USDA Outlook: Global coarse grain output forecast to rise 7.5% year-over-year to a record 1.228 billion tonnes in 2012/2013, driven by record U.S. corn yields; global barley production to increase 1.3% to 135.4 million tonnes
May 15, 2012
– The following article is excerpted from the May Feed Outlook published by the Economic Research Service of the USDA.
Global 2012/13 Coarse Grain Output Projected Up 7 Percent
World coarse grain production in 2012/13 is forecast up 85.6 million tons from the previous year to a record 1,228.0 million. Much of the increase is attributed to U.S. corn being boosted by the potent combination of expected record yields and a 75-year high in intended plantings. However, foreign producers are also expected to respond to the sustained high coarse grain prices of recent years with production projected up 19.5 million tons to a record 838.2 million. For most countries, trend yields are assumed because planting and growth have not progressed enough to justify a departure from trend. For some coarse grains, especially winter barley and rye planted in the Northern Hemisphere, yield forecasts are adjusted to account for favorable or unfavorable conditions. The average foreign yield for 2012/13 is lower than a year earlier for barley and oats, just slightly lower for corn, and increased for sorghum, mixed grain, millet, and rye.
Foreign coarse grain harvested area in 2012/13 is projected up 2 percent to 279.5 million hectares over 2011/12, as attractive prices around the world support expansion and a shift towards corn in many countries. However, by the time Southern Hemisphere countries plant, corn prices are expected to be lower, limiting the incentive to plant coarse grains, especially when compared with incentives to plant oilseeds. Foreign corn area is projected up 3.5 million hectares to 138.4 million year over year, barley area is forecast up 1.0 million to 50.0 million, sorghum is up 1.0 million to 37.5 million, and rye is up 0.2 million to 5.2 million. Over the same period, millet is reduced 0.5 million to 34.2 million, mixed grain is trimmed 0.3 million to 4.0 million, and oats stay nearly unchanged at 10.3 million.
The Biggest Foreign Producers Expect Record Corn Crops in 2012/13
Foreign corn production in 2012/13 is projected to reach a record 570.1 million tons, up 13.6 million tons from the year before. China is expected to produce a record corn crop of 193.0 million tons, as expanded area more than offsets a return to trend yields after the 2011/12 record. Corn prices and government support in China have been strong enough to increase corn area for 10 consecutive years to a record 34.0 million hectares in 2012/13. A return to normal growing conditions is expected to limit corn yields in China, keeping production growth to less than 1 percent.
Brazil, the second largest foreign corn producer at 67.0 million tons, is projected to match 2011/12 record corn production in 2012/13. By late in calendar year 2012, when Brazil is planting first-crop corn, prices are expected to favor soybeans over corn, and first-crop corn area is expected to decline. However, this decline will likely be more than offset by an increase in second-crop corn area following soybeans in states like Mato Grosso. While first-crop corn yields are expected to increase in 2012/13, following drought in some areas in 2011/12, that is expected to be more than offset by second-crop yields returning to trend levels following the 2011/12 record.
The EU is forecast to produce 63.1 million tons of corn in 2012/13, down 1.5 million year over year. While attractive corn prices will likely boost corn area 4 percent, yields are not expected to match the previous year’s record. Spain’s corn area may be reduced by insufficient water for irrigation in the South.
Corn production in Sub-Saharan Africa is projected up 2 percent in 2012/13 to 56.6 million tons. A return to trend yields in South Africa, the region’s largest producer, is expected to boost that country’s production 1.5 million tons to 13.0 million.
In Southeast Asia, corn production is expected to reach 30.0 million tons in 2012/13, up 3 percent over the previous year. Indonesia’s corn production is forecast down 2 percent to 8.5 million tons despite a small increase in area, as a return to trend yields implies a reduction from last year’s record high. Vietnam’s corn production is forecast up 7 percent to 5.3 million tons, and Thai corn production is projected to increase 5.0 percent to 4.5 million tons. For both countries, prices support a small area increase and trend yields imply another record high. Small increases in corn production are anticipated for Laos, Cambodia, and the Philippines in 2012/13.
Argentina is projected to have a record corn crop of 25.0 million tons in 2012/13, up 3.5 million over last year. While high soybean prices compared with corn prices and government policies are expected to combine to reduce corn harvested area 6 percent, a return to trend yields after drought increases yield prospects 23 percent.
Ukraine is expected to produce a record 24.0 million tons of corn in 2012/13, up 1.2 million over last year. Corn area harvested is forecast up 27 percent due to attractive corn prices and good returns to corn production for the last several years coupled with the replanting of failed winter crops (mostly wheat and rapeseed) with corn after unusually extensive winter-kill this year. However, a return to trend yields after last year’s record drops corn yield expectations 17 percent, limiting the production expansion.
India’s corn production is forecast up 3 percent in 2012/13 to 22.0 million tons over the previous year. While attractive corn prices are expected to boost area, corn yields are projected to nearly match those of the previous year, when monsoon rains were average.
Mexico is forecast to produce 21.0 million tons of corn in 2012/13, up 2.0 million from 2011/12, as area is expected to rebound 1.0 million hectares to 7.0 million. Lack of water in reservoirs in Sinaloa sharply reduced winter corn area in 2011/12, and some recovery in winter corn area is expected as reservoirs get replenished. Moreover, corn area for both main-crop and winter-crop in other regions is expected to expand, compensating for the incomplete recovery in Sinaloa.
Corn production in Canada is forecast up 18 percent to 12.6 million tons as planting intentions signal a sharp increase in area to a record 1.4 million hectares and trend yields provide a small increase. Good corn prices at planting and the development of short-season varieties combine to encourage corn area expansion both in the traditional regions of Eastern Canada, mostly Ontario, and also into the Prairie Provinces, especially Manitoba.
A Small Increase Expected for Global Barley Production
World barley production is projected to reach 135.4 million tons in 2012/13, up 1.7 million from a year earlier. Though a small producer, the United States accounts for more than half the increase in global output, as foreign barley production is up only 0.7 million tons to 131.0 million. Strong prices are expected to support barley area in many countries, but severe winter weather has limited production prospects in some countries.
EU barley production is forecast up 2.1 million tons to 53.6 million for 2012/13. Barley production potential dropped significantly due to winter drought in Spain and low temperatures with inadequate snow cover in parts of Poland, Germany, and into the Balkans. Even with higher-than-average winter losses, EU barley harvested area is projected up 4 percent year over year. The average yield for EU barley in 2012/13 is projected slightly better than in 2011/12 when extensive spring drought across France and other countries reduced production potential, but 7 percent less than the record in 2004/05.
Russia’s 2012/13 barley production is projected at 16.5 million tons, down 3 percent from 2011/12. Most barley in Russia is spring planted, and with planting ongoing, both area harvested and yield are projections. Area is expected to expand 3 percent based on attractive prices and the success of 2011/12 exports. However, a return to trend yields across Siberia, the Urals, and the Volga cuts projected yields 5 percent from a year earlier.
Canada’s barley production is forecast up 16 percent in 2012/13 to 9.0 million tons. Wet soils in 2011/12 affected barley planting intentions, but a dry winter has left 2012 planting conditions more open for expansion. Barley area in Canada is expected to expand 18 percent. Favorable prices and some barley producers’ enthusiasm for additional marketing opportunities with the end of the Canadian Wheat Board’s export monopoly support the area expansion. Trend yields imply a 2-percent reduction from 2011/12.
Australia’s barley production in 2012/13 is projected to reach 8.0 million tons, down 0.5 million from a year earlier. Planting moisture and the economics of small grains production, including wheat and barley prices and exchange rates, are not expected to be as favorable in 2012/13 as was the case a year earlier. Barley area is expected to decline 5 percent, with trend yield down slightly from a year ago.
Ukraine’s barley production in 2012/13 is forecast down 1.6 million tons to 7.5 million from a year earlier. Most barley in Ukraine is spring planted, and with extensive winter-kill in winter wheat and rapeseed, spring barley can compete for the large area to be resown to spring crops. However, prices favor corn and sunseed compared to barley, and barley area in 2012/13 is projected to decline 2 percent. A return to trend in 2012/13 drops barley yields 16 percent.
Turkey’s barley production is expected to decline 11 percent in 2012/13 to 6.25 million tons. Area is expected to increase 3 percent as producers’ prices are attractive, but there has been no significant trend in barley yields in recent decades, so a return to average yields implies a drop of 14 percent from yields of a year ago.
Argentina’s barley production is projected to reach a record 5.4 million tons, up 1.4 million tons in 2012/13. Argentina’s barley area is expected to expand by 33 percent, mostly because barley prices to producers are more attractive than winter wheat prices. Argentina maintains an export quota for wheat but not for barley, and the quota has been used to reduce the wheat price to producers compared to the export price. A return to trend yields in 2012/13 implies a small increase over 2011/12.
Morocco, though a relatively small barley producer, is expected to see production fall to only 1.1 million tons in 2012/13, a drop of over 50 percent year over year. Barley is grown as a winter crop in Morocco, and it has been devastated by drought, cutting yield prospects.
World Sorghum Production to Grow at Double Digits in2012/13
Global sorghum production in 2012/13 is forecast up 13 percent to 61.7 million tons. While U.S. production is up dramatically, foreign output is also increasing, up 4.1 million tons to 53.2 million. The largest producing region is Sub-Saharan Africa, where sorghum is projected to rebound to 23.4 million tons, up 1.6 million from 2011/12 when the monsoon rains fell to below average in many countries. With average rains projected for 2012/13, sorghum yields are expected to return to average. The largest increase is expected for Sudan, with production increasing 82 percent to 3.8 million tons. However, a return to trend yield drops Chad’s sorghum production 46 percent to 0.7 million tons.
Argentina’s sorghum production in 2012/13 is forecast up 0.8 million tons to 4.8 million. Argentine farmers have done relatively well marketing sorghum, so area is expected to increase 5 percent while a return to trend boosts yields 14 percent. Mexico’s sorghum production is projected to increase 0.7 million tons to 6.8 million, and sorghum production in India and Brazil is expected to increase 0.6 million tons each to 6.7 million and 2.8 million, respectively. All three countries are expected to expand sorghum area in 2012/13 and reach yields slightly higher than in 2011/12.
Global millet production in 2012/13 is forecast up 2 percent to 33.5 million tons over the previous year. An increase of 2.3 million tons to 18.1 million is expected for Sub-Saharan Africa, as yields return to trend. However, a reduction for India is partly offsetting as area is expected to shift to more profitable crops. World oats production in 2012/13 is projected to be stable year-to-year at 23.2 million tons. Declines in Russia (lower yield) and the EU (reduced area) are mostly offset by increases for the United States and Canada. Global mixed grain production is up 0.4 million tons to 15.1 million, and world rye production is projected up 0.5 million tons to 13.4 million due to increased production expected in the EU.
Beginning Stocks Boosted for 2012/13 This Month
Beginning stocks for 2012/13 are by definition the same as ending stocks for 2011/12, so although no supply and demand balance was done for 2012/13 in April, the 2011/12 coarse grains supply and demand included the 2012/13 beginning stocks as the 2011/12 ending stocks. These coarse grain stocks are revised up 4.2 million tons in May. The largest increase is 2.8 million tons for Brazil, boosted by sharply higher corn production estimated for 2011/12. U.S. stocks are up 1.3 million tons this month. China’s stocks are up 1.0 million tons and EU stocks are up 0.4 million due to increased 2011/12 corn imports. Tanzania’s coarse grain stocks are boosted 0.5 million tons based on large increases in estimated production and consumption for several years. Russia’s coarse grain stocks are reduced 0.5 million tons this month mostly due to increased corn exports.
At 161.2 million tons, 2012/13 global coarse grain beginning stocks are just below the 162.4 million estimated for a year earlier but much lower than the 195 million reached 2 or 3 years earlier. Total world coarse grain supplies are projected reach record highs in 2012/13, up 84.3 million tons, or 6 percent, in 2012/13 over a year earlier due to expanded production. While U.S. corn production accounts for most of the increase in global coarse grain supplies in 2012/13, foreign supplies are also at record highs.
World Coarse Grain Use Projected Up 5 Percent
Global coarse grain use in 2012/13 is projected to reach a record 1,204.3 million tons, up 5 percent from a year earlier. Ample supplies of coarse grains, especially corn, are expected to drive down prices, making wheat less attractive as an ingredient in animal rations. World coarse grain feed use is projected up 7 percent to 705.0 million tons in 2012/13. Global food, seed and industrial use (FSI) is expected to expand more slowly than feed and residual use, with significant FSI expansion in China but sluggish industrial use in the United States. Of the 60.6- million-ton coarse grain consumption increase, corn is expected to account for 53.7 million, sorghum for 5.5 million, millet for 0.7 million, barley for 0.5 million, oats for 0.2 million, and rye for 0.1 million.
U.S. coarse grain use is projected to increase 23.8 million tons in 2012/13, much more than in any other country, illustrating why U.S. supply-and-demand changes drive world prices. China’s coarse grain use is forecast up 12.5 million tons in 2012/13, with corn use for feed and FSI each increasing 6.0 million. FSI use is also expected to increase for sorghum and barley, supported by increasing consumption of alcoholic beverages. Brazil’s coarse grain use is projected up 2.9 million tons, with feed use up 2.4 million tons as meat production continues to expand. Canada’s coarse grain use is expected to increase 2.0 million tons as less low-quality wheat is likely to be available for feeding. EU coarse grain use is forecast up 1.9 million tons mostly due to a shift to coarse grains and away from feed-quality wheat in compound feed rations. EU coarse grain FSI is only up 0.25 million tons as most ethanol plants are expected to continue to use wheat. Sudan is projected to increase coarse grain use (mostly food use) 1.7 million tons as supplies recover from drought. Even with the rebound, Sudan’s use will fall short of 2010/11 levels.
Mexico is forecast to increase coarse grain use 1.6 million tons, with most of the increase supporting expanded meat production. India is expected to boost coarse grain use 1.45 million tons, with roughly a third of the increase boosting FSI, and most of the growth used to increase output of meat, eggs, and dairy. Russia is forecast to increase coarse grain use 1.2 million tons, the entire growth used to support meat production. Argentina is expected to boost coarse grain use 1.1 million tons, with 0.8 million tons of the increase in FSI as corn used to produce ethanol expands. Vietnam’s use of coarse grains is projected up 1.1 million tons, all in feed and residual, as the use of wheat for feed declines and compound feed production expands.
Most other countries are expanding coarse grain use by less than a million tons in 2012/13, but some are expected to have declines. With reduced barley production, Morocco’s coarse grain use is forecast down 0.9 million tons, with a third of the decline in FSI. For some countries the decline in coarse grain use is modest. For example, Ethiopia is down 0.4 million tons, but since the reduction is nearly all in FSI, it raises concerns. For all of Sub-Saharan Africa, coarse grain use is forecast up 3.4 million tons in 2012/13 to a record 100.5 million.
Increased 2012/13 Ending Stocks Concentrated in the United States
Global coarse grain ending stocks for 2012/13 are projected up 15 percent to 184.9 million tons, with U.S. corn stocks accounting for the entire increase. Foreign coarse grain stocks are projected down 2 percent to 133.8 million tons. With ample supplies in the United States and declining prices, the incentive to hold stocks in the rest of the world is reduced.
EU 2012/13 coarse grain ending stocks are projected down 1.7 million tons. With virtually all stocks privately owned and price prospects declining, demand for coarse grains to replace wheat in compound feeds is expected to be strong. Iran’s coarse grain stocks are forecast down 0.6 million tons as economic sanctions make importing corn to feed to chickens more problematic. Malawi’s ending stocks are projected down 0.5 million tons as consumption levels are expected to be maintained, even with a smaller corn crop. India’s coarse grain stocks are expected to decline 0.5 million tons, as production of millet declines and demand for corn is strong. Some countries are expected to increase coarse grain stocks in 2012/13, mostly due to increased production. For example, Mexico is up 0.8 million tons, and Argentina is up 0.5 million. Other countries changes in projected stocks during 2012/13 are less than 0.5 million tons.
Increased Coarse Grain Trade Projected for 2012/13 on Record Corn Trade
Global coarse grain trade in 2012/13 is forecast up 5 percent to 128.1 million tons, less than 1 million tons below the record reached in 2007/08. Global corn trade is projected at over 100 million tons for the first time. Corn is expected to be cheaper than feed wheat as U.S. corn prices decline and less low quality wheat is produced (assuming a more normal quality of wheat production, especially in Australia and Canada). Also, a rebound in sorghum trade is expected.
World corn trade in 2012/13 (October-September trade year) is forecast to reach a record 101.4 million tons, up 4.4 million as foreign consumption grows more rapidly than foreign production, boosting U.S. export prospects. U.S. corn exports are projected to reach 48 million tons (1.9 billion bushels for the September-August local marketing year), up 4.5 million tons, as U.S. prices are expected to be highly competitive with a record crop. As of May 3, 2012, U.S. corn sales for shipment in 2012/13 reached 4.4 million tons, up from 1.8 million a year earlier. However, U.S. corn exports are expected to remain far below the record 61.8 million tons reached in 1979/80, or the 60 million plus exported in 1989/90 and 2007/08. Since 2007/08, several years of sustained strong corn prices have encouraged the expansion of corn production around the world, increasing competition for U.S. exports. Most dramatically, Ukraine has emerged as a corn export powerhouse, challenging Argentina and Brazil as leading corn competitors. In aggregate, foreign corn exports in 2012/13 are projected to be 53.4 million tons, almost the same as the record 53.5 million a year earlier.
Argentina is projected to increase corn exports 1.0 million tons in trade year 2012/13, reaching 15.0 million. The large 2012/13 crop will be harvested mostly starting in March 2013, relatively late in the trade year, limiting how much Argentina can ship during 2012/13 but increasing competition for U.S. exports in the latter half of the trade year. Ukraine, with a record corn crop and favorable shipping costs to markets in the Mediterranean and Middle East, is forecast to export 14.0 million tons, unchanged from the previous year. Brazil, with record corn production for the second consecutive year, is also expected to maintain corn exports at the previous year’s level of 10.5 million tons. India’s corn exports in 2012/13 are expected to decline 0.2 million tons to 2.2 million as strong domestic demand limits exports. EU corn exports are forecast down 0.5 million tons to 2.0 million as internal demand for feed grains is expected to be strong given the reduced wheat crop. South Africa’s corn exports are expected to increase 0.5 million tons to 2.0 million as production increases. Serbia’s exports are forecast up 0.1 million tons to 1.8 million due to increased production and relatively attractive EU prices. Paraguay’s 2012/13 trade year corn exports are forecast down 0.2 million tons to 1.6 million because the larger expected 2012/13 local year corn crop will be mostly exported in the 2013/14 trade year. Russia’s corn exports are expected to drop 1.0 million tons to 0.5 million as internal demand is growing.
Import demand for corn in 2012/13 is expected to be enhanced by declining prices and less competition from low-quality wheat. China is expected to import 7.0 million tons, up 2.0 million from the previous year. Corn prices in China are expected to remain higher than world prices, encouraging imports, but the availability of import quota may limit imports to about 7.0 million tons. South Korea’s corn imports are forecast up 1.0 million tons to 8.5 million as corn is expected to be cheaper than feed-quality wheat. EU corn imports are forecast up 1.0 million tons to 6.0 million as drought in Spain boosts import demand. Turkey’s corn imports are projected up 0.5 million tons to 1.0 million due to expanding feed demand. Israel and Vietnam are each expected to increase corn imports 0.3 million tons as corn prices become more competitive than wheat. Most other countries maintain or increase corn imports slightly to maintain or expand meat production. However, Mexico’s corn exports are projected to drop 1.2 million tons to 9.3 million as production increases and sorghum imports expand.
Indonesia’s corn imports are forecast down 0.5 million tons to 1.5 million as production increases. Brazil, with ample corn supplies, is forecast to import 0.8 million tons of corn from its neighbors in 2012/13, 0.3 million less than a year earlier.
Sorghum Trade To Rebound in 2012/13
World sorghum trade in 2012/13 is projected to expand 2.1 million tons to 7.1 million, mostly because of much larger U.S. supplies. U.S. exports are expected to more than double in 2012/13, reaching 3.5 million tons (140 million bushels for the September-August local marketing year). However, foreign exports are also expected to increase, up 0.2 million tons to 3.6 million, the largest since 1985/86. Most of the increase in competitor’s exports is in Argentina, up 0.4 million tons to 2.2 million, based on increased production. Australia’s sorghum exports are projected down 0.2 million tons to 1.0 million due to reduced production and less domestic low-quality feed wheat.
Sorghum imports for Mexico are expected to increase 1.7 million tons to 3.0 million as sorghum becomes more attractively priced than feed-quality wheat or corn. Tight grain supplies in the Iberian Peninsula are expected to boost EU sorghum imports 0.2 million tons to 0.3 million. Small increases in imports are also expected for Morocco, Sudan, and Japan.
Barley, Oats, and Rye Trade in 2012/13
Global barley trade is projected to decline 4 percent in 2012/13 (October- September), with reduced import prospects for Saudi Arabia and Algeria. Argentina is expected to emerge as the world’s largest barley exporter for the first time, increasing exports 1.0 million tons to 4.0 million. Global oats trade is projected little changed at 2.2 million tons, while rye trade expands slightly.