Feed YEARBOOK -- TEXT May 3, 2004 April 2004, ERS-FDS-2004 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 23, 2004. The complete report will be available electronically in about a month. ----------------------------------------------------------------------------- Feed Situation and Outlook Yearbook. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2004, FDS-2004. Approved by the World Agricultural Outlook Board. Summary released April 23, 2004. Summaries and full text of Situation and Outlook reports may be accessed electronically via the ERS website at www.ers.usda.gov/. To order, call 1-800-999-6779 in the United States or Canada. Other areas please call (703) 605- 6220. 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Corn, Sorghum, and Barley Prices Rise in 2003/04 For 2003/04, total U.S. feed grain disappearance is projected at 283 million tons, up from 260 million tons the previous year. All use categories show year-over-year increases, but exports show the biggest gain. Food, seed, and industrial (FSI) use is forecast at a record 70.3 million tons. A record corn crop led to a rise in feed grain supplies, which are forecast at 309 million tons. However, the growth in utilization is expected to exceed the growth in supply, and ending stocks will decline for the third year in a row. Feed and residual use of the four feed grains plus wheat in September-August 2003/04 is expected to be up 3 percent from the 156 million tons used in September-August 2002/03. The grain used per grain consuming animal unit in 2003/04 is forecast at 1.78 tons, compared with 2002/03's 1.76 tons. Corn is expected to represent 92 percent of feed and residual use in 2003/04, up nearly 1 percent from 2002/03. Corn production in 2003/04 was a record 10,114 million bushels, up from the previous year’s drought-reduced crop of 8,967 million bushels. A record average yield of 142.2 bushels per acre and a 1.8-million-acre increase in harvested area are behind this year- over-year increase. Beginning stocks were 1,087 million bushels, and the total 2003/04 corn supply was up 633 million to 11,211 million bushels. Although corn supplies were up, utilization is forecast up even more. Total corn utilization is expected to rise 864 million bushels to a record 10,355 million bushels. Utilization is up for all use categories. Ending corn stocks for 2003/04 are expected to fall to 856 million bushels, their lowest level since 1995/96, and prices are expected to rise to $2.45- $2.65. Corn FSI use in 2003/04 is expected to total 2,555 million bushels, up from 2,340 million in 2002/03. FSI use would represent 25 percent of total corn use, unchanged from 2002/03 and up 4 percentage points from 2001/02. Corn food and industrial use in 2003/04 is expected to be up for all component categories. Corn used to make ethanol for all of 2003/04 is forecast at 1,195 million bushels, up 20 percent from 2002/03. Ethanol production reported by the U.S. Department of Energy (DOE) continued to set records, as new plants came on stream. The 2003/04 sorghum crop is 411 million bushels, up from 361 million bushels a year earlier. An increase in harvested area and yield, estimated at 7.8 million acres and 52.7 bushels per acre, respectively, led to this year-over-year change. Beginning stocks were 43 million bushels. Total sorghum supply is 454 million bushels, up from 422 million bushels in 2002/03. Total sorghum utilization is expected to rise from 379 million bushels to 410 million in 2003/04. The bulk of this increase comes from exports. Sorghum ending stocks are forecast at 44 million bushels in 2003/04, up slightly from a year earlier, and the season average price is projected at $2.45-$2.65. These are the highest season average sorghum prices since 1995/96. The barley crop is 276 million bushels, up from 2002/03’s 227 million. This increase stems from higher average yields and larger harvested area. Beginning stocks were 69 million bushels, down from 92 million bushels in 2002/03. These low stocks were caused by dry conditions in 2002/03. Total barley supply is 360 million bushels in 2003/04, up from 337 million bushels a year earlier. Total utilization is forecast at 262 million bushels, down from 268 million. Most of this year-over-year decline stems from a 5-million-bushel drop in exports to 25 million bushels. Ending barley stocks are forecast at 98 million bushels. The 2003/04 season average barley price is forecast at $2.80-$2.90, up from $2.72 the previous year. The 2003/04 oats supply is forecast at 284 million bushels, up from 274 million bushels a year earlier. A recovery from drought conditions is behind this increase. The 2003/04 yield was 65 bushels per acre, up from 56.4 a year ago and the second largest on record. Imports are forecast at 90 million bushels, the lowest since 1995/96. Total oats utilization is projected at 220 million bushels, down 4.5 million bushels from the previous year and the lowest on record, the result of a drop in feed and residual use. Ending 2003/04 stocks are forecast to be 64 million bushels, up from 50 million. The 2003/04 season average oats price is expected to be $1.45-$1.50 per bushel, compared with $1.81 a year earlier. According to the U.S. Department of Agriculture’s March 31 Prospective Plantings report, growers intend to plant 79 million acres of corn, up fractionally from both 2003 and 2002. Farmers intend to plant 46 percent of their prospective corn acreage with varieties developed using biotechnology, up from 40 percent in 2003. Sorghum growers intend to plant 8.6 million acres, down 9 percent from 2003. Barley growers intend to plant 4.68 million acres in 2004, down 12 percent from a year earlier. Oats growers intend to plant 4.31 million acres and harvest 2.07 million acres, down 6 percent and 7 percent, respectively. The Prospective Plantings report indicates that sorghum, barley, and oats planted area are forecast to be the lowest on record. This continues a long-term decline in planted area due to higher relative returns for other crops. Hay production for 2003 is estimated at 157 million tons, up 4 percent from the 2002 total. This change stems from a 0.14-ton- per-acre increase in yield to 2.48 tons per acre. Harvested area declined from 64.5 million acres to 63.3 million acres. Stocks of all hay on farms totaled 111 million tons on December 1, 2003, up 7 percent from the previous year. Prices for all hay are down in 2003/04, led by declines in alfalfa hay prices. The Prospective Plantings indicated that producers intend to harvest 63.7 million hay acres in 2004, up 1 percent from a year earlier. World coarse grain production is expected to increase 2 percent in 2003/04, supported by a record U.S. corn crop. However, foreign coarse grain production is forecast down 2 percent because drought devastated production across most of the European Union, Eastern Europe, and parts of the former Soviet Union. Corn production in China is forecast down 6 percent as growing conditions were too dry in some parts of the Northeast while a cool misty summer limited corn growth in the North China Plain. Global coarse grains beginning stocks were the lowest since 1984/85, reducing 2003/04 supplies. World coarse grain consumption in 2003/04 is expected to grow over 3 percent, partly because of reduced supplies of lower-quality wheat used for feeding, improving economic growth in several regions, and increased population growth. Moreover, global consumption is forecast to remain much larger than production, dropping world ending stocks 43.4 million tons to 102.3 million, the smallest since 1975/76. U.S. corn exports for the October-September 2003/04 trade year are forecast at 51 million tons, up 24 percent from the previous year. Competition from Argentina and China is down. In addition, there are reduced supplies of competitively priced wheat that are used for feeding. Corn exports from Eastern Europe are projected down 63 percent. However, corn exports from Brazil are expected to increase. High ocean freight rates and strong U.S. corn prices are expected to limit the increase in U.S. exports. Feed Grains Record Corn Utilization Leads to Tighter Feed Grain Stocks in 2003/04 A record 2003/04 U.S. corn crop led to an increase in feed grain supplies. However, feed grain utilization increased even more, and ending stocks declined for the third straight year. Tighter stocks led to higher prices for all feed grains in 2003/04 except oats. Total feed grain disappearance is projected at 282.6 million tons in 2003/04, up from 260.1 million tons the previous year. The biggest year-to-year increase came from exports; feed and residual, and food seed and industrial use (FSI) also show gains. Feed grain exports are projected at 56.7 million tons, up from 45.9 million the previous year. Feed and residual use and FSI are projected at 155.5 million tons and 70.3 million tons, respectively. Record ethanol production is driving much of the increase in FSI. Total feed grain supply was up in 2003/04 but not enough to offset the increase in utilization. A record corn crop led to a 32-million-ton increase in feed grain production, which is projected at 275.5 million tons. Beginning 2003/04 stocks are 30.9 million tons, and imports were 2.1 million tons. Therefore, total corn supply for 2003/04 is projected at 308.5 million tons, up from 291 million tons the previous year. With utilization increasing faster than supply, ending stocks declined for the third straight year. Ending stocks for 2003/04 are projected at 25.9 million tons, the smallest since 1995/96. The tighter 2003/04 stocks led to higher prices for the entire feed grain complex except oats. The Prospective Plantings report for 2004 indicates that as of early March farmers intend to plant 79 million corn acres, up fractionally from the previous year. Prospective plantings for 2004/05 sorghum, barley, and oats are 8.6 million acres, 4.7 million acres, and 4.3 million acres respectively, all down from the previous year. Corn Corn Prices Rise in 2003/04 Despite Record Crop Record yields of 142.2 bushels per acre led to a record 2003/04 corn crop. However, the large crop was overshadowed by record corn utilization. The year-to-year change in corn utilization came from increased feed and residual use, exports, and food, seed, and industrial use. This led to tighter ending stocks and the highest prices since 1996. Corn Production Up 13 percent From 2002/03 Corn production in 2003/04 was a record 10,114 million bushels, up from last year’s drought-damaged crop of 8,967 million bushels. The year-to-year increase stems from a 1.8-million-acre increase in harvested area and a 12.9-bushel-per-acre increase in yield. The 2003/04 corn harvested area and yield are 71.1 million acres and a record 142.2 bushels per acre, respectively. The previous record for corn production was 10,051 million bushels, and the previous yield record was 138.6 bushels per acre, both set in 1994. Beginning 2003/04 corn stocks were 1,087 million bushels, down from 1,596 million the previous year. Total 2003/04 corn supply is 11,211 million bushels, up 633 million bushels from the previous year. Corn yields in 2003/04 were higher in almost all States east of the Mississippi River due to favorable precipitation and temperatures during much of the growing season. Hot and dry conditions occurred during August across much of the Corn Belt and central Great Plains, but this happened after the critical July pollination period and did not have a significant negative yield impact. With the exception of Iowa, Minnesota, and Wisconsin, yields in all the Corn Belt States are up from 2002/03. However, the 2002/03 yields in Iowa and Minnesota were records. Hot and dry conditions in the western Corn Belt and central Great Plains did limit the crop. However, the conditions were less severe than in 2002, and most States in these areas realized yield increases. Planted area totaled 78.7 million acres, down fractionally from 2002/03. Corn planted area was either down or unchanged in all but 12 States. Area harvested for grain, at 71.1 million acres, was up 3 percent from the 2002 drought-reduced crop. Farmers harvested 6.53 million acres for silage, a 13-percent decrease from last year. The number of acres abandoned (this year) also decreased to 1.07 million acres, down significantly from the 2.25 million acres abandoned in 2002. Much needed moisture was received in late April and early May across much of the Corn Belt, which helped relieve long-term precipitation deficits, especially in Indiana, Nebraska, Ohio, and parts of Illinois. However, these rains slowed fieldwork and delayed some producers from timely planting, especially in Indiana. Germination and emergence were hampered throughout much of the Corn Belt by excess moisture and cool temperatures. However, warmer and drier weather during the first 3 weeks of June improved growing conditions. The 2003 corn objective yield data showed a record-high ear count per acre for the combined seven objective yield States (Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio, and Wisconsin). The 2003 ear count was 4 percent above the previous high in 2000 and 6 percent above last year. Ear counts were at record-high levels in six of the seven objective yield States. Nebraska’s ear count was the third highest on record, below 1999 and 2000. Total Utilization Rises 864 Million Bushels to New Record Total corn utilization is projected at a record 10,355 million bushels, up from 9,491 million bushels in 2002/03. This year-to- year increase stems from increases in feed and residual use, food, seed, and industrial use (FSI), and exports. Feed and residual use is projected at 5,800 million bushels, up from 5,558 million a year earlier. Corn exports are projected to increase from last year’s low levels to 2,000 million bushels in 2003/04. This is the highest level of U.S. corn exports since 1995/96. Reduced competition in global markets, notably from China, is behind this year-to-year change in exports. Food, seed, and industrial use is projected at a record 2,555 million bushels, up from 2,340 million bushels in 2002/03. Record ethanol production is behind this year-to-year increase. Corn Prices To Rise for Fourth Straight Year With utilization rising faster than supply, ending stocks are projected to decline 231 million bushels to 856 million. These are the lowest ending stocks since 1995/96. The stocks-to-use ratio is 8.3 percent. These tight stocks have led to higher prices. The 2003/04 season-average farm price is projected at $2.45-$2.65 per bushel, up from $2.32 the previous year. This would be the fourth straight price increase. The benchmark Central Illinois cash corn price was $2.89 per bushel in March 2004, the largest price since March 1997 and $0.58 above the previous March. National corn prices have averaged $2.38 per bushel from September 2003 to March 2004, up from $2.34 per bushel for the same period a year earlier. Prospective Corn Plantings Up Fractionally in 2004/05 In March, producers indicated that they intended to plant 79 million corn acres in 2004, up fractionally from both 2002 and 2003. Many States, especially in the Southeast and southern Great Plains, are expected to decrease their corn plantings in favor of soybeans and cotton due to more favorable prices relative to corn at the time when the survey was conducted. Farmers intend to plant 46 percent of their corn acreage with varieties developed using biotechnology, up 6 percentage points from 2003. There are no biotech varieties of sorghum, barley, or oats. If the 2004 biotech corn plantings intentions are realized: * 27 percent of corn acreage will be planted with varieties containing bacillus thuringiensis (Bt), up 2 percentage points from last year, * 14 percent of corn acreage will be planted with herbicide-resistant varieties developed using biotechnology, up 3 percentage points from 2003, * corn varieties containing both insect and herbicide resistance will be planted on 5 percent of the acreage, up 1 percentage point from the previous year. Sorghum Sorghum Prices Rise for Fourth Straight Year Sorghum production in 2003/04 rebounded from last year’s drought, however, it was still relatively low by historical standards. Increased supplies were partially offset by higher use, and ending stocks are forecast to increase slightly. Following the tightness of the corn market, sorghum prices are forecast to be the highest in 8 years. Sorghum Production Increases 14 Percent in 2003/04 The 2003/04 sorghum crop is 411 million bushels, up from 361 million the previous year. Increased harvested area and yield are behind this year-to-year change. However, the 2002/03 crop had serious weather problems. Sorghum yields were up 2 bushels per acre to 52.7 bushels per acre, but these are still low by historical standards. The 5-year yield average is 61.7 bushels per acre. Harvested area in 2003/04 was 7.8 million acres, up from 7.1 million the previous year. Beginning stocks were 43 million bushels and total 2003/04 supply is 454 million bushels. Although supplies are up from the previous year, they are still relatively low. Kansas and Texas are the largest sorghum-producing States. Sorghum tends to be grown in drier areas because it can handle heat and drought stress better than corn. However, corn has expanded outside of the traditional Cornbelt. Better corn hybrids, increased corn yields relative to sorghum yields, and increased planting flexibility stemming from changes in farm legislation are behind this production shift. Seventeen of the 24 sorghum-producing States followed by the National Agricultural Statistics NASS) showed higher yields in 2003/04. But, dry conditions hindered Kansas yields, which are unchanged from the previous year. Yields in Texas were 54 bushels per acre, up 3 bushels per acre from the previous year. Harvested sorghum area was 5.75 million acres in both Texas and Kansas. This is down 200,000 acres from 2002/03. Total Use Projected at 410 Million Bushels Total sorghum utilization is projected at 410 million bushels, up from 379 in 2002/03. The bulk of this year-to-year increase came from higher exports, which went from 186 million bushels in 2002/03 to 210 million bushels. Mexico is by far the most important destination for U.S. sorghum, followed by Japan. Over the first-half of the marketing year (for which data are available) total sorghum exports were 2.8 million tons; Mexico and Japan accounted for 42 percent and 28 percent of this total. Food, seed, and industrial use is forecast to increase 1 million bushels in 2003/04 to 25 million bushels. Ethanol is the primary FSI category for sorghum, and ethanol production increased significantly in 2003/04. Corn is the dominant starch source used in U.S. ethanol plants, but sorghum is the main grain used in some plants, particularly in sorghum production regions. Some plants use either corn or sorghum depending on price and availability of each. Feed and residual use increased nearly 6 million bushels to 175 million. Ending stocks in 2003/04 are forecast at 44.3 million bushels, up from 43.1 million bushels a year earlier. The stocks- to-use ratio is projected to be 10.8 percent in 2003/04 compared with 11.4 percent a year earlier. Sorghum Prices Highest in 8 Years The season average sorghum price for 2003/04 is forecast at $2.45-$2.65 per bushel, compared with $2.32 per bushel a year earlier. These are the highest sorghum prices since 1995. Traditionally sorghum prices average 92-93 percent of the corn price, but this is an unsteady relationship. The 2003/04 season average sorghum price is the same as the 2003/04 season average corn price. Strong sorghum export markets, particularly to Mexico, are behind the relatively high sorghum prices as compared with corn. Sorghum Acres Projected To Decline in 2004/05 Sorghum area has 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 land in Texas. Plantings in 2002/03 increased 565,000 acres due to a drought. The bulk of this increase came from sorghum being planted on failed Texas wheat land. According to the 2004 Prospective Plantings report, growers intend to plant 8.60 million acres, down 9 percent from last year. This would be the lowest sorghum planted area in modern times. The largest year-over-year declines are expected to be in Texas and Kansas. In Texas, the intended sorghum area of 2.80 million acres is down 12 percent from the previous year. Kansas producers intend to plant 3.40 million acres, down 4 percent from 2003. Barley Barley Stocks Rise in 2003/04 Barley production in 2003/04 is up from last year’s drought, but utilization dropped for the third straight year. The change in utilization stems from a 5-million-bushel decrease in exports. Tightness in the feed grain complex, as well as a larger share of barley being used as malt, led to a price increase in 2003/04. Barley production in 2003/04 was 276 million bushels, up from 227 million bushels from the previous year. The 2003/04 crop is still below the 5-year average of 285.3 million bushels, which includes two crops that had significant drought problems. In general, there was favorable weather across the northern Great Plains and western barley-growing region. The year-to-year production increase stems from higher average yields and larger harvested area, especially in North Dakota. Harvested area in 2003/04 is 4.7 million acres, up from 4.1 million in the previous year. Yield increased from 55 bushels per acre in 2002/03 to 58.9 bushels per acre. The ratio of harvested to planted area is 88.4 percent, up from 82.3 percent in 2002/03. Beginning 2003/04 stocks were 69.3 million bushels, down from 92.1 million bushels. These low beginning stocks were caused by the 2002/03 drought. Imports in 2003/04 are 15 million bushels, down from 18 million a year earlier and the lowest since 1992. Total 2003/04 barley supply is 360 million bushels, up from 337 million bushels the previous year. Favorable weather at planting time gave the 2003/04 barley crop an early start in the northern Great Plains. These favorable conditions persisted during crop development. In mid-August, harvest progress in the five major barley-producing States was 60 percent, well ahead of the normal pace. The crop condition at that time was rated at 55 percent good to excellent, 14 percentage points more than the same period in the previous year. The Minnesota and North Dakota crops had the best conditions at 82 and 75 percent good to excellent, respectively. The crop did not fare as well in Montana and Washington, where 33 and 19 percent of the crop was rated good to excellent, respectively. In Montana, unusually hot weather in July and August led some farmers to cut their barley for hay. Total Utilization Drops for Third Straight Year Total use is forecast at 262 million bushels, down from 268 million bushels in 2002/03 and the lowest in decades. The bulk of this year-to-year decline stems from a 5-million-bushel drop in exports, which are now forecast to be 25 million bushels. These are the lowest exports since 1985. Feed and residual use is forecast at 65 million bushels in 2003/04, up fractionally from the previous year. Feed and residual use has been declining steadily throughout the 1990s. Food, seed, and industrial use is forecast at 172 million bushels in 2003/04. Barley used for malt production is the main element of FSI. Barley ending stocks for 2003/04 are forecasted at 98 million bushels, up from 69 million bushels a year earlier. The stocks- to-use ratio is 37.6 percent, up nearly 12 percentage points from 2002/03. This is the highest barley stocks-to-use ratio since 1998. Despite the larger stocks-to-use ratio, barley prices are up in 2003/04 due to tightening supplies of other feed grains (especially corn), and an increase in malt use in 2003/04. Barley Prices To Rise in 2003/04 The 2003/04 season average barley price is forecast at $2.80- $2.90 per bushel, up from $2.72 the previous year. From June 2003 through February 2004, the simple average of feed barley was $2.28 per bushel, compared with $2.12 for the same period a year earlier; the simple average price for malting barley was $3.09 per bushel in 2003/04 compared with $2.91 per bushel in 2002/03. The spread between malting and feed barley has averaged $0.80 so far this year, slightly above the spread from 2002/03. Barley Plantings Expected Lower in 2004 According the 2004 Prospective Plantings report, barley growers intend to plant 4.68 million acres for 2004, down 12 percent from a year earlier. If this is realized it will be the lowest planted area on record and follows a long-term decline that goes back to the 1960s. North Dakota’s expected 2004/05 acreage, at 1.80 million, is also 12 percent below a year earlier. Producers in Montana intend to plant 950,000 acres, down 14 percent from 2003 and the fewest since 1953. Idaho’s intended acreage, at 700,000, is down 7 percent from 2003, while Washington’s expected 290,000 acres is the fewest since 1974. Many Minnesota growers are planning to switch to corn or soybeans, and their intended barley acreage is down 42 percent, to 110,000 acres. Oats Total Oats Supply Up in 2003/04 Oats production in 2003/04 rebounded from last year’s drought, but utilization is down slightly. Ending stocks are forecast to rise nearly 15 million bushels, but are still relatively low by historical standards, and prices are down. Total oats supply is forecast at 284 million bushels, up from 274 million bushels in 2002/03. A recovery from the drought conditions of 2002/03 is the main factor behind this year-over- year change. Both harvested area and yield are up in 2003/04. Harvested area in 2003/04 is 2.2 million acres. Yield is forecast at 65 bushels per acre, up from 56.4 bushels per acre in 2002/03 and the second largest on record. Oats production in 2003/04 is estimated at 145 million bushels, up from 116 million a year earlier. Beginning stocks were 50 million bushels in 2003/04, down from 63 million bushels a year earlier. Imports in 2003/04 were forecast at 90 million bushels, down from 95 million bushels in 2002/03 and the lowest since 1995/96. This change is due to tight supplies in Canada and the European Union, which are the major suppliers in the United States. Wet conditions delayed planting during early April 2003 in the Corn Belt and Ohio Valley. However, planting gained momentum at the end of the month. A series of May thunderstorms in the Plains, Midwest, and East enhanced soil moisture for the emerging crop, while delaying planting of the late crop in the Ohio Valley. By mid-May, planting was nearing completion in all States except North Dakota, Pennsylvania, and Wisconsin, where planting progressed behind the 5-year average. Harvest began around mid-July in all areas except Minnesota, North Dakota, and Wisconsin. Progress was slow during the remainder of the month, with the northern Corn Belt slightly behind average and harvest of the late crop in the Ohio Valley well behind average by months end. Harvest continued in August with few delays. By the end of the month, harvest in all States except Pennsylvania advanced to near normal levels. On September 2, harvest was 97 percent complete, slightly ahead of the 5-year average of 94 percent. Total Utilization Projected at 220 Million Bushels Total 2003/04 utilization is projected at 220 million bushels, down 4.5 million bushels from the previous year and the lowest on record. The year-to-year decline stems from a drop in feed and residual use from 150 million bushels in 2002/03 to 145 million bushels. Exports also declined in 2003/04 and are currently forecast at 2 million bushels. Partially offsetting these decreases is a 1-million-bushel increase in food, seed, and industrial use, which is now forecast at 73 million bushels. Ending 2003/04 stocks are forecast to be 64 million bushels, up from 50 million the previous year. The stocks-to-use ratio is expected to be 29.3 percent in 2003/04, up from 22.2 percent a year earlier and the largest since 1999/2000. Prices Decline in 2003/04 Average oats prices received by farmers in 2003/04 are expected to be $1.45-$1.50 per bushel, down from $1.81 a year earlier. Although year-over-year prices are down sharply, they are still above the 5-year of $1.34 per bushel. Prospective Plantings Down in 2004 On March 1, 2004, farmers indicated that they intend to plant 4.31 million oats acres, down 6 percent from a year earlier and the lowest on record; farmers intend to harvest 2.07 million of those acres, down 7 percent from 2003. States in the Great Plains, Mississippi Valley, and central Rocky Mountains expect to plant fewer acres compared with last year. Harvested area in North Dakota, Minnesota, and South Dakota are expected to decline 17 percent, 25 percent, and 4 percent, respectively from 2003/04. Harvested area in Wisconsin is expected to increase 4 percent in 2004/05. Hay Hay Production Increases in 2003 Hay production in 2003 and hay stocks (as of December 1, 2003) are both up. Prices for all hay are down in 2003/04, led by declines in alfalfa hay prices. Stocks of all hay on farms totaled 111 million tons on December 1, 2003, up 7 percent from the previous year. Thirty of the 48 reporting States had higher hay stocks than a year earlier. Most of the States reporting an increase in stocks compared with last year were located in the northern and central Rocky Mountains, northern and central Great Plains, eastern Corn Belt, Ohio Valley, and the Southeast. Stocks were significantly higher in Virginia and North Carolina due to a sharp increase in production during 2003. Roughage consuming animal units (RCAU) in 2003/04 are estimated at 70.7 million, down from 72 million a year earlier. Hay stocks on farms on December 1, 2003 were 1.56 tons per RCAU, compared with 1.43 tons per RCAU a year earlier. Hay production for 2003 is estimated at 157 million tons, up 4 percent from the 2002 total. Acreage harvested in 2003/04 is 63.3 million acres, down from 64.5 million acres a year earlier. Average 2003/04 yield is 2.48 tons per acre, up 0.14 ton from the previous year. Texas is by far the largest producer of all hay in 2003, with production of 12.4 million tons, down from 13.9 million tons a year earlier. California, Missouri, and Nebraska are the second, third, and fourth largest hay producers in 2003/04. Alfalfa hay production in 2003 totaled 76.3 million tons, up 3 percent from a year earlier. This year-to-year change stems from increases in harvested area and yield. Harvested area is estimated at 23.6 million acres, up 2 percent from the previous year. Yields averaged 3.24 tons per acre, up 0.05 ton from 2002. California continues to be the largest alfalfa-producing State, followed by Nebraska, South Dakota, and Iowa. Growers seeded 3.1 million acres of alfalfa and alfalfa mixtures during 2003, down from 3.3 million acres a year earlier. 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. Production of all other hay in 2003 totaled 80.8 million tons, up 5 percent from a year earlier. Record yields, estimated at 2.03 tons per acre, are behind this year-to-year change. Harvested area is estimated at 39.8 million acres, down 4 percent from a year earlier. A large reduction in haying of Conservation Reserve Program acreage contributed to fewer acres harvested. Growing conditions were more favorable than 2002 in the northern and central Great Plains. Abundant rainfall in the Ohio Valley and along the Atlantic Coast contributed to higher yields than last year. In contrast, Minnesota and Wisconsin experienced dry conditions later in the growing season which resulted in lower yields. 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). Wisconsin is by far the largest haylage and greenchop producer of the eight reporting States, and on a forage basis, Wisconsin becomes the largest all hay and alfalfa hay producing State. Corn silage production for 2003/04 is estimated at 106 million tons, up 1 percent from a year earlier. This year-to-year change is caused by improved yields, which were partially offset by lower harvested area. Corn silage area decreased due to better growing conditions in many States causing more acres to be harvested for grain and fewer acres cut for silage. Corn silage yields in 2003 were 16.2 tons per acre, up 2.2 tons per acre from a year earlier. Sorghum silage production is estimated at 3.55 million tons, up 6 percent from 2002. Area cut for sorghum silage in 2003/04 is estimated at 343,000 acres, down 3 percent from the previous year. Sorghum silage yields averaged 10.4 tons per acre in 2003/04, up 0.9 ton per acre from last year. All hay prices received by farmers during May-February 2003/04 averaged $85.67/ton, down from $93.27/ton in the same period a year earlier. The season average farm price for all hay in the May-April 2002/03 marketing year was $92.40/ton, down from $96.50 in the previous marketing year. Alfalfa hay prices received by farmers averaged $90.46/ton during the period from May to February, down from $100.67 for the same period in 2002/03. The 2002/03 season average alfalfa farm price was $100/ton compared with $104/ton in the previous marketing year. Hay other than alfalfa had a weighted season average price in 2002/03 of $73.80/ton compared with $73.30/ton in the previous marketing year. In the first 10 months of the 2003/04 marketing year, the simple average was $72.91/ton compared with $75.29 in the first 10 months of the previous marketing year. Prospective Harvested Acreage The March Prospective Plantings report indicated that producers expect to harvest 63.7 million acres of all hay in 2004, up 1 percent from a year earlier. Adequate soil moisture in most of Texas, lower Mississippi Delta, and Great Lakes States enhanced producers’ expectations to harvest more hay. Extreme dry conditions have left soil moisture very short, and water supplies are expected to be inadequate in the central Great Plains and central Rocky Mountains, which decreased harvest intentions. Reduced water availability in California has also lowered expected hay acreage in 2004. Feed and Residual Use Feed and Residual Use To Increase Feed and residual use is expected to be up from last year because of increases in animal numbers. More cattle on feed and larger pig crops are expected to increase feed needs. Feed and residual use of the four feed grains plus wheat in September-August 2003/04 is expected to be up 3 percent from the 156 million tons used in September-August 2002/03. Corn is expected to represent 92 percent of feed and residual use in 2003/04, up nearly 1 percent from 2002/03. The index of grain consuming animal units (GCAU) for 2003/04 is estimated to be up 1 percent from 2002/03's 89 million. The grain used per GCAU in 2003/04 is 1.78 tons, compared with 2002/03's 1.76 tons. In the index components, GCAU for cattle on feed, hogs, broilers, and layers are up from the previous year, but dairy and turkeys, are down. Dairy cows on January 1, 2004, totaled 9.0 million head, down 151,000 head from 2003. Dairy cow numbers are expected to decline slightly as the year progresses. With slower growth in output per cow, milk production in 2004 is expected to be about 169.9 billion pounds, down from 170.4 billion in 2003. Thus, feed use by the dairy industry will weaken. Feed needs by the cattle-on-feed sector are expected to be fairly strong, even as beef production in 2004 is forecast down 4 percent from 2003. The numbers of cattle on feed on January 1, 2004, totaled 13.8 million head, up from 13.2 million the previous year but are expected to average below a year earlier by mid-year. Numbers of fed cattle slaughtered are expected to be down but weights are expected to rise year-to-year this spring and summer. Broiler production in 2004 is expected to increase 1.3 billion pounds from 2003, as producers increase production. Cumulative placements (an indication of future flock size) in broiler hatchery supply flocks have been increasing in 2004, and cumulative placements will be 3 percent higher by next fall than a year earlier. Broiler prices were up 6.4 cents per pound in 2003 compared with 2002, and are expected to be up 8 to 11 cents in 2004. Egg producers are expected to produce 7.3 billion dozen eggs in 2004, up 1 percent from 2003. Wholesale egg prices in 2004 are expected to be up 16 to 21 cents from 2003’s 87.9 cents per dozen. In 2004, turkey production is forecast at 5.525 billion pounds, down from the 5.65 billion produced in 2003. Overall, feed demand by the poultry sector is expected to remain strong. Pork production in 2004 is expected to be up 2 percent from the 20 billion pounds produced in 2003. 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 2004 by 1 percent relative to the prior year, and in June-August 2004 by 2 percent. Pig crops were up relative to the year earlier in September-November 2003 and in December 2003-February 2004 and are expected to boost pork production in 2004. The forecast increase in pork production suggests feed needs for the pork sector will be strong in 2003/04. Food, Seed, and Industrial Use of Corn Food, Seed, and Industrial Uses of Corn To Increase in 2003/04 Food, seed, and industrial (FSI) use of corn is expected to rise 9 percent from a year earlier in 2002/03. Corn used for ethanol will post the largest increase. Corn FSI use in 2003/04 is expected to total 2,555 million bushels, up from 2,340 million in 2002/03. FSI use would represent 25 percent of total corn use, unchanged from 2002/03 and up 4 percentage points from 2001/02. Corn use in 2003/04 is expected to be up for all use categories. Corn used to make ethanol for all of 2003/04 is forecast at 1.195 billion bushels, up 20 percent from 2002/03. Monthly ethanol production reported by the Department of Energy (DOE) was higher than the previous month, measured in barrels per day, setting record highs in November 2003-January 2004 as new plants came on stream. The refining industry geared up for the complete conversion from methy tertiary butyl ether (MTBE) to ethanol in California by January 2004 plus New York and Connecticut. The California ban on using MTBE was delayed from January 2003 but many of the California gasoline producers had conversion plans underway prior to the announced delay, and used ethanol before the required date. This ethanol production reflects higher use of capacity and the new plants that have been added in response to strong demand and State-level ethanol production incentives as well as a Federal Bioenergy Program. Stocks in January of ethanol also reported by DOE were down 22 percent from their record high in March 2003 of 284.87 million gallons. With the conversion to ethanol by these three States, free stocks of ethanol are down and prices have risen in line with soaring gasoline prices. Although the cost of corn, the main feedstock for ethanol, has been rising sharply, strong ethanol prices and rising co-product prices have kept pace or in many cases increased more. Prices of co-products such as corn gluten feed and meal, corn oil, and distillers’ grains, have been lifted by the soaring market for protein meal and vegetable oil, as well as higher grain prices. This has kept economic incentives for ethanol producers favorable. High ethanol prices and the increasing size of the U.S. market have recently spurred increased interest in imports. Ethanol imports are constrained by a 54-cent-per-gallon tariff, but spot prices were high enough in the spring of 2004 to offset the effects of the tariff. Trade data through February 2004 show no increase in imports, but there have been reports that more imports are planned this summer. Brazil is reportedly investing in ethanol export infrastructure and is supporting a new ethanol futures contract on the New York Board of Trade to facilitate trade expansion. In addition to imports with the tariff, ethanol can be imported duty free from qualifying Central American and Caribbean countries under the Caribbean Basin Initiative (CBI). Potential imports of ethanol produced from regional feedstocks are negligible due to the region's tiny production capacity. However, the CBI also allows duty-free imports of ethanol reprocessed in the region of up to 7 percent of the U.S. ethanol market. This provides an indirect route for ethanol from Brazil, the world's largest producer. With the phenomenal growth in the U.S. market, this 7-percent window is increasing significantly. Thus, the continuation of high ethanol prices that is expected if gasoline prices remain strong could lead to increasing imports. Corn used for high fructose corn syrup (HFCS) in 2003/04 is projected at 535 million bushels, up barely 1 percent from 2002/03. HFCS is primarily used in soft drinks. Although sales have continued to expand, the rate of growth has slowed recently as consumers use more bottled water and other beverage alternatives. Currently, efforts are being made to encourage U.S. consumers to exercise more and limit calories to reduce obesity. New popular diets stress low carbohydrates and sugars. These efforts have not yet lowered total use, but because exports have been down, domestic use accounts for all of the growth. Estimated corn used for HFCS exports were down 5 percent in September 2003- January 2004 relative to the similar period a year earlier. In September 2003-January 2004, exports to Mexico and Canada were both down nearly 10 percent from the same period a year earlier. In September 2002-August 2003, shipments to Mexico were down 81 percent from 2001/02 because of a trade dispute with Mexico. In 2003/04, corn used to make glucose and dextrose is forecast to increase from the 219-million-bushels used in 2002/03, which was up slightly from the year before. In the first 6 months of the marketing year, corn used to produce glucose and dextrose was up 4.7 percent from last year. In 2003/04, corn used in starch production is expected to be up nearly 2 percent from the 256-million-bushels used in 2002/03. Use was up nearly 4 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. Beverage and manufacturing alcohol production in 2003/04 is expected to use 132 million bushels of corn, up 1 million from 2002/03. World Coarse Grain Outlook Foreign Coarse Grain Production Drops in 2003/04, Stocks To Plummet World coarse grain production is expected to increase 2 percent in 2003/04, supported by a record U.S. corn crop. However, foreign coarse grain production is forecast down 2 percent because drought devastated production across most of the EU, Eastern Europe, and parts of the former Soviet Union. Corn production in China is forecast down 6 percent as growing conditions were too dry in some parts of the Northeast while a cool misty summer limited corn growth in the North China Plain. Global coarse grains beginning stocks were the lowest since 1983/84, reducing 2003/04 supplies. World coarse grain consumption in 2003/04 is expected to grow nearly 4 percent, partly because of reduced supplies of lower quality wheat used for feeding, improving economic growth in several regions, and population growth. Moreover, global consumption is forecast to remain much larger than production, dropping world ending stocks 43 million tons to 102 million, the smallest since 1975/76. Foreign Coarse Grain Production Declines in 2003/04 Foreign (world less the United States) coarse grain production, 616 million tons in 2003/04, is down 2 percent from a year ago. Foreign corn production is dropping 5 percent, despite a small increase in area because of lower yields in Europe, China, and South America. While foreign production of barley, oats, and sorghum increased modestly, rye production imploded, dropping over 30 percent. China’s coarse grain production (mostly corn) in 2003/04 declined 7 million tons to 123 million. Corn area declined slightly as prices in China favored soybeans. Growing conditions were a mixed bag, with parts of northeast China too dry, and much of the North China Plain too cool, misty, and overcast during the crucial summer growth stages for optimal corn yields. Average corn yields declined 3 percent, but were not disastrously low, still being higher than 4 of the previous 10 years. China’s barley and sorghum production, while small compared with corn, increased as prices were high enough to increase area slightly, reversing the longer-term trend. The European Union’s (EU) coarse grain production is estimated down 13 million tons to 93 million. Winter barley and rye experienced much above average winter-kill. Moreover, summer crops faced widespread drought. Corn production dropped 22 percent to 31 million tons. Barley area increased, but yields dropped enough that production declined 1 million tons to 47 million. Oats production declined slightly as Scandinavian countries maintained area, but yields failed to reach year- earlier levels. Rye production plummeted 31 percent to 3 million tons, as policy reforms discouraged plantings, winter weather across Germany was unfavorably cold, and drought stretched through the spring and summer. Eastern Europe’s coarse grain production suffered from both the extreme winter-kill that devastated winter grains in the former Soviet Union, and the spring and summer drought that ruined summer crops in the EU. Coarse grain production in 2003/04 dropped 9 million tons to less than 42 million. Corn production, a victim of the spring and summer drought, dropped 6 million tons to 21 million. Barley production declined 1 million tons to 8 million, a second year of reduced production. Poland’s rye production dropped almost 1 million tons to 3 million, the lowest in over 40 years, as price and profitability concerns limited area planted, and winter-kill and drought were extensive. Coarse grain production in the former Soviet Union (excluding the Baltics) is estimated down 6 million tons to 55 million in 2003/04. Winter crops in parts of Russia and Ukraine were utterly devastated by winter-kill caused by a crusting of ice on the snow cover that lasted for many weeks, suffocating the plants beneath. However, some of the abandoned winter-grain area was reseeded to summer crops, especially corn and spring barley, limiting the reduction in coarse grains. Barley production declined 5 million tons to 29 million and rye production dropped 4 million to only 6 million. However, corn area expanded, and summer growing conditions in Ukraine and Southern Russia were reasonable, and the region produced its biggest corn crop since 1989/90, reaching over 11 million tons. South America’s coarse grain production in 2003/04 is expected to decline 6 million tons to 70 million. Production declined 3 million tons each in Brazil and Argentina. Drought during planting in western corn-growing regions of Argentina contributed to reduced area and yields. In Brazil, area is forecast nearly the same as a year earlier, but yields failed to reach that year’s record levels. While down from last year’s bin-buster, Brazil’s corn crop is still the second largest on record. Brazil’s sorghum production, while still very small compared with corn, is continuing to expand in the Center-West region. Rains were mostly favorable across much of the Middle East, boosting coarse grain production slightly to 16 million tons. Yields for the region are forecast at near-record levels, but area is less than in the previous decade when Saudi Arabia was subsidizing barley production. Turkey reduced producer support in 2003/04, and barley area is forecast to fall to the lowest level in over 10 years. However, this is more than offset by a record corn crop in Turkey as irrigated area expands. Australia’s 2003/04 coarse grain production is forecast to nearly double to a record 13 million tons as it rebounds from the previous year’s widespread, devastating drought. Prices were strong enough at planting to induce record-large area. Average yields are expected to be good, but less than the 2001/02 record. Barley production is estimated to more than double, reaching a record 8.5 million tons and sorghum production is forecast at a record 2.3 million. Mexico’s coarse grain production is forecast at a record of nearly 28 million tons in 2003/04. While the rainy season started late in some regions, when it came, rains were adequate. Area expanded and yields approached the previous year’s record. Corn production increased 1 million tons to 20 million, and sorghum production is expected to slightly exceed the previous year’s 6.3 million. Canada’s coarse grain production increased 6 million tons to 26 million as growing conditions were more favorable, especially for barley across the prairies. Barley production increased 5 million tons to 12 million. Corn production, concentrated in eastern Canada, also increased with strong yields, more than offsetting a decline in area. South Africa’s corn planting was delayed by below-normal rainfall, and corn prices at planting were not considered attractive, so area dropped. However, rains later in the season were mostly adequate, though some spots remained dry. Average yields are forecast at nearly the previous year’s level, but with area down sharply, corn production is expected to decline almost 2 million tons to 8 million. Elsewhere in Sub-Saharan Africa conditions have been, on average, more favorable and coarse grain production for the whole region is forecast nearly the same as the previous year at 69 million tons. Rains across North Africa were generally favorable, boosting the region’s coarse grain production more than 2 million tons to 12 million. Most of the increase is in barley. Egypt’s corn, with the largest share of the region’s production, is irrigated, and production is forecast up only slightly because reduced area offsets most of the expected yield growth. India had a favorable monsoon, and coarse grain production rebounded 9 million tons from the previous year’s depressed level, reaching 35 million. Corn area, yield, and production (15 million tons) are expected to reach record levels. 2003/04 Beginning Stocks the Lowest Since 1984/85 Global coarse grain beginning stocks in 2003/04 are estimated at 146 million tons, down 29 million from the previous year. This is the lowest carry-in stocks since 1984/85. Almost half 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 2003/04, at 46 million tons, while U.S. stocks were less than 31 million. Such large stocks are expensive to maintain, and in recent years China appears to be taking advantage of fairly strong international corn prices by liquidating burdensome stocks. Since China is in the process of reducing corn stocks, those stocks are an important part of available supply in 2003/04. Unfortunately, China does not publish grain stocks data, so the precise level of corn stocks is not known. Coarse grain 2003/04 beginning stocks for the rest of the world (world minus China and the United States) are estimated at 69 million tons, up 5 million from a year earlier, and the largest in 5 years. Coarse grain beginning stocks were up 4 million tons in Brazil following a record crop, and up slightly in the EU, former Soviet Union, and other countries with comparatively good production in 2002/03, but down in several others. Global Coarse Grain Consumption Forecast Up Significantly in 2003/04 World coarse grain consumption in 2003/04 is forecast at a record 935 million tons, up from 901 estimated for the previous year. Foreign coarse grain consumption is projected up 3 percent, while U.S. consumption is up over 5 percent. Foreign wheat feed use is forecast down 13 percent, to 95 million tons, with feed grains replacing some of the wheat. Income growth has been generally better this year in most countries, so some acceleration in the growth of meat consumption is expected. Population growth is also a factor boosting foreign coarse grain use. Increased production encourages use in some countries, while reduced production in other countries is a constraint. India’s coarse grain consumption in 2003/04 is forecast up 7 million tons, the largest foreign increase. This is a reversal of the previous year’s drop as production rebounds with a normal monsoon. While most coarse grains are used for human food, corn is being increasingly used by the expanding poultry industry. In China, economic growth remains robust, and meat production is growing. However, coarse grain use is expected to grow only 2 percent (3 million tons). The very dramatic rise in soybean meal use may be moderating the increases in corn use, as feed rations become more balanced and efficient. Consumption of feed grains in the former Soviet Union is expected to increase more than 4 million tons in 2003/04 as the poultry industry, and to a lesser extent, pork production expands. Increased production of corn and reduced supplies of feed wheat will drive increases in coarse grain use. Coarse grain consumption in Latin America (excluding Mexico) is expected to increase more than 1 million tons in 2003/04. In Brazil, the 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. In Mexico, consumption is forecast up 0.5 million tons to 36 million tons. This does not include U.S. shipments of cracked/kibbled corn. As permits to import corn (cupos) are limited, and sorghum is priced as a premium, feed compounders in Mexico are importing cracked corn. Imports of cracked corn are counted as a product instead of as grain, and do not count against the corn quota, and do not require cupos. They do not appear in the USDA corn supply and demand balance for Mexico, but do appear as U.S. feed and residual use in the U.S. corn supply and demand. In 2002/03 U.S. shipments of cracked corn to Mexico nearly tripled compared with the previous year, and exceeded 2.5 million tons corn equivalent. In 2003/04 growth has continued, but at a slower pace. For September through February cracked corn shipments to Mexico are up 14 percent. In North Africa, feed grain consumption is expected to increase in all countries except Egypt. Foreign exchange constraints and sluggish economic growth are expected to reduce Egypt’s corn consumption. In Canada and Australia, coarse grain consumption is expected to increase more than 1 million tons each. Production has rebounded for both. In Canada, BSE-related phytosanitary restrictions have limited beef exports, resulting in cattle being held instead of exported or slaughtered, contributing to some increase in feeding. EU coarse grain use is expected to increase 1 million tons to over 104 million. Supplies of feed wheat are down even more than coarse grains, increasing the use of coarse grains in feed rations. However, import restrictions are limiting the increase in coarse grains use. In Eastern Europe feed grain consumption is expected to decline nearly 3 million tons to 45 million because of reduced production. The Middle East, Sub-Saharan Africa, and much of East Asia (excluding China) are expected to have slowly increasing consumption of feed grains in 2003/04. However, in South Korea, feed grains use is expected to increase almost 1 million tons because of the reduced availability of feed-quality wheat and strong pork production. However, a small decline is expected in Japan. Dropping Global Coarse Grain Ending Stocks To Be Lowest Since 1975/76 World coarse grain stocks are projected to drop 43 million tons in 2003/04 to 102 million tons. Foreign coarse grain stocks are forecast down 38 million tons, of which China’s stocks are forecast down 23 million. Coarse grain stocks in the rest of the world are expected to decline nearly 16 million tons, a reduction of 23 percent. While the drop in coarse grain stocks in 2002/03 was a U.S. and China phenomenon, in 2003/04 the reduction is expected to be much more pervasive, reaching across many more countries. Projected global coarse grain ending stocks in 2003/04 are forecast to be the lowest since 1975/76, a time when use was about one-third less. China has been reducing corn stocks for several years. 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 has been uncertain. As long as corn stocks are perceived as burdensomely large, the incentive to export will remain. However, there is evidence that a turning point has occurred. As of mid- April 2004, Dalien corn prices were 20 percent higher than a year earlier. At the start of calendar year 2004, China severely limited the incentives that effectively subsidized corn exports, and China’s export sales of corn have been very limited. EU coarse grain ending stocks, mostly barley and rye, are expected to drop almost in half during 2003/04, falling below 10 million tons. Program reforms have eliminated price supports for rye and the burdensome rye intervention stocks are being liquidated. With reduced production and increased use, the European Commission has been able to liquidate intervention stocks this year by selling into the domestic market instead of using subsidies to export unwanted surpluses. In the former Soviet Union and Eastern Europe coarse grain stocks are expected to drop as reduced supplies of feed-quality wheat boosts demand for feed grains in the face of reduced production. Coarse grain stocks in each region are expected to be cut almost in half, a drop of 7 million tons in the former Soviet Union and almost 3 million for Eastern Europe. Canada and Australia are expected to increase coarse grain stocks in 2003/04 because of increased production. Global corn stocks are expected to account for most of the drop in coarse grain stocks during 2003/04, plummeting 35 million tons, but barley and rye stocks are also expected to sink. World barley stocks are projected down 6 million tons to 21 million, the lowest since 1995/96. Global 2003/04 rye ending stocks, at 4 million tons, are forecast at half the level of beginning stocks and are the lowest since 1996/97. World oats stocks are expected to be little changed in aggregate in 2003/04, with increases in North America offset by reductions in the former Soviet Union. Global sorghum stocks are expected to increase in 2003/04, mostly in Sub-Saharan Africa and China. World Coarse Grain Trade Outlook U.S. Corn Exports Up Sharply Due To Reduced Competition in 2003/04 U.S. corn exports for the October-September 2003/04 trade year are forecast at 51 million tons, up 24 percent from the previous year. Competition from Argentina and China is down, as well as from reduced supplies of competitively priced wheat for feeding. Corn exports from Eastern Europe are projected down 63 percent. However, corn exports from Brazil are expected to increase. High ocean freight rates and strong U.S. corn prices are expected to limit the increase in U.S. exports. Global Coarse Grain Trade Forecast Down Almost 3 Percent in 2003/04 World coarse grain trade in 2003/04 is projected at 102 million tons, down 3 million tons from a year earlier. Global corn trade is forecast virtually unchanged at 78 million tons. Barley trade is projected down 2 million tons to less than 15 million, and rye trade is expected down almost 1 million to less than 1 million tons, for both commodities the lowest in 6 years. While forecast oats trade is down slightly, sorghum trade is expected to increase. The region with the largest reduction in coarse grain imports forecast in 2003/04 is the Middle East, down 2.7 million tons. Saudi Arabia is expected to cut barley imports 2 million tons because of reduced supplies in exporting countries. The EU has drastically cut subsidized barley exports, and with reduced crops in Eastern Europe and the former Soviet Union, the availability of barley from the Black Sea Region is down. Turkey is expected to reduce coarse grain imports 1.1 million tons, mostly because of a bigger corn crop. However, Israel is importing more coarse grain, especially corn because of reduced availabilities of feed- quality wheat. Canada is expected to reduce coarse grain imports 2 million tons in 2003/04. Increased barley production in the Prairies and another large corn crop in Ontario are expected to provide more feed grains, limiting the need to import corn from the United States. Indonesia’s feed grain imports are projected down 0.5 million tons because of increased corn production and the dampening effect of avian influenza on feed demand. Egypt is expected to reduce coarse grain imports 0.4 million tons because of foreign exchange constraints. Mexico is expected to increase coarse grain imports 0.7 million tons to over 9.5 million. Corn imports are expected to increase 1 million tons to 6.3 million, but sorghum imports are expected to decline because of tight U.S. supplies, high prices, and competition from EU purchases. Mexico’s purchases of cracked corn are also expected to increase. South Korea’s coarse grain imports (mostly corn) are forecast up 0.8 million tons to over 9.7 million because of reduced competition with feed-quality wheat. The pork industry has provided strong demand. Coarse grain imports are expected to increase for the EU (up 0.8 million tons), Eastern Europe (up 0.7 million), and the former Soviet Union (up 0.4 million) because of reduced production. Japan is projected to import 0.6 million tons less coarse grains in 2003/04. However, at nearly 20 million tons, Japan remains by far the world’s largest importer. Competition for Corn Exports Much Reduced in 2003/04 China exported corn aggressively to start 2003/04, as exporters realized that export subsidies would be cut as 2004 began. Corn exports in December 2003 reached a record 3.3 million tons, but have dropped dramatically since. Officials have stated that corn exports will be limited to 2.5 million tons during calendar year 2004. China’s corn exports for 2003/04’s October-September trade year are forecast at 8 million tons, down sharply from 15.2 million the previous year. This leaves many Asian importers looking for a different source for corn during the second half of 2003/04. Some are turning to minor regional exporters such as India and Thailand because ocean freight rates boost prices from U.S. origins, but many are buying U.S. corn. Argentina is expected to be the second largest corn exporter in 2003/04, at 9 million tons, down 2.7 million from the previous year. Corn production is forecast down 3 million tons. The crop currently being harvested is expected to be marketed relatively quickly, as international corn prices are attractive. Brazil has emerged as a leading corn exporter, with 2003/04 exports projected to reach 5 million tons. Brazil has received a price premium in some markets for ‘GM-free’ corn. Brazil has found significant niche markets for its corn in the EU and among South Korea’s starch manufacturers. Strong domestic demand from growing poultry and pork production, and competition with soybeans for the use of port facilities will limit corn exports. Eastern Europe’s corn exports are forecast down 1.6 million tons to 0.9 million, mostly because of reduced corn production. South Africa is also expected to reduce corn exports slightly because of a smaller crop. World barley trade is forecast down 2 million tons to less than 15 million tons in 2003/04. EU barley exports are forecast down 4.6 million tons to 1.5 million. The European Commission has suspended weekly tenders for export subsidies. Reduced production and strong domestic demand for grain is expected to also reduce barley exports out of the former Soviet Union. Partly offsetting these export declines are increases for Australia and Canada, both countries having increased production. Australia’s barley exports in 2003/04 are expected to double, reaching 4.6 million tons. Canada’s exports are expected to expand from just 0.3 million tons a year ago to 2.0 million in 2003/04. Global sorghum trade is also expected to increase 0.5 million tons to 6.4 million in 2003/04. The United States, with tight supplies, is expected to increase exports 0.3 million tons, to 5.2 million. Australia, rebounding from drought, and Brazil, with increasing production, are expected to increase export shares. Mexico and Japan will remain the largest import markets, but the EU is expected to increase imports 0.7 million tons to 1.1 million as quirks in the way import duties are calculated result, during certain periods, in a much lower import duty for sorghum than for corn. Sorghum is all non-GMO, unlike corn, encouraging for some EU buyers. World rye trade is expected to drop nearly in half in 2003/04, failing to reach 1 million tons. The EU can move rye into domestic markets instead of exports because of tight domestic grain supplies. Supplies are also down in Eastern Europe and the former Soviet Union. Global oats trade is forecast down 8 percent to 1.9 million tons in 2003/04 (October-September) because of increased production in the United States, the dominant importer, and tight supplies in Canada and the EU. U.S. Corn Exports in 2003/04 Forecast Up 24 Percent in 2003/04 U.S. October-September 2003/04 corn exports are forecast at 51 million tons, up nearly 10 million tons from a year earlier. The U.S. share of world corn trade in 2003/04 is forecast at 65 percent, up from the exceptionally low 53 percent the previous year. But still much less than 5 years ago, when the U.S. share of global corn trade was above 75 percent. Shipments during the first months of 2003/04 are up sharply, and outstanding sales are also strong. According to the Bureau of Census, exports of corn during the first 5 months (October-February) totaled 20.5 million tons, down from 17.1 million a year ago. Grain Inspections data for March 2003 were 4.2 million tons, up from 3.1 million a year ago. Shipments for the first-half of the marketing year are up almost 20 percent. U.S. Export Sales, as of April 1, 2004, reports outstanding export sales of 9.1 million, up 66 percent from a year ago. Commitments (shipments plus outstanding sales) to the largest market, Japan, are up slightly. Canada has reduced purchases of U.S. corn. However, commitments to South Korea are up from just 0.2 million tons a year ago to 1.4 million for 2003/04. Egypt’s corn commitments are 2.7 million tons, more than double a year ago. Several countries, like Mexico, Israel, Syria, Morocco, Tunisia, Cuba, and Indonesia have purchased significantly more U.S. corn than at this time a year ago. U.S. sorghum exports in 2003/04 are forecast at 5.2 million tons, up 0.3 million from the previous year. High U.S. sorghum export prices relative to corn have limited sorghum exports. U.S. barley exports are forecast up slightly at 0.6 million tons (October- September). U.S. barley prices are relatively high, but some exports of feed barley to Saudi Arabia have occurred. 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 2003/04 are forecast up 10 million tons to 56.9 million tons.