export Sales, as of April 4 (through the first 7 months of the local marketing year), corn shipments were 27.0 million tons, down 0.8 million from a year ago, while outstanding sales were 6.3 million, up 0.7 million. U.S. commitments to the largest market, Japan, are almost the same as a year ago at 10.8 million tons. However, commitments to South Korea are down 45 percent. Imports of food quality corn are up sharply from Brazil but purchases in recent weeks have shifted to China due to reduced new- crop supplies in Brazil. China currently is offering corn to South Korea at a significant discount to U.S. corn. As China's export pace slows, U.S. corn exports to Korea are expected to increase. Export commitments to the Philippines are up, but increases are limited by tariffs. Purchases by Middle Eastern countries have been relatively strong, especially by the United Arab Emirates and Syria, but Israel and Iran are down. Africa's purchases of U.S. corn are 0.5 million tons ahead of last year's strong pace, with steady shipments to the largest market, Egypt, and increases to Morocco, Tunisia, and South Africa. U.S. Census export data track corn exports to Canada and Mexico more completely than U.S. Export Sales. According to Census, corn exports are up slightly to the Western Hemisphere, because reduced exports to Mexico and Venezuela are more than offset by increases to Canada, Colombia, and the Dominican Republic. Mexico had a significant increase in corn production. The Venezuelan Government published a statement that no import licenses would be issued until the entire domestic crop was purchased. U.S. sorghum exports are forecast at 6.4 million tons, up more than 0.5 million from the previous year. Demand for U.S. sorghum has been strong enough to maintain export quotes above comparable corn prices, despite increased area and production. U.S. barley exports are forecast down over 40 percent to 0.6 million tons (October-September). U.S. barley prices are relatively high and no sales of feed barley to Saudi Arabia are expected. U.S. barley exports are expected to be mainly routine shipments of mostly malting barley to Mexico and Japan. Total U.S. coarse grain exports in 2001/02 are forecast up nearly 2 percent to 56.0 million tons. END_OF_FILE