FEED OUTLOOK March 12, 1997 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ FEED OUTLOOK is published monthly by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. FDS--0397. ------------------------------------------------------------------------------ HIGHLIGHTS o Corn Prices Rally Over Last Month o Hay Prices Continue To Strengthen o South Africa Corn Exports Trimmed NO CHANGES IN U.S. FEED GRAIN SUPPLY AND USE There were no changes in USDA forecasts this month, except for a slight increase in the farm price of oats. On the international side, there were numerous adjustments in foreign country production and trade forecasts, but the U.S. trade outlook was not changed. At the end of March, the quarterly Grain Stocks report will be released, along with Prospective Plantings for 1997. The former will provide useful benchmarks on the pace of disappearance for all the grains and available supplies for the remainder of the year. The latter will be the first indication of farmers' crop intentions for spring planting. Given the extremely tight supply situation for soybeans--similar to the situation for corn a year ago--the market will likely be very sensitive to planting intentions. UPDATE ON FOOD, SEED, AND INDUSTRIAL USE OF CORN No changes were made in forecast use this month. The good news for the corn sector was an increase in ethanol production reported for the month of January. Production in January 1997 was up 3 percent from December 1996, but still down 8 percent from January 1996. The bad news is that stocks of ethanol increased at the end of January, up 14 percent from December 1996, and up 20 percent from the end of January 1996. Since we are nearing the end of the winter oxygenate season, stocks would be expected to decline. With MTBE prices presently strong, blenders may be encouraged to use ethanol to raise octane levels as well as oxygen content. Preliminary data indicate corn sweetener production in December through February may be slightly less than expected. However, since much of the corn sweeteners are used in soft drinks, output will likely increase as the weather warms in the spring. CORN PRICES RALLY FROM MID-FEBRUARY Futures prices for corn increased sharply over the last month, rising from around $2.70 per bushel in mid-February to over $3.00 in early March. This was somewhat surprising because there was little if any significant news to change supply and demand fundamentals. Gains in soybean contracts were even more dramatic, however, and these contributed to raising corn prices, along with probable speculative buying. Cash prices have also risen in recent weeks. Central Illinois corn prices rose into the $2.90 range in early March, up from $2.66 in mid-February. There were no changes in farm price forecasts this month. The impact of recent price strength on the season average prices received by farmers hinges largely on how much grain has already been sold. On average, about 60 percent of the corn crop is marketed by the end of February, but many reports suggest sales to date have been lower this year. The preliminary farm price of corn was $2.69 per bushel in February, the same as the January price. Sorghum farm prices have also been fairly steady in recent months, with the February price of $2.26 per bushel unchanged from January. Relative to corn, the sorghum price remains weaker, running about 84 percent of the corn price. This is a sharp contrast to a year ago when sorghum prices were higher than those of corn. The decline reflects the large increase in sorghum supply. The preliminary all-barley farm price was $2.47 in February, down 6 cents from January and the lowest since July 1995. There are indications that a higher than average share of the crop will be sold for malting this year, but the premium of malting over feed barley has weakened recently. The forecast of the season average oats price was raised 5 cents this month to $1.90-2.00 per bushel. Oats prices have continued strong in recent months relative to the other feed grains, despite large imports. This possibly reflects the increasing share of oats that is used as a specialty crop. Rather than competing in all feed markets with corn and barley, high quality oats have a niche as a premium feed grain for horses, as well as being important as a food grain for breakfast cereals and other uses. HAY PRICES ON TRACK TO SET NEW RECORD The prices received by farmers for alfalfa and alfalfa hay mixtures were $115 per ton at mid-month February, up from $84.60 per ton last year and up from the January 1997 price of $106. Other hay prices in February were $80 per ton, up from $64.90 in 1996, but down from $80.10 in January 1997. Hay prices have been strong all during the 1996/97 May-April hay marketing year, mainly because adverse weather reduced the quantity and quality of the 1996 hay crop. In addition, in the first half of the year, shortages of feed grains raised demand for high quality hay. Last spring, dry weather in Texas, Oklahoma, and Kansas cut production and kept cattle off pastures, requiring supplemental feeding of carryover hay. The eastern Corn Belt had wet weather that kept farmers from harvesting high quality hay. Thus, alfalfa production in these areas was affected and prices have been strong, especially for high quality alfalfa hay. Summer rains led to improved grass hay production in Texas and Oklahoma. Hay stocks on December 1, 1996, were down 4 percent from a year earlier, with the biggest declines in the eastern Corn Belt and Lake States, where stocks were down 15 percent. Calculating U.S. stocks on December 1 vs. the number of cows that have calved, gives a decline in hay per cow of 1 percent relative to a year earlier. Hay stocks per cow in the eastern Corn Belt and Lake States were down 12 percent. Many cattle producers likely supplemented hay supplies with additional silage. For example, using hay stocks plus silage production (since we don't have silage stock data) for the eastern Corn Belt and Lake States divided by cows that have calved resulted in supplies per cow being the same as in 1996. SOUTH AFRICA'S CORN PRODUCTION DOWN, EXPORT FORECAST REDUCED The forecast of 1996/97 world coarse grain trade is down 1.1 million tons this month to 88.2 million. Increased sorghum trade was more than offset by reduced corn and rye trade. EU rye exports and South Korea's rye imports are forecast 800,000 tons lower as the EU has subsidized less exports than expected, and used more domestically. In South Africa, where the crop is nearing maturity, projected corn production was reduced 1 million tons to 8.5 million. This reflects dryness during the later reproductive and filling stage in the southern part of the maize triangle (the major producing region). Further north, conditions were favorable. The forecast of 1996/97 (October/September) exports was lowered 500,000 tons. Crop prospects remain favorable for other major Southern Hemisphere corn producers. The forecast of Argentina's corn production, at a record 14.5 million tons, did not change this month, as generally very favorable conditions offset disease and dryness in some areas. Argentina's 1996/97 sorghum export forecast increased slightly, with Japan expected to import an increased share of sorghum and a lower share of corn. ****************************************************************************** Information Contacts: Pete Riley (202) 501-8512 * * Allen Baker (202) 219-0360 * * International Analysis: Edward Allen (202) 219-0831 * * Data Coordinator: Jenny Gonzales (202) 219-0704 * * The next Feed Outlook will be released on April 14, 1997. ****************************************************************************** NOTE: THE FEED YEARBOOK WILL BE RELEASED LATER THIS MONTH. THE SUMMARY WILL BE RELEASED MARCH 21. THE ELECTRONIC VERSION OF THE FULL REPORT WILL BE AVAILABLE A FEW DAYS LATER AND PRINTED VERSIONS WILL BE AVAILABLE ABOUT 2 WEEKS LATER. Table 1--Feed Grains: Marketing year supply and disappearance 1/ ------------------------------------------------------------------------------ Year/ Beg. Produc- Im- Supply FSI Feed & Ex- Total End. Farm Qtr. stocks tion ports resid. ports disp. stks. price ------------------------------------------------------------------------------ CORN ------------------------Million bushels--------------------- $/bu 1994/95 Sep-Nov 850 10,103 2 10,955 406 2,019 449 2,874 8,080 2.05 Dec-Feb 8,080 --- 4 8,084 406 1,497 590 2,493 5,592 2.18 Mar-May 5,592 --- 3 5,595 445 1,167 568 2,180 3,415 2.35 Jun-Aug 3,415 --- 1 3,416 434 854 570 1,858 1,558 2.59 Mkt. yr. 850 10,103 10 10,962 1,690 5,537 2,177 9,405 1,558 2.26 1995/96 Sep-Nov 1,558 7,374 4 8,935 409 1,760 660 2,830 6,106 2.80 Dec-Feb 6,106 --- 5 6,111 397 1,352 562 2,311 3,800 3.15 Mar-May 3,800 --- 5 3,805 411 1,066 610 2,087 1,718 3.76 Jun-Aug 1,718 --- 3 1,721 366 533 396 1,295 426 4.31 Mkt. yr.1,558 7,374 16 8,948 1,583 4,711 2,228 8,522 426 3.24 1996/97 Sep-Nov 426 9,293 3 9,723 386 1,945 487 2,817 6,906 2.96 Mkt. yr. 426 9,293 10 9,729 1,670 5,200 1,900 8,770 959 2.55-2.85 SORGHUM 1994/95 Sep-Nov 48 649 0 697 0 210 64 274 422 1.91 Dec-Feb 422 --- 0 422 1 80 61 142 281 2.02 Mar-May 281 --- 0 281 1 67 54 122 159 2.18 Jun-Aug 159 --- 0 159 1 43 43 87 72 2.64 Mkt. yr. 48 649 0 697 3 400 223 625 72 2.13 1995/96 Sep-Nov 72 460 0 532 1 176 54 231 301 2.36 Dec-Feb 301 --- 0 301 1 71 67 139 163 3.25 Mar-May 163 --- 0 163 1 55 36 92 70 3.94 Jun-Aug 70 --- 0 70 1 10 41 52 18 3.63 Mkt. yr. 72 460 0 532 4 312 198 514 18 3.19 1996/97 Sep-Nov 18 803 0 821 1 304 56 361 460 2.50 Mkt. yr. 18 803 0 821 4 525 225 754 67 2.20-2.50 ------------------------------------------------------------------------------ Table 1--Feed Grains: Marketing year supply and disappearance, (cont.) 1/ ------------------------------------------------------------------------------ Year/ Beg. Produc- Im- Supply FSI Feed & Ex- Total End. Farm Qtr. stocks tion ports resid. ports disp. stks. price ------------------------------------------------------------------------------ BARLEY ----------------------Million bushels--------------------- $/bu 1994/95 Jun-Aug 139 375 24 538 44 122 20 186 352 2.00 Sep-Nov 352 --- 14 366 36 32 19 87 279 1.98 Dec-Feb 279 --- 14 292 36 53 11 99 193 2.05 Mar-May 193 --- 14 207 51 27 17 95 113 2.15 Mkt. yr. 139 375 66 580 166 235 66 467 113 2.03 1995/96 Jun-Aug 113 360 12 484 42 113 17 172 313 2.53 Sep-Nov 313 --- 8 321 38 30 11 78 243 2.80 Dec-Feb 243 --- 8 251 34 19 20 73 178 3.18 Mar-May 178 --- 12 190 52 23 16 91 100 3.29 Mkt. yr. 113 360 41 513 166 185 62 413 100 2.89 1996/97 Jun-Aug 100 397 9 505 42 140 7 190 316 3.18 Sep-Nov 316 --- 8 324 38 26 12 76 248 2.73 Mkt. yr. 100 397 40 536 166 235 35 436 100 2.70-2.80 OATS 1994/95 Jun-Aug 106 229 20 355 32 103 0.2 135 220 1.19 Sep-Nov 220 --- 34 254 30 32 0.2 62 192 1.19 Dec-Feb 192 --- 23 215 28 38 0.4 66 149 1.21 Mar-May 149 --- 16 165 35 29 0.2 64 101 1.36 Mkt. yr. 106 229 93 428 124 202 1.0 327 101 1.22 1995/96 Jun-Aug 101 162 28 290 32 78 0.4 110 180 1.48 Sep-Nov 180 --- 26 206 30 23 0.5 53 153 1.52 Dec-Feb 153 --- 18 171 27 30 0.3 58 113 1.94 Mar-May 113 --- 9 122 34 21 0.8 56 66 2.21 Mkt. yr. 101 162 81 343 123 152 2.1 277 66 1.68 1996/97 Jun-Aug 66 155 6 228 31 63 1.0 95 133 2.08 Sep-Nov 133 --- 39 172 29 14 0.8 43 129 1.83 Mkt. yr. 66 155 100 322 120 120 3.0 243 79 1.90-2.00 ------------------------------------------------------------------------------ Totals may not add due to rounding. 1/ Corn and sorghum are on a September 1 to August 31 marketing year. Barley and oats are on a June 1 to May 31 marketing year. Table 2--Feed and residual use of wheat and coarse grains ------------------------------------------------------------------------------ Year Feed Total Animal Feed/ Beginning Corn Sorg. Barley Oats Grains Wheat grains Units animal September 1 unit ------------------------------------------------------------------------------ -------------Million metric tons -------------- Mil. Tons 1994/95 Sep-Nov 51.3 5.3 0.7 0.6 57.9 -0.8 57.1 Dec-Feb 38.0 2.0 1.2 0.6 41.8 0.7 42.5 Mar-May 29.6 1.7 0.6 0.5 32.4 -0.8 31.6 Jun-Aug 21.7 1.1 2.5 1.2 26.4 8.3 34.7 Mkt. yr. 140.6 10.2 4.91 2.8 158.5 7.4 166.0 84.3 1.97 % Change 17.8 -12.4 -19.4 -15.8 12.9 -22.4 10.6 0.4 10.2 1995/96 Sep-Nov 44.7 4.5 0.7 0.4 50.2 -2.7 47.5 Dec-Feb 34.3 1.8 0.4 0.5 37.1 0.3 37.4 Mar-May 27.1 1.4 0.5 0.3 29.3 -1.8 27.5 Jun-Aug 13.5 0.2 3.0 0.9 17.8 10.4 28.1 Mkt. yr. 119.7 7.9 4.6 2.1 134.4 6.2 140.6 85.2 1.65 % Change -14.9 -22.0 -5.9 -24.6 -15.3 -16.5 -15.3 1.1 -16.2 1996/97 Sep-Nov 49.4 7.7 0.6 0.3 58.0 -2.1 55.9 Mkt. yr. 132.1 13.3 4.1 2.2 151.8 6.6 158.4 86.0 1.84 % Change 10.4 68.4 -10.3 3.3 13.0 7.0 12.7 0.8 11.8 ------------------------------------------------------------------------------ Table 3--Grain shipments and rates ------------------------------------------------------------------------------ 1994/95 --------------1995/96----- --------1996/97-- Mkt. Yr. Mkt. Yr. Sept-Jan Jan Sept-Jan Jan ------------------------------------------------------------------------------ Barge shipments 1/ 3.1 4/ 3.7 3.9 2.4 NA 1.6 (Million ton/month) Barge rate index 2/ 160.8 151.8 196.5 196.2 130.1 131.8 (Dec 1990 = 100) Railcar loadings 3/ 28.5 28.2 29.0 27.7 23.7 24.3 (1,000 cars/week) Rail rate index 2/ 116.6 117.3 117.6 118.1 119.7 NA (Dec 1984 = 100) ------------------------------------------------------------------------------ 1/ Illinois & Mississippi rivers. Includes soybeans and all grains. Source: U.S. Army Corps of Engineers 2/ Source: Bureau of Labor Statistics 3/ Includes soybeans and all grains. Source: Association of American Railroads. 4/ 11-months average. NA = Not available. Table 4--Cash feed grain prices ------------------------------------------------------------------------------ Corn, Corn, Sorghum, Sorghum, Barley, Barley, Oats, No. 2, No. 2, No. 2, Yel No. 2, No. 2, No. 3 or No. 2, Yel, Yel, Texas Yel, feed, better, Heavy Ctrl. Gulf South Gulf Duluth Malting, white, IL ports Panhandle ports Minn. Minn. 1/ 1/ 1/ 1/ 2/ 2/ 2/ ------------------------------------------------------------------------------ Mkt. yr. $/bu $/bu $/cwt $/cwt $/bu $/bu $/bu 92/93 2.12 2.46 4.06 4.27 2.11 2.37 1.58 93/94 2.54 2.85 4.95 4.90 2.05 2.48 1.55 94/95 2.34 2.78 4.75 4.62 2.02 2.75 1.36 95/96 3.91 4.30 7.30 7.19 2.67 3.69 2.28 Monthly: 1995/96: Oct 3.12 3.57 6.15 6.22 2.58 3.69 2.11 Nov 3.23 3.63 6.26 6.38 2.98 4.02 2.63 Dec 3.36 3.76 6.55 6.93 2.92 3.98 2.50 Jan 3.53 4.00 6.75 7.05 2.94 4.00 2.40 1996/97: Oct 2.81 3.27 5.08 5.34 2.10 NQ 2.06 Nov 2.63 2.97 4.66 4.76 1.90 NQ 1.87 Dec 2.62 2.97 4.59 4.77 1.96 NQ 1.86 Jan 2.62 3.02 4.57 4.80 1.95 NQ 1.89 ------------------------------------------------------------------------------ 1/ Marketing year beginning September 1. NQ = No quote. 2/ Marketing year beginning June 1. Table 5--Selected feed and feed by-product prices ------------------------------------------------------------------------------ Soybean Cotton- Corn Corn Meat & Dists.' Wheat Alfalfa meal seed gluten gluten bone dried midlgs, farm 44% slv. meal, feed, meal, meal, grains, Kansas price Decatur, 41% slv. IL IL Central Lawrence- City IL Memphis pts. pts. U.S. burg, IN 1/ 1/ 1/ 1/ 1/ 1/ 1/ 2/ 3/ ------------------------------------------------------------------------------ ------------------------------$/ton---------------------------------- Mkt. yr. 92/93 180.80 159.22 95.95 284.60 220.93 122.84 69.69 78.20 93/94 181.82 168.36 88.62 286.61 206.81 123.79 81.51 89.30 94/95 151.77 112.64 82.77 221.95 170.51 106.70 65.04 92.10 95/96 217.27 186.12 116.47 319.35 222.07 151.37 118.08 88.20 Monthly: 1995/96: Oct 183.40 153.25 98.40 290.50 221.00 121.70 93.40 85.80 Nov 194.10 165.00 118.60 326.90 226.60 142.60 111.00 85.00 Dec 213.60 185.80 119.10 331.90 228.80 146.50 126.60 84.60 Jan 220.50 208.80 127.00 351.00 236.50 144.80 131.20 84.60 1996/97: Oct 238.00 183.25 102.30 344.00 272.10 160.80 103.20 98.20 Nov 242.70 196.60 97.50 340.00 261.70 145.00 100.70 100.00 Dec 240.90 224.50 99.50 342.50 272.00 143.10 113.00 102.00 Jan 240.70 207.20 100.25 336.25 262.90 144.00 103.10 106.00 ------------------------------------------------------------------------------ 1/ Marketing year beginning September 1. 2/ Marketing year beginning May 1. 3/ Includes monthly & marketing year revisions from 1994/95. Table 6--Corn: Food, and industrial uses ------------------------------------------------------------------------- Glucose ---Alcohol--- Cereals and Bev. & other Total Year HFCS dex. Starch Fuel & Mfg products F&I ------------------------------------------------------------------------- Million bushels 1994/95 Sep-Nov 104.6 58.8 57.3 134.4 21.2 29.4 405.8 Dec-Feb 100.5 51.5 55.0 141.5 27.9 29.1 405.5 Mar-May 123.8 58.4 56.2 137.7 24.2 29.7 430.1 Jun-Aug 135.6 62.3 57.3 119.1 26.7 29.7 430.8 Mkt year 464.6 231.1 225.7 532.8 100.0 118.0 1672.1 1995/96 Sep-Nov 110.1 60.7 55.8 121.1 32.3 29.4 409.4 Dec-Feb 105.1 52.9 51.5 120.8 37.5 29.1 396.9 Mar-May 130.8 60.7 54.9 91.8 25.0 29.7 393.1 Jun-Aug 136.2 62.8 57.0 61.9 15.5 29.7 363.2 Mkt year 482.2 237.0 219.3 395.7 110.4 118.0 1562.6 1996/97 Sep-Nov 115.1 57.4 55.0 100.7 27.4 29.9 385.5 Mkt year 515.0 240.0 225.0 440.0 110.0 120.0 1650.0 ------------------------------------------------------------------------------ Table 7--Wholesale corn milling product and by-product prices ------------------------------------------------------------------------------ Corn meal, Brewers' Sugar, HFCS, 42% Corn starch, yellow, grits, destrose, tank cars, fob Midwest New York Chicago Midwest Midwest 3/ ------------------------------------------------------------------------------ $/cwt $/cwt cents/lb cents/lb $/cwt Mkt. yr. 1/ 92/93 13.39 9.68 24.50 13.30 10.70 93/94 14.49 10.98 25.44 14.63 12.61 94/95 13.22 10.67 25.62 12.27 12.43 95/96 2/ 17.79 14.21 25.50 13.01 15.98 Monthly 1995/96: Nov 14.87 12.34 25.50 13.30 14.36 Dec 15.15 12.62 25.50 13.30 14.42 Jan 17.01 12.91 25.50 13.15 14.57 Feb 17.36 13.26 25.50 13.15 15.11 1996/97: Nov 16.78 12.70 25.50 13.15 13.58 Dec 16.18 12.08 25.50 13.15 12.95 Jan 16.38 12.28 25.50 13.15 12.89 Feb 2/ 16.58 12.48 25.50 13.15 12.77 ------------------------------------------------------------------------------ 1/ Marketing year beginning September 1. 2/ Preliminary. 3/ Bulk-industrial, unmodified. Table 8--U.S. feed grain exports by selected destinations 1/ ------------------------------------------------------------------------------ Country/region ------1994/95------ ------1995/96------ 1996/97 Mkt. yr. Sep-Dec Mkt. yr. Sep-Dec Sep-Dec ------------------------------------------------------------------------------ CORN --------------------Thousand tons--------------------- Japan 15,849 4,917 15,303 5,036 4,681 Taiwan 6,027 1,986 5,938 2,021 1,804 Former USSR 140 33 34 27 69 South Africa 187 0 347 163 0 Sub-Saharan Africa 449 160 321 178 23 EU 2,836 395 2,842 1,173 152 Egypt 2,569 822 2,167 905 856 Canada 1,096 361 808 290 357 China 3,240 36 2,207 2,152 53 East Europe 112 67 188 134 103 Algeria 1,000 601 522 211 318 S. Korea 8,005 1,991 8,285 2,942 2,714 Mexico 2,985 1,696 6,453 1,569 1,430 Others 10,723 3,566 11,077 4,628 4,585 Total 55,218 16,631 56,494 21,431 17,144 SORGHUM Mexico 2,557 973 1,759 565 777 Japan 2,050 866 1,617 677 806 Others 1,008 333 1,591 836 334 Total 5,615 2,171 4,968 2,078 1,917 ---------------------------------------------------------- ------1994/95--- ------1995/96------ 1996/97 Mkt. yr. June-Dec Mkt. yr. June-Dec June-Dec BARLEY ---------------------------------------------------------- Saudi Arabia 203 0 373 148 32 Israel 468 427 42 42 28 Jordan 51 51 0 0 50 Others 671 459 932 779 480 Total 1,392 936 1,347 969 590 ------------------------------------------------------------------------------ 1/ Totals may not add due to rounding. Source: Bureau of the Census Table 9--U.S. imports by country of origin ------------------------------------------------------------------------------ Country/region ------1994/95--- ------1995/96------ 1996/97 Mkt. yr. June-Dec Mkt. yr. June-Dec June-Dec ------------------------------------------------------------------------------ OATS --------------------Thousand tons--------------------- Canada 1,161 764 1,302 964 932 Finland 374 330 22 8 22 Sweden 70 26 62 62 34 Other 0 0 0 0 0 Total 1/ 1,605 1,120 1,387 1,034 987 BARLEY, MALTING Canada 715 457 740 449 352 Other 0 0 0 0 0 Total 1/ 716 457 740 449 352 BARLEY, OTHER 2/ Canada 702 457 141 91 100 Other 16 16 6 0 0 Total 1/ 719 473 147 91 100 ------------------------------------------------------------------------------ 1/ Totals may not add due to rounding. 2/ Mainly consists of barley for feeding, and also includes seed barley. Source: Bureau of the Census END_OF_FILE