Feed YEARBOOK May 7, 2003 April 2003, ERS-FDS-2003 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------ This TEXT is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The summary was released on April 24, 2003. The complete report will be available electronically in about a month. ------------------------------------------------------------------ SUMMARY FOOD AND INDUSTRIAL USE RECORD-LARGE IN 2002/03 For 2002/03, total feed grain disappearance is down 3 percent from a year earlier, as declines in feed and residual and exports, offset the increase in food, seed, and industrial (FSI) use. FSI use is projected at a record 64 million tons, up 10 percent from 2001/02. By contrast, feed and residual use is down 5 percent and exports are expected to drop 12 percent. Despite the lower total use, feed grain ending stocks are projected to fall more than a third because the 2002 feed grain crop was the smallest since 1995/96. Feed and residual use of the four feed grains plus wheat in September-August 2002/03 is expected to be down 3 percent from the 162 million tons used in September-August 2001/02. The grain used per grain consuming animal unit (GCAU) in 2002/03 is 1.79 tons, down from 2001/02's 1.81 tons. Corn is expected to represent 92 percent of feed and residual use in 2002/03, unchanged from 2001/02. Corn production in 2002/03 was 9 billion bushels, down 5 percent from a year earlier. A 6-percent drop in yield accounts for all of the decline because harvested area was up slightly. With beginning stocks down 303 million bushels from the previous year, 2002/03 supply, at 10.6 billion bushels, is down nearly 800 million from 2001/02 and the lowest since 1997/98. Total domestic use is projected at a record 7,935 million bushels, up slightly from 2001. This is the seventh consecutive year domestic use has increased. The year-to-year increase is caused by an increase in FSI use, which is projected at a record 2,285 million bushels. Feed use (including residual) is projected to be the lowest since 1998 and exports the smallest in 5 years. Tighter stocks are leading to higher prices and the 2002/03 season-average price is forecast at $2.25-$2.35 per bushel, compared with $1.97 the year before. Corn FSI use in 2002/03 is expected to total 2,285 million bushels, up more than 230 million from 2001/02, and represent 24 percent of total corn use, up 3 percentage points from a year earlier and a record. Corn use in 2002/03 is expected to be up for high fructose corn syrup, starch, alcohol, cereals, and other products, but glucose and dextrose use are projected to be down. Corn used to make ethanol for all of 2002/03 is forecast to be up 30 percent from the 714 million bushels used in 2001/02. Monthly ethanol production (reported in barrels per day) set record-highs from August 2002 to January 2003, but February was down. Sorghum production dropped almost 30 percent to only 370 million bushels, the smallest crop since 1956. Serious weather problems, which reduced harvested area and lowered yields, are behind the year-to-year drop in production. With higher beginning stocks partially offsetting the smaller crop, total 2002/03 sorghum supplies are down 23 percent. Total use in 2002/03 is forecast down 100 million bushels from a year earlier, with the decline almost equally divided between feed and residual use and exports. Sorghum prices received by farmers are forecast at $2.30-$2.40 per bushel, compared with $1.94 in 2001/02. Barley production in 2002 was the lowest since 1937, as harvested area declined 4 percent and yields by 6 percent. Total domestic use is forecast down 5 percent from a year earlier due to lower feed and residual use and exports. Barley ending stocks for 2002/03 are forecast at 70 million bushels, down from 93 million last year. Barley prices received by farmers are forecast at $2.65-$2.75, compared with $2.22 in 2001/02. Oats supplies in 2002/03 are down only slightly from a year earlier as higher production almost offset the lower beginning stocks. Harvested area was up slightly but yields dropped, leaving production up only 2 percent from a year earlier. Total use of oats in 2002/03 is expected to be about equal to a year earlier, leaving ending stocks down 8 percent from the 63 million bushels in 2001/02. Prices received by farmers for oats in 2002/03 are expected to average between $1.75-$1.85, compared with $1.59 in 2001/02 and the highest since 1996/97. According to the March 31 Prospective Plantings report, growers intend to plant 79 million acres of corn in 2003, unchanged from last year’s actual plantings of 79 million. Sorghum growers intend to plant 9.45 million acres of sorghum in 2003, down from 9.58 million acres the previous year. Barley growers intend to plant 5.38 million barley acres, up 6 percent from a year ago. Farmers indicated they intended to harvest 2.204 million acres of oats for grain in 2003, up 5 percent from 2002. Hay production in 2002 totaled 151 million tons, down 4 percent from the 2001 total. Acreage harvested, at 64.5 million acres, was up 2 percent from 2001. The average yield, at 2.34 tons per acre, is down 0.13 ton from the previous year. Stocks of all hay on farms on December 1, 2002, were down 6 percent from 2001's 111 million tons. Farmers in March indicated they planned to harvest 63.6 million acres of hay in 2003, down from the 64.5 million acres harvested in 2002. World coarse grain production is expected to decline more than 3 percent in 2002/03, but corn production is forecast down only 1 percent because the smaller U.S. crop is partly offset by increased foreign production. Foreign harvested area forecasts declined for each of the coarse grains, partly in response to low prices compared with oilseeds and wheat during planting, and partly due to unfavorable weather. Foreign yields increased for corn, boosting production, but production of the other coarse grains declined. Global coarse grains beginning stocks were the lowest since 1995/96. World coarse grain consumption in 2002/03 is expected to decline slightly. However, global consumption is forecast to remain much larger than production, dropping world ending stocks 28 million tons to 151 million, the smallest since 1983/84. U.S. corn exports for the October-September 2002/03 trade year are forecast at 43.5 million tons, down 8 percent from the previous year. Increased competition has come from Argentina and China, as well as from large supplies of competitively priced wheat for feeding. Corn exports from Brazil and Eastern Europe, though down compared with the previous year, remain large. Lower Production and Tightening Stocks Led to Higher Prices in 2002/03 Total feed grain production dropped 17 million tons in 2002 but use is expected to decline only about 8 million tons. The tighter supplies/use balance has led to increased prices throughout the feed grain complex in 2002/03. U.S. feed grain production in 2002/03 is estimated at 244.9 million tons, down from 261.7 the previous year and the lowest since 1995/96. Beginning stocks are estimated at 45 million tons compared with 52.7 million in 2001. Total feed grain supply is estimated at 292.4 million tons, down from 316.8 million the previous year and the lowest since 1997/98. On the use side, total feed grain disappearance is projected at 263.5 million tons, down 8 million from 2001/02 as both exports and feed and residual use decline. Feed grain exports are projected at 47.9 million tons in 2002/03, down from 54.7 million tons the previous year. Feed and residual use is down more than 7 million tons in 2002/03 at 151.7 million tons. In contrast, food, seed, and industrial (FSI) use is projected at a record 64 million tons, up from 58 million tons a year earlier. Record ethanol production is driving much of the increase in FSI. High fructose corn syrup and starch production are also at record levels. Feed grain ending stocks are projected at 28.9 million tons, the lowest since 1996/97. The Prospective Plantings report for 2003 indicated that as of early March, farmers intended to plant fewer corn (down fractionally), sorghum, and oats acres compared with a year earlier. Barley acres are expected to be up 6 percent from 2002. Weather problems caused tight supplies and higher prices, particularly for malting barley, helping induce farmers to expand plantings. Lowest U.S. Corn Crop Since 1995 Lead to Higher Corn Prices A 6-percent decline in yield (partially offset by a slight increase in harvested area) led to a 500-million-bushel drop in corn production. Domestic corn use will increase to a record 2,285 million bushels led by the rapid expansion in ethanol production. However, a drop in both feed use (including residual) and exports is expected to lead to a 210-million-bushel reduction in total utilization. Corn Production Down 5 Percent From 2001/02 Corn production in 2002 was 9 billion bushels, down nearly 500 million bushels from the previous year and the lowest since 1995. This drop was caused by a 6-percent decline in yield to 130.0 bushels per acre. Beginning stocks were down 303 million bushels from the previous year to 1,596 million. Total 2002/03 supply is 10.6 billion bushels, down nearly 800 million from 2001 and the lowest since 1997/98. Grain yields were down from 2001 in many areas of the United States as drought persisted during the growing season, particularly in the central and northern Great Plains and eastern Corn Belt. However, record yields were established in Iowa and Minnesota. Planted area totaled 79.1 million acres, 4 percent above 2001. Planted area was up in all but 14 States. Nine States saw a reduction in plantings while 5 were unchanged. Harvested area, estimated at 69.3 million acres, is up slightly from the previous year although weather problems increased abandoned acres as well as the silage harvest. Farmers harvested 7.49 million acres of corn silage in 2002, a 22-percent increase from a year earlier. Corn acres not harvested for grain or silage increased to 2.25 million acres, up significantly from the 796,000 acres abandoned in 2001. Drier-than-normal weather in the spring provided good planting conditions for most farmers except those in the eastern Corn Belt (especially Indiana and Ohio) where heavy precipitation led to frequent planting delays. During July pollination, high temperatures, and moisture shortages stressed the crop in many areas of the United States. However, farmers in Iowa, Michigan, Minnesota, and Wisconsin did receive timely rainfall during this period that allowed for good pollination. Above-normal temperatures and dry weather during the first half of October quickly ripened late-maturing fields around the Great Lakes and eastern Corn Belt. Harvest progress was slowed in the western Corn Belt and Great Plains due to heavy rainfall in early October. After mid-month, producers experienced only brief delays due to light rain and snow. Harvest progress in Iowa and Minnesota, as well as adjacent parts of the Great Plains, was well behind normal throughout the month. However, dry weather in Indiana and Ohio allowed harvest to progress well ahead of normal, but overall, the harvest finished only slightly behind the average pace. The 2002 corn objective yield data recorded a year-to-year drop in ear counts per acre for the combined seven objective yield States (Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio, and Wisconsin). Ear counts were at record-high levels in Iowa but the remaining States were down from a year earlier. Increased Ethanol Production Leads to Record-Large Domestic Utilization Total domestic use is projected at a record 7,935 million bushels, up slightly from 2001. This is the seventh consecutive year domestic use has increased. This year’s gains are caused by an increase in food, seed, and industrial use, which is projected at a record 2,285 million bushels. This follows a long-term growth pattern for corn FSI, which is driven largely by ethanol production (see section on corn FSI). Feed use (including residual) is projected at 5,650 million bushels, down 227 million bushels from 2001 and the lowest since 1998. Corn exports, projected at 1,675 million bushels, are down 214 million bushels from 2001 and the lowest in 5 years. Fierce competition, notably from China and Argentina, are largely the reason for the year-over-year drop in exports. The decline in exports and feed and residual use is leading to a projected drop of 210 million bushels in total utilization to 9,610 million bushels. While declining, use exceeded production and ending 2002 stocks are projected to drop to 1,009 million bushels, the lowest since 1996. The 2002 stocks-to-use ratio is 10.5 percent, down nearly 6 percentage points from the previous marketing year. Corn Prices Rise for Third Straight Year The tighter supply/use balance is leading to higher prices in 2002. The 2002/03 season-average price for corn is forecast at $2.25-$2.35 per bushel, compared with $1.97 the year before. The mid-point of this range would be the highest since 1997/98. The benchmark Central Illinois cash corn price was $2.57 per bushel in September 2002, the highest since the $2.59 in March 1998 and 63 cents above a year earlier. Season average corn prices have averaged $2.34 per bushel from September 2002-March 2003, compared with $1.92 for the same period a year earlier. Prospective 2003 Corn Plantings Virtually Unchanged From 2002 In March, producers indicated that they intended to plant 79.02 million acres of corn in 2003, down fractionally from the actual 2002 planted area of 79.05 million acres. Expected acreage is up in the eastern Corn Belt as growers are switching back to corn after planting soybeans last year when persistent wet weather in the spring prevented them from seeding corn. All States in the Great Plains, except North Dakota, are decreasing their intended corn plantings due to fears that drought conditions will persist into the 2003 crop year. Prospective planting estimates can differ from actual planting due to weather conditions or a changing market situation. Farmers intend to plant 38 percent of their acreage with corn hybrids developed using biotechnology, up 4 percentage points from 2002 but well below usage rates for soybeans or cotton. Insect resistant, herbicide resistant, and stacked gene hybrids are expected to make up 26 percent, 9 percent, and 3 percent of total corn acreage. Sorghum Production and Use Down Sharply in 2002/03 Lower production in 2002 led to a 125-million-bushel year-over- year decline in total supply and a cut in use. Ending stocks are projected to drop to only 36 million bushels, and prices are projected to average at a 7-year high. Smallest Sorghum Crop Since 1956 Sorghum production in 2002/03 at 370 million bushels, was down 28 percent from the previous year. Serious weather problems, which reduced harvested area and lowered yields, are behind the year- to-year drop in production. Harvested area in 2002 is estimated at 7.3 million acres, down from 8.6 the previous year. This is the lowest level since the mid-1950s. Yields for 2002 are estimated at 50.7 bushels per acre, down from 59.9 the year before and the lowest since 1983. The 5-year yield average is 65.4 bushels per acre. Robust yield growth for corn relative to sorghum (and other feed grains) is an important reason for declining sorghum area. Kansas and Texas are the largest sorghum producing States. Sorghum tends to be grown in drier areas because it can handle drought and heat stress better than corn. However, corn has expanded into areas outside of the traditional Corn Belt because it has generated higher returns than sorghum production. Since recent farm legislation has allowed for greater planting flexibility, corn and soybean production has expanded in the northern and western tiers of the Corn Belt. Beginning stocks in 2002 were 61 million bushels, up from 42 million the previous year, but when combined with the lower production resulted in the lowest sorghum supplies in many decades and well below the 5-year average of 600 million bushels. Kansas leads the Nation in sorghum area and grain production, but Texas leads the Nation in sorghum silage production. Texas and Oklahoma were the only two major sorghum-producing States in 2002 that showed an increase in grain yield from the previous year. Severe drought conditions in Kansas, Colorado, and Nebraska caused a higher than normal abandonment of sorghum acres and significantly reduced grain yields and production. Total Use Projected at 395 Million Bushels Total sorghum use is projected at 395 million bushels, down 100 million bushels from the previous year with almost equal reductions in both feed and residual and exports. Feed and residual use and exports are projected at 160 million bushels and 190 million bushels, respectively. Mexico is by far the most important export destination for U.S. sorghum followed by Japan. From September through February (the last month for which the Bureau of the Census has export data), total sorghum exports were 2.09 million tons, with sorghum exports to Mexico and Japan 1.4 million tons and 0.606 million tons, respectively. FSI use is projected at 45 million bushels, unchanged from 2001. Ethanol is one of the primary FSI categories for sorghum, and total ethanol production increased significantly in 2002. Corn is the dominant starch source used in U.S. ethanol plants, but sorghum is the main grain used in some plants, particularly in areas where there is a concentration of sorghum production. Some plants use either corn or sorghum, depending on price and availability of each. Ending stocks in 2002 are projected at 36 million tons, down from 61 million tons at the start of the year. The stocks-to-use ratio is 9 percent, down from 12.3 in 2001/02. Tightening sorghum and other feed grain stocks are leading to increased prices. 2002/03 Sorghum Prices Highest in 7 Years Season average sorghum prices for 2002 are forecast at $2.30- $2.40 per bushel, compared with $1.94 the previous marketing year. These are the highest sorghum prices since 1995. The sorghum price is expected to average 102 percent of the corn price, up from 98 percent in 2001. Historically, sorghum prices have averaged 92-93 percent of the corn price. However, strong export sales, particularly to Mexico, have changed this traditional relationship. Sorghum Acres Projected To Decline in 2003/04 Sorghum acres have been trending downward since the 1980s. However, sorghum plantings can spike when weather creates problems for other crops. For example, 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. Plantings in 2002/03 increased by 565,000 acres due to the drought. The bulk of the increased plantings came from Texas where sorghum followed failed wheat. Despite higher prices in 2002, sorghum area is forecast to decline in 2003 from actual 2002 plantings. However, 2003 intentions are well above 2002 intentions. According to the 2003 Prospective Plantings report, growers intend to plant 9.45 million acres of sorghum, down from 9.58 million the previous year and the lowest since 2000. Both Kansas and Texas are expected to have declining sorghum acreage this year. Kansas producers intend to plant 3.70 million acres, 3 percent less than last year. Wet soil conditions in Texas have hampered soil preparation and early planting. Texas sorghum acreage is expected at 2.90 million acres, down 9 percent from last year. However, in March 2002 Texas producers only intended to plant 2.7 million acres (actual was 3.2 million). Sorghum acres are expected to increase where farmers apparently are anticipating continued dry conditions. Nebraska is expecting 650,000 acres to be planted, an increase of 44 percent from last year. 2002 Barley Production Down for Second Straight Year Decreased barley supplies are leading to rising prices in 2002/03. Ending stocks are forecast at 66 million bushels and the stocks-to-use ratio is the tightest since 1995/96. Barley production in 2002 was 227 million bushels, down 9 percent from a year earlier and the lowest since 1937. The year-to-year drop in barley production is caused by a nearly 4-percent drop in harvested area and a nearly 6-percent drop in yield. Planted area, which has been trending downward since the 1960s was 5.07 million acres in 2002, compared with 4.97 the previous year. Harvested area in 2002 is 4.14 million acres and the ratio of harvested to planted barley area is 81.5 percent, the lowest since the 1988 drought. Yields are 54.9 bushels per acre, the lowest since 1989. Beginning 2002 stocks were 93 million bushels, down from 106 million bushels a year earlier and the smallest since 1975. Imports are expected to total 20 million bushels, down nearly 4 million bushels from 2001 as the Canadian drought cut supplies available to export to the United States. Total barley supply in 2002 is forecast at 339.7 million bushels, down 11 percent from a year earlier. Barley plantings were delayed by cold weather but were completed in most of the major States by late May and early June. Above- normal temperatures promoted rapid plant development across the northern Great Plains and Pacific Northwest during July. However, moisture shortages stunted vegetative growth in less advanced fields and hampered grain-filling in more advanced fields, especially in South Dakota. Nearly all of the barley fields were headed in Minnesota and Washington by mid-month. In Idaho and Montana, barley fields entered the heading stage later than normal. Extremely dry conditions in southern North Dakota forced farmers to either abandon barley fields or harvest them for hay. Barley harvest advanced to 71 percent complete on September 1, well behind the normal pace of 81 percent. Cold night time temperatures delayed ripening and limited the harvest pace across most of the northern Great Plains. Harvest progress was far behind normal in Montana and North Dakota. By mid-September, the barley harvest was 91 percent complete compared with the 5-year average of 94 percent. The Montana harvest was still well behind average, but North Dakota picked up pace and was even with the 5- year average. In mid-September, harvest in Idaho, Minnesota, and Washington was nearly complete and ahead of average. In late September, the North Dakota harvest was virtually complete, and was even with its 5-year average. Total Use Dropped for Second Straight Year Total use is forecast at 270 million bushels, down from 287 in 2001 and the lowest in decades. The bulk of this year-to-year drop stems from a decline in feed and residual, which is now projected at 75 million bushels. FSI is projected at 173 million bushels. Barley used for malt production is the main element of FSI. Exports in 2002 are projected at 22 million bushels, down 5 million bushels and the lowest since 1985. U.S. barley exports are expected to be mainly routine shipments of mostly malting barley to Mexico and Japan. Barley ending stocks for 2002/03 are forecast at 70 million bushels, down 23 million bushels from the previous year. The stocks-to-use ratio is 25.8 percent, down from 32.4 percent in 2001. This is the lowest stocks-to-use ratio since 1995. The tight supply/use balance has led to increased barley prices for 2002/03. Barley Prices To Rise in 2002/03 Average barley prices received by farmers in 2002/03 are forecast at $2.65-$2.75 per bushel, up from $2.22 a year earlier. Through March 2003, the simple average of feed barley prices is $2.16 per bushel, compared with $1.72 per bushel for the same period a year earlier. Malting prices from June 2002 to March 2003 have averaged $2.93, compared with $2.59 the previous year. The spread between malting and feed barley prices has averaged 78 cents thus far in the 2002/03 marketing year compared with a 5-year average of 80 cents. Barley Plantings Expected Higher in 2003 According to the 2003 Prospective Plantings report, growers intend to plant 5.4 million acres, up from 5.073 million the previous year. Tight supplies and rising prices, particularly for malting barley, are behind this year-to-year increase. Producers in eight States planned to increase acreage, nine are expected to have decreased acreage, and 10 are expected to hold steady. The biggest increase is in North Dakota, up 400,000 acres from last year. Fewer acres are expected in the Pacific Northwest due to dry conditions and concerns over water availability in some areas. Total Oats Supply Down in 2002/03 Oats production in 2002 was 119 million bushels, up slightly from the previous year. Weather problems caused a decrease in yields. Total use is projected at 224.5 million tons, up fractionally from 2001. Higher prices are largely because of price gains in corn and the other feed grains. Oats supplies in 2002/03 are projected at 282 million bushels, down more than 3 million bushels from the previous year. The drop in supply is the result of a 10-million-bushel drop in beginning stocks to 63 million bushels, which was partially offset by slight increases in production and a 4-percent increase in imports. Total oats production in 2002/03 was 119 million bushels, as increased harvested area more than offset lower yields. Oats harvested area for 2002 is estimated at 2.1 million acres, up from 1.9 million the year before. Weather problems in 2002/03 dropped yields from 61.4 bushels per acre to 56.8 bushels per acre. These are the lowest yields since 1995. The top four oats-producing States in 2002 were the upper mid- western States of Minnesota, Wisconsin, Iowa, and North Dakota. Only Iowa showed improved yields in 2002. Planting in 2002 proceeded ahead of normal in parts of the western Corn Belt, but cold weather delayed progress in the upper Mississippi Valley and the northern Great Plains. Wet soils in the eastern Corn Belt limited planting progress during most of April. The oats crop matured ahead of normal in Nebraska and Iowa, but continued to lag in the upper Mississippi Valley and eastern Corn Belt. Hot weather promoted rapid plant development during most of July, but drought in the Great Plains reduced forage supplies and encouraged growers to harvest many oats fields as hay. These hot and dry conditions also damaged grain yields in many areas of the central and northern Great Plains. In Minnesota, a period of excessive rain combined with slow soil drainage caused lower crop conditions. Oats Imports Rise in 2002/03 Oats imports in 2002/03 are projected at 100 million bushels, up from 96 million the previous year. The United States imports oats primarily from Canada with lesser amounts from Finland and Sweden. These countries tend to have cooler summers that are conducive to producing the heavy white oats favored by the food processing industry and many horse enthusiasts. Total 2002/03 oats use is projected up fractionally from the previous year but well below the 5-year average. Feed and residual for 2002/03 is projected at 150 million bushels, up slightly from the previous marketing year, and food, seed, and industrial use is forecast at 72 million bushels. Ending stocks are forecast at 58 million bushels, down from 63 million in 2001/02. The 2002/03 stocks-to-use ratio is 25.8 percent. Oats Prices Up for the Second Straight Year Prices received by farmers are expected to average $1.75-$1.85 per bushel in 2002/03 compared with $1.59 per bushel the previous year. These are the highest oats prices since 1996/97 and the second consecutive year of higher prices. Weather problems reduced oats production in both Canada and the United States the past 2 years. This led to shorter supplies, particularly of high quality white oats, and higher prices. But even the lower quality feed oats prices have benefited from the higher corn prices. Prospective Plantings Up in 2003 On March 1, 2003, farmers indicated that they intended to harvest 2.2 million acres of oats, up from 2.1 million acres the previous year and the second consecutive increase. Acres for grain are expected up in the central and northern Great Plains and Rocky Mountain States. MARKETING LOAN BENEFITS DOWN IN 2002 The 2002 Farm Act continued marketing loans but loan rates were fixed by legislation and increased for feed grains. However, the drought-reduced production boosted prices, eliminating loan deficiency payments (LDP) for most feed grain crops. The 2002 Farm Act extended the U.S. Department of Agriculture's (USDA) programs to assist farmers, including nonrecourse marketing assistance loans and LDPs. Nonrecourse marketing assistance loans provide interim financing to eligible grain producers. Producers pledge their grain as collateral and obtain a loan equivalent to the loan rate established in their county by USDA's Farm Service Agency. The loan proceeds are often used to cover short-term cash needs. The loan eligibility period for corn and sorghum is from the date of harvest through May 31 of the calendar year following the year the crop is harvested, and for barley and oats through March 31. As of April 24, 2003, feed grain producers had outstanding loans on 1.4 billion bushels of 2002-crop feed grains, compared with 1.4 billion bushels a year earlier. The value of the outstanding loans totaled $2.6 billion, up from $2.3 billion in 2001. The new program raised the national average loan rates for the feed grains for 2002 through 2007. 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 is the lower of the loan rate plus interest or the posted county price (PCP), a proxy for the local price. The PCP--calculated each day the Federal Government is open--is based on terminal market prices and a fixed differential to each county, largely reflecting transportation costs and other marketing factors. When a farmer repays the loan at a PCP below the loan rate, the difference between the loan rate and the PCP is called a 'marketing loan gain.' In lieu of securing a loan, eligible producers may opt for an LDP during the loan eligibility period on part or all of the crop if the PCP is lower than the county loan rate. The LDP rate is the amount by which the county loan rate exceeds the PCP on the date the application is made. The grain cannot be placed under loan once an LDP is paid. If producers take the LDPs and immediately sell their crop and if the PCP accurately reflects local prices, producers 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 costs or hold it in the expectation of a price rally later in the marketing season. Because of relatively high prices, marketing loan benefits for feed grains in 2002 are small despite higher loan rates. As of April 24th, the 2002 corn and oats crop LDP payments are negligible, compared with 2001's $1.1 billion for corn and $2 million for oats. LDP payments for the 2002-crop barley totaled $3.6 million and sorghum totaled $2.3 million, mainly from early harvested barley and sorghum. At this time last year, LDP payments for the 2001/02 barley crop totaled $14.7 million and for sorghum, $4.2 million. HAY PRODUCTION AND PRICES DECREASE Hay production in 2002 decreased 4 percent from 2001, and stocks on December 1, 2002, were down 6 percent from a year earlier. Yet prices of all hay are weaker in 2002/03, led by declines in alfalfa hay prices. Stocks of all hay on farms on December 1, 2002, were down 6 percent from 2001's 111 million tons. Thirty-three of the 48 States had lower hay stocks than a year earlier. Most of the States reporting decreased hay stocks were located in the western Corn Belt, central Rocky Mountains, northern and central Great Plains, and the Southeast. Stocks were significantly higher in Oklahoma and Texas, mainly due to a sharp increase in production during 2002. Roughage consuming animal units (RCAU) in 2002/03 are estimated to be little changed from 2001/02’s 72.2 million. Hay stocks on farms on December 1, 2002, were 1.4 tons per RCAU, down 6 percent from the year earlier. Hay production in 2002 totaled 151 million tons, down 4 percent from the 2001 total. Acreage harvested, at 64.5 million acres, was up 2 percent but yield, at 2.34 tons per acre, is down 0.13 ton from the previous year. Texas was the top producer of all hay, with 13.8 million tons, up 3 million from 2001. California, Missouri, and Kansas ranked second, third, and fourth, respectively, in all hay production. Alfalfa hay production in 2002 totaled 73.8 million tons, down 8 percent from the 2001 total. Harvested acreage, at 23.1 million acres, is down 3 percent from the previous year. Yields averaged 3.19 tons per acre, compared with 3.37 tons per acre in 2001. California continues to lead in alfalfa hay production. Minnesota replaced South Dakota as the second-leading producer. Growers seeded 3.3 million acres of alfalfa and alfalfa mixtures during 2002. This is up 1 percent from the 2001 seeded acreage of 3.26 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 2001 were the equivalent of 14 percent of the acres of alfalfa and alfalfa mixtures harvested for hay in 2002, up from 13 percent the previous year. Production of all other hay in 2002 totaled 77.1 million tons, up 1 percent from the 2001 total, with a 4-percent increase in harvested acres accounting for the change. Because of the drought, farmers were allowed to harvest forage from Conservation Reserve Program acres, which were part of the increase. Average yields were 1.86 tons per acre, compared with 1.93 tons per acre in 2001. In 2001, 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). In 2002, over one-third of the haylage and greenchop produced by the eight reporting States was in Wisconsin. On a forage basis, Wisconsin becomes the number two producing all-hay State and the top alfalfa hay producing State. Corn silage production for 2002 is estimated at 105 million tons, above the 2001 level of 102.1 and the largest production since 1982. Farmers harvested 7.49 million acres for silage, a 22- percent increase. Because of drought in many States, corn was salvaged by harvesting for silage. Thus silage yield decreased to 14 tons per acre, compared with 16.6 tons a year earlier. Sorghum for silage production is estimated at 3.36 million tons, a decrease of 10 percent from 2001. Area cut for silage was up 5 percent, but yields were down 14 percent. Total corn and sorghum silage production per RCAU is 1.5 tons, compared with 1.47 tons in 2001. All hay prices received by farmers during May-March 2002/03 averaged $94.53 per ton, down from $96.09 in May-March 2001/02. In the 2001/02 May-April hay marketing year, prices received by farmers for all hay weighted by marketings were $96.50 per ton, up from $84.60 in 2000/01. Alfalfa hay prices received by farmers in 2002/03 will be lower than a year earlier. In the first 11 months of the 2002/03 marketing year, alfalfa hay prices averaged $100.65 per ton, 4 percent below the simple average of $104.37 for the same months in 2001/02. In the 2001/02 marketing year, the weighted average for alfalfa hay prices was $104.00 per ton, and $88.90 and $80.20 in 2000/01 and 1999/2000, respectively. Hay other than alfalfa in 2001/02 had a weighted average price of $73.30 per ton, compared with $70.90 in 2000/01 and $66.80 in 1999/2000. In the first 11 months of 2002/03, the simple average price was up 4 percent from the same months in 2001/02. Prospective Harvested Acreage Farmers in March indicated they planned to harvest 63.6 million acres of hay in 2003, down from the 64.5 million acres harvested in 2002. Harvested acres for 2003 are expected to decrease in 17 States. North Dakota, down 900,000 acres, has the largest decrease following drought conditions last year which resulted in more Conservation Reserve Program land and small grain acres harvested for hay. Hay acres in Texas dropped 430,000 acres from the record-high acreage last year. Reduced water availability for irrigating hay is lowering growers’ expectations in the Pacific Coast States. FEED AND RESIDUAL USE Feed and Residual Use To Decline Feed and residual use is expected to be down from last year because of declines in animal numbers. Fewer cattle on feed and lower pig crops are expected to reduce feed needs. Feed and residual use of the four feed grains plus wheat in September-August 2002/03 is expected to be down 3 percent from the 162 million tons used in September-August 2001/02. Corn is expected to represent 92 percent of feed and residual use in 2002/03, unchanged from 2001/02 but up from 2000/01. The index of grain consuming animal units (GCAU) for 2002/03 is estimated to be down 2 percent from 2001/02's 90 million. The grain used per GCAU in 2002/03 is 1.78 tons, compared with 2001/02's 1.81 tons. In the index components, GCAU for dairy, broilers, and layers are up from the previous year; however, declines in turkeys, hogs, and cattle on feed are more than offsetting. Dairy cows on January 1, 2003, totaled 9.2 million head, up 40,000 head from 2002. Dairy cow numbers are expected to decline as the year progresses. But, with increased production per cow, milk production in 2003 is expected to be about 171.6 billion pounds, up from 169.8 billion in 2002. Thus, feed use by the dairy industry will continue relatively strong. Feed needs by the cattle on feed sector are expected to be down, as beef production in 2003 is forecast down 3 percent from 2002. The number of cattle on feed on January 1, 2003, totaled 12.9 million head, down from 13.9 million the previous year. Cattle on feed are likely to remain below year-earlier levels during 2003, resulting in lower beef production. Broiler production in 2003 is expected to decrease 65 million pounds from 2002, as producers scale back production. Cumulative placements (an indication of future flock size) in broiler hatchery supply flocks have been decreasing in 2003, and cumulative placements will be 2 percent lower by next fall than a year earlier. Broiler prices were down 3.5 cents per pound in 2002 compared with 2001, but are expected to be up 4.4 to 7.5 cents in 2003. Egg producers are expected to produce 7.2 billion dozen eggs in 2003, essentially unchanged from 2002. Egg prices in 2002 are expected to be nearly unchanged from 2001’s 67.2 cents per dozen, but higher grain prices have encouraged producers to slow production increases. In 2003, turkey production is forecast at 5.675 billion pounds, down from the 5.713 billion produced in 2002. Overall, feed demand by the poultry sector is expected to remain strong but not expand as much as in prior years. Pork production in 2003 is expected to be down 1 percent from the 19.7 billion pounds produced in 2002. Hog farmers responding to the March 1 survey of hog producers indicated that they intended to decrease the number of sows farrowing in March-May 2003 by 3 percent relative to the prior year, and in June-August 2003 by 3 percent. The forecast decrease in pork production suggests feed needs for the pork sector will be weaker in 2002/03. FOOD, SEED, AND INDUSTRIAL USE OF CORN Food, Seed, and Industrial Uses of Corn To Increase in 2002/03 Food, seed, and industrial (FSI) use of corn is expected to rise 11 percent from a year earlier in 2002/03. Corn used for ethanol will post the largest increase. Corn FSI use in 2002/03 is expected to total 2,285 million bushels, up from 2,054 million in 2001/02. FSI use would represent 24 percent of total corn use, up 3 percentage points from 2001/02 and up 4 percentage points from 2000/01. Corn use in 2002/03 is expected to be up for high-fructose corn syrup (HFCS), starch, alcohol, and cereals and other products, but glucose and dextrose use are projected to be down. Corn used for HFCS in 2002/03 is projected at 552 million bushels, up 2 percent from 2001/02. 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. While shipments to other countries, notably Canada, Japan, and China are increasing, total exports are down 49 percent compared with September 2001-January 2002. Exports have also slowed primarily because of a trade dispute with Mexico. In 1996/97, Mexico accounted for 81 percent of our HFCS shipments, but other countries have been buying HFCS and reduced Mexico’s share. Shipments to Mexico have been 98 percent below year-ago levels in September 2002 through January 2003 because of a tax on soft drinks sweetened by HFCS. HFCS shipments to Mexico in 2001/02 represented 33 percent of exports to all countries and in September 2002-January 2003 were 2 percent. In 2002/03, corn used to make glucose and dextrose is forecast to decline from the 217 million bushels used in 2001/02, 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 down 1 percent from last year. In 2002/03, corn used in starch production is expected to be up nearly 4 percent from the 246 million bushels used in 2001/02. Use was up 5 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. Output from the paper and paper products industries was stronger in September 2002-February 2003 than a year earlier, accounting for most of the strength in starch production. Even though the economy is not particularly strong, interest rates are very low and the new home market and home remodeling have been keeping wallboard sales strong. Beverage and manufacturing alcohol production in 2002/03 is expected to use 131 million bushels of corn, unchanged from 2001/02. Corn used to make ethanol for all of 2002/03 is forecast at 925 million bushels, up 30 percent from 2001/02. Monthly ethanol production reported by the Department of Energy was higher than the previous month, measured in barrels per day, setting record- highs in August 2002-January 2003 as new plants came on stream, but February was down. The refining industry geared up for the conversion from methy tertiary butyl either (MTBE) to ethanol in California by January 2003 plus additional States in latter years. The California ban on using MTBE has been delayed but at least some of the California gasoline producers had conversion plans underway prior to the announced delay, and are using 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. WORLD COARSE GRAIN OUTLOOK Global Coarse Grain Production Down in 2002/03, Stocks To Drop World coarse grain production is expected to decline more than 3 percent in 2002/03, but corn production is forecast down only 1 percent because the smaller U.S. crop is partly offset by increased foreign production. Foreign area forecasts declined for each of the coarse grains, partly in response to low prices compared with oilseeds and wheat during planting, and partly due to unfavorable weather. Foreign yields increased for corn, boosting production, but production of the other coarse grains declined. Global coarse grains beginning stocks were the lowest since 1995/96. World coarse grain consumption in 2002/03 is expected to decline slightly. However, global consumption is forecast to remain much larger than production, dropping world ending stocks 28 million tons to 151 million, the smallest since 1983/84. Foreign Coarse Grain Production Declines in 2002/03 Foreign coarse grain production, at 616 million tons in 2002/03, is down 2 percent from a year ago. Foreign area forecasts declined for each of the coarse grains, partly in response to low prices compared with oilseeds and wheat during planting, and partly due to unfavorable weather. China’s increased corn yields and production were offset by reduced area and yields for coarse grains in Australia and Canada, countries devastated by drought. China’s coarse grain production (mostly corn) in 2002/03 increased almost 11 million tons to 133 million. Area increased slightly as prices and the previous year’s returns were good compared with most alternatives. Growing conditions were favorable in the major corn-growing province of Jilin in northeast China, but dryer further south and in parts of the North China Plain. Growing conditions were much better than during the previous 2 years, when drought was widespread. Corn yields increased 9 percent, but did not reach record levels, and China produced its third largest corn crop. South America’s coarse grain production is expected to increase almost 3 million tons in 2002/03. Brazil and Argentina planted more soybeans and slightly less coarse grains. Argentina’s corn area is expected to match the previous year despite relatively high production costs and the ongoing economic and financial crisis, as the jump in U.S. corn prices provided an incentive for Argentine producers to plant more corn. Corn seed companies reportedly helped producers acquire inputs. Growing conditions in both countries have been generally favorable, with above-normal rainfall. Argentina is expected to reach record average corn yields, while Brazil nearly matches record levels. Parts of the Middle East had improved rains in 2002/03, but others had less favorable conditions. The region produced almost 16 million tons, up more than 1 million, and the largest coarse grain production since 1998/99. Rains were abundant in Iran, boosting coarse grain production (mostly barley) almost 1 million tons. Turkey had better weather than the previous year, but dryness during the spring limited the increase in coarse grain production to 0.6 million tons. Syria’s barley production, while large, failed to match the previous year’s bumper crop, declining 0.5 million tons. Most foreign regions produced reduced coarse grain crops in 2002/03. Production dropped the most in India, Australia, Mexico, and Canada. India’s coarse grain production declined almost 10 million tons, as producers planted 15 percent less area. Moreover, monsoon rains were weak is some areas and yields declined. Coarse grain production in the rest of South Asia was relatively stable. Australia’s coarse grain production is expected to drop 7 million tons to less than half the previous year’s level because of widespread devastating drought. El Nino weather in the Pacific is associated with drought in Australia, and though the El Nino was not very strong or long lasting, the drought spawned in Australia was unusually severe. Coarse grain production declined more than 3 million tons in Mexico because dryness east of Mexico City where the corn is not irrigated resulted in reduced harvested area. Sorghum area also declined, but improved average yields were almost offsetting. Canada’s coarse grain production declined 3 million tons as drought struck the Western Prairies for the second straight year. Barley-producing areas were especially hard hit, with some fields hayed or grazed instead of harvested for grain. Barley production dropped almost 4 million tons to 7 million, the lowest since 1968/69. However, corn production, concentrated in eastern Canada, did better, with a small increase in area and yield. Eastern Europe’s coarse grain production declined almost 3 million tons to 50 million. Poland’s rye area dropped significantly, reducing production enough to more than offset increased production of corn, barley, and oats. Corn production in the region declined because of hot dry conditions in Hungary and the former Yugoslavia. Barley production declined mostly because a spring drought damaged winter barley in Romania. While growing conditions in Eastern Europe for the 2002/03 crop were not as good as the previous year, they were much better than in 2000/01. Coarse grain production in the former Soviet Union (including the Baltics) is estimated down less than 2 million tons to 63 million in 2002/03. Barley production declined 1 million tons mostly because yields in Russia, though high, failed to match the previous year’s level. Corn production in the former Soviet Union increased almost 2 million tons, mostly because of favorable growing conditions in Ukraine and southern Russia. Oats production dropped more than 2 million tons mostly because of reduced area in Russia, though yields also fell slightly. South Africa’s corn production suffered from below-normal rainfall, as is to be expected in an El Nino year, but area increased and enough rains fell to limit the yield drop. Production declined less than 1 million tons, which was more than offset by increased coarse grain production elsewhere in Sub- Saharan Africa. Sorghum production in Sudan increased as area expanded. North Africa’s coarse grain production nearly matched the previous year in 2002/03. North Africa’s barley production is up slightly as Morocco’s barley production increased 0.5 million tons because good rains improved yields. Tunisia and Algeria were dryer, and together are down about 0.3 million tons. Egypt’s corn, with the largest share of the region’s production, is irrigated, but production declined slightly because of reduced area. The European Union’s (EU) coarse grain production is estimated to be nearly unchanged in 2002/03. Barley production totaled the same 48 million tons as during 2001, as reduced area in the United Kingdom and unfavorable excessive rains in Germany were offset by increased production in Spain and France, where planting conditions were favorable. EU corn area declined while yield increased fractionally, leaving production nearly unchanged from the 40 million tons produced in 2001/02. Oats production increased as Scandinavian countries increased area and improved weather boosted yields. However, rye production dropped with unfavorable harvest conditions in Germany. 2002/03 Beginning Stocks Down From a Year Ago, but Still Large Global coarse grain beginning stocks in 2002/03 are estimated at 180 million tons, down 10 million from the previous year. This is the lowest carryin stocks since 1996/97 when beginning stocks fell to 152 million tons. More than 60 percent of estimated coarse grains stocks are corn stocks in China and the United States. China is estimated to have had the world’s largest coarse grain stocks, beginning 2002/03, at almost 70 million tons. Such large stocks are expensive to maintain, and in recent years China appears to be taking advantage of the rise in U.S. corn prices by liquidating burdensome corn stocks. Since China is in the process of reducing corn stocks, those stocks are an important part of available supply in 2002/03. Unfortunately, China does not publish grain stocks data, so the precise level of corn stocks is not known. Coarse grain 2002/03 beginning stocks for the rest of the world (world minus China and the United States) are estimated at 63 million tons, up 10 million from a year earlier, and the largest in 4 years. Coarse grain beginning stocks were 5 million tons higher in the former Soviet Union, following a good 2001 crop. EU stocks were also up as barley and rye intervention stocks increased. So both China and other foreign countries’ stocks were a large potential source of global feed grain supplies in 2002/03. Global Coarse Grain Consumption Forecast Down Slightly in 2002/03 World coarse grain consumption in 2002/03 is a forecast 889 million tons, down from 901 estimated for the previous year. Foreign coarse grain consumption is projected down nearly 2 percent, while U.S. consumption is forecast down less than 1 percent. Many foreign countries are suffering from weak economic performance, possibly dampening the demand for feed grains to produce meat. Reduced production in some countries is also a constraint on use. The largest increase in coarse grain consumption in 2002/03 is forecast for China, up 2 million tons. In China, economic growth remains robust, corn is abundant, and meat production is growing. However, coarse grain use is expected to grow only 1.6 percent. The very dramatic rise in soybean meal use may be moderating the increases in corn use, as feed rations become more balanced and efficient. China’s consumption increase is expected to be concentrated in corn. Consumption of feed grains in the former Soviet Union is expected to increase more than 1 million tons in 2002/03 as the poultry industry and to a lesser extent, pork production expands. Abundant supplies of feed wheat will limit the increases in coarse grain use. Coarse grain consumption in Latin America is expected to increase more than 1 million tons in 2002/03. In Brazil, the export-led poultry and pork sectors continue to expand, accounting for most of the region’s growth in feed grain use. Consumption of corn is expected to stagnate in most of the rest of the region, including Argentina and Mexico. However, Mexcio’s decline is somewhat misleading due to the increased imports of cracked corn which is counted as a corn product instead of as corn. In North Africa, feed grain consumption is expected to increase slightly, with increased barley production in Morocco. However, for other countries and regions feed grain use is forecast to decline slightly or drop significantly. The largest drop is expected in India where coarse grains are used mostly as food. With a large drop in production of millet, and smaller declines for corn and sorghum, consumption is forecast down 7 million tons. Consumers are expected to turn to wheat and rice as alternatives. In Canada and Australia, coarse grain consumption is expected to decline about 2 million tons each. Production has dropped, and increased imports will be only partly offsetting. Also, both countries are increasing wheat feeding. EU coarse grain use is expected to decline almost 2 million tons as abundant supplies of feed quality wheat replace some feed grains in animal rations. Large imports of feed wheat from the Black Sea region by Spain and Italy have contributed to the trend. Eastern Europe, Other Western Europe, the Middle East, Sub- Saharan Africa, and much of non-China East Asia are expected to have stagnant, slowly declining consumption of feed grains in 2002/03. Global Coarse Grain Ending Stocks To Drop in 2002/03 for a Fourth Year World coarse grain stocks are projected to drop 28 million tons in 2002/03 to 151 million tons. Foreign coarse grain stocks are forecast down 12 million tons, of which China’s stocks are forecast down nearly 10 million. Coarse grain stocks in the rest of the world are only expected to decline 2 million tons, a reduction of 4 percent. The drop in coarse grain stocks in 2002/03 is mostly a U.S. phenomenon, and to a lesser extent a long term strategic adjustment in China. That said, global ending stocks in 2002/03 are forecast to be the lowest since 1983/84. China has been reducing corn stocks. Eventually, China’s corn supplies are expected to become tight enough so that China emerges as much less of an exporter, and possibly a major corn importer, but the timing of this switch is highly uncertain. As long as corn stocks are perceived as burdensomely large, the incentive to export will remain. EU coarse grain ending stocks, mostly barley and rye, are forecast up almost 2 million tons because of reduced use. Coarse grain ending stocks in the former Soviet Union and Eastern Europe are forecast little changed in 2002/03. Australia and Mexico, each with reduced production, are expected to reduce coarse grain stocks in 2002/03 by about 1 million tons each. Global barley and rye stocks are expected to be little changed in 2002/03. While sorghum and oats stocks are expected to decline some, the overwhelming preponderance of the global coarse grains drop is expected to be corn in the United States and China. WORLD COARSE GRAIN TRADE OUTLOOK U.S. Corn Exports Drop as Competition Increases in 2002/03 U.S. corn exports for the October-September 2002/03 trade year are forecast at 43.5 million tons, down 8 percent from the previous year. Increased competition has come from Argentina and China, as well as from large supplies of competitively priced wheat for feeding. Corn exports from Brazil and Eastern Europe though down compared with the previous year, remain large. Increased U.S. corn prices have contributed to the reduced market share. Global Coarse Grain Trade Forecast for 2002/03 Same as Previous Year World coarse grain trade in 2002/03 is projected at 102 million tons, the same as a year earlier. While many importers are reducing supplies, some are increasing significantly, offsetting the declines. Global corn trade is forecast up 2 million tons to 76 million, and oats and rye trade are expected to increase slightly. However, world sorghum trade is projected down 1.6 million tons because of tight U.S. supplies. Global barley trade will be down almost 1 million tons. Mexico is expected to increase coarse grain imports 1.2 million tons to over 10 million. Reduced production is necessitating the large increase in corn imports. Sorghum imports are expected to decline because of high prices and tight supplies in the United States. South Korea’s coarse grain imports (mostly corn) are forecast up 0.5 million tons to over 9 million because the pork industry has provided strong demand while China has offered attractively priced corn. Smaller increases in coarse grain imports are expected in Sub-Saharan Africa, the United States, and Brazil. The region with the largest reduction in coarse grain imports forecast in 2002/03 is the Middle East, down 1.7 million tons. Israel and Turkey are each expected to reduce imports 0.5 million tons, and Saudi Arabia is expected to reduce barley imports. Cheap wheat for feed use and increased production in the region have combined to slow imports. The European Union (EU) is expected to import less coarse grains, partly because of abundant supplies of wheat for feeding, dropping coarse grain imports 0.8 million tons. Reduced EU barley imports are linked to a new import regime. Japan is projected to import 0.7 million tons less coarse grains in 2002/03 as meat production declines. However, at over 19 million tons, Japan remains by far the world’s largest importer. Competition for Corn Exports Intense in 2002/03 China has exported corn aggressively in 2002/03, expanding its market share in Asian countries as U.S. corn prices increased because of a smaller crop. In contrast, China’s corn crop increased almost 11 million tons to 125 million. Record corn exports of 13 million tons are projected. When China entered the World Trade Organization, corn export subsidies were to end. However, China’s Government has continued to help corn exporters by waiving transportation taxes and rebating the value-added tax. China has boosted exports, especially to South Korea, and also to other Asian markets. China’s share of the global corn market is expected to increase from less than 12 percent in 2001/02 to 17 percent. Argentina is expected to be the third largest corn exporter in 2002/03, at 11 million tons, up nearly 2.5 million from the previous year. Corn production is forecast up only 0.6 million tons. However, the timing of Argentina’s corn shipments is expected to boost exports during the October-September 2002/03 international marketing year. The export of the previous year’s corn crop was delayed as producers held stocks due to the financial crisis and changing tax and rebate regulations. Thus, more of that corn crop was exported after October 1, 2002, than had been normal. However, the crop currently being harvested is expected to be marketed relatively quickly, as international corn prices can be expected to decline after the next U.S. crop is harvested. Brazil emerged as the world’s fourth-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 decline 1.4 million tons to 2.5 million in 2002/03 (October-September), because of strong domestic demand from growing poultry and pork production. However, Brazil has found significant niche markets for its corn in the EU and among South Korea’s starch manufacturers. Eastern Europe’s corn exports are forecast down more than 0.5 million tons to 2.6 million, mostly because of a smaller crop in Hungary. However, the region’s corn exports remain large, 43 percent above the average of the last 10 years. Increased corn exports by Serbia are partly offsetting the decline in Hungary. South Africa is expected to increase corn exports 18 percent to 1.4 million tons, but most of the shipments are expected to go to other countries in southern Africa. World barley trade is forecast at just over 16 million tons in 2002/03. EU barley exports are forecast up almost 2 million tons to 5 million. However, the level of exports will depend on how aggressive the European Commission is at subsidizing exports through free market restitutions. Canada’s barley exports, devastated by a second year of drought, are expected to drop to only 0.4 million tons, the lowest since 1962/63. Australia’s barley exports are also expected to plummet because of drought, dropping 2.8 million tons to 1.4 million. Eastern Europe’s barley exports are also forecast down because of lower production in Romania. However, Russia is expected to expand barley exports 0.8 million tons to 3.5 million. Ukraine and Kazakhstan are also expected to increase barley exports. 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. Also, EU imports of inexpensive barley from the Black Sea area are expected to decline. Barley prices, especially for malting, have been strong in 2002/03. Global sorghum trade is also expected to drop in 2002/03. The United States, with reduced production, is forecast to reduce exports 1.3 million tons, to 4.8 million. Drought in Australia, and strong internal demand for feed grains will cause a sharp drop in sorghum exports. Australia’s exports are forecast at less than 15 percent of the previous year. Argentina is expected to boost sorghum exports nearly 50 percent to 0.6 million tons. Mexico and Japan will remain the major import markets. World rye trade is expected to expand slightly in 2002/03 because the EU needs to subsidize as many rye exports as possible to keep intervention stocks under control. Russia is also boosting exports. However, customers for rye are hard to find, and Japan remains the largest importer. Global oats trade is forecast up 14 percent to 2.3 million tons in 2002/03 (October-September) despite continued high prices. Supplies of quality oats from Canada and Australia are down because of drought. However, production and quality in Sweden and Finland improved, and EU oat exports are forecast to nearly double to 1.3 million in 2002/03. U.S.oat imports in October- September 2002/03 are expected to rebound to 1.8 million tons. U.S. Corn Exports in 2002/03 Forecast To Drop 3.6 Million Tons U.S. October-September 2001/02 corn exports are forecast at 43.5 million tons, down 8 percent from a year earlier. The U.S. share of world corn trade in 2002/03 is forecast at 57 percent, slightly below the shares in 1985/86 and 1993/94, and the lowest estimated share since 1971/72. Just 4 years ago, the U.S. share of global corn trade was above 75 percent. Shipments during the first months of 2002/03 have dropped, and outstanding sales are also down. According to Census, exports of corn during the first 5 months (October-February) totaled 17.1 million, down from 18.5 a year ago. Grain Inspections data for March 2003 are about 3.0 million tons down from over 4.5 million a year ago. Shipments for the first half of the marketing year are down 13 percent. U.S. Export Sales, as of April 3, reports outstanding export sales of 5.5 million, down 13 percent from a year ago. Commitments (shipments plus outstanding sales) to the largest market, Japan, are up 1 million tons. Canada, and to a lesser extent, Mexico have also increased purchases of U.S. corn. However, commitments to South Korea are down nearly as much as Japan is up. China is capturing most of South Korea’s corn market. Egypt’s corn commitments are 1.3 million tons, cut nearly in half. Several countries, like Indonesia, Philippines, United Arab Emirates, and Morocco, that had made significant purchases a year ago have bought no U.S. corn this year. Others, like Turkey, Israel, Saudi Arabia, Syria, Tunisia, and South Africa, have reduced imports sharply. U.S. sorghum exports in 2002/03 are forecast at 4.8 million tons, down 1.3 million from the previous year. U.S. sorghum export prices, much above corn, have limited sorghum exports. U.S. barley exports are forecast about the same as a year ago at 0.5 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 2002/03 are forecast down 9 percent to 48.8 million tons.