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USDA Feed Outlook

17 January 2013

USDA Feed Outlook - January 2013USDA Feed Outlook - January 2013

Feed Outlook

The National Agricultural Statistics Service's Crop Production 2012 Summary and January Grain Stocks reports revealed larger corn production this month and lower-than- expected December 1 stocks, resulting in a sharply increased outlook for 2012/13 feed and residual use. Feed grain production for 2012/13 is estimated at 285.8 million tons, up 1.2 million from last month as higher estimated corn production more than offset lower sorghum output. Feed grain ending stocks are forecast down 1.4 million tons to 18.1 million tons. Corn production is estimated 55 million bushels higher, with harvested acreage slipping 346,000 acres, but the national average yield raised by 1.1 bushels per acre. Projected 2012/13 corn ending stocks are lowered 45 million bushels, as a 200-million-bushel decrease in exports is more than offset by a 300-million-bushel increase in feed and residual use. Corn export prospects are lowered by increased competition from South America and tight U.S. supplies as revealed by the December 1 stocks. Ending stocks at 5.3 percent of projected usage will be the tightest since 1995/96. The projected season average farm price is raised for sorghum and unchanged for corn, barley, and oats. The December 1 stocks revealed very large sorghum use, boosting feed and residual 50 million bushels for the year, while tight supplies for the coming months reduce expected exports 35 million bushels.

Domestic Outlook

Feed Grain Supplies for 2012/13 Up This Month, Ending Stocks Reduced

U.S. feed grain supplies for 2012/13 are forecast at 318.3 million metric tons, up 1.2 million from last month but down 40.3 million from last year. The 2012 corn crop is estimated higher this month reflecting improved yield estimates, but the forecast sorghum crop is reduced. Barley and oats production are unchanged. Feed grain beginning stocks are 27.8 million tons, with a small revision to September 1 corn stocks. Total feed grain use for the current marketing year is projected higher at 300.1 million tons this month, supported by increased corn feed and residual use, in spite of lower corn exports.

Feed and residual use for the four feed grains plus wheat converted to a September- August marketing year is up 10.0 million tons to 126.5 million this month. This stems from increases in projected feeding of corn, sorghum, barley, oats, and wheat reflecting December 1 stocks and greater projected beef, pork, broiler, and turkey production. Grain-consuming animal units are forecast at 91.6 million, up from 90.8 million last month due to higher forecast poultry and red meat production in 2013. Feed and residual use per animal unit is increased slightly to 1.38 tons, up from 1.28 tons last month. Small supply-and-use changes were made for feed grains for 2011/12; production is raised 30,000 tons to 323.6 million based on a small upward revision to 2011/12 corn production. Estimated domestic use is raised slightly to 289.7 million tons with an 11,000-ton increase in feed and residual use to 119.6 million tons based on slight upward revisions in corn and sorghum ending stocks for 2011/12. Feed grain ending stocks edge up to 27.8 million tons for 2011/12.

Corn Planted Acreage and Yield Estimated up from Last Month

The U.S. corn production forecast for 2012/13 is raised 55 million bushels this month to 10,780 million, largely based on improvements in the estimated corn yield. The January yield estimate is raised 1.1 bushels per acre to 123.4. This gain is enough to offset the slight decrease in harvested acres to 87.4 million acres, down from the December estimate of 87.7 million acres. The deline in 2012/13 harvested acres comes despite a small increase in planted acres. The 2011/12 corn production figure is also revised upward by 1.2 million bushels to 12,360 million bushels. Relative to last year’s production estimate, the 2012/13 corn crop is forecast to be 1,580 million bushels smaller, a contraction of nearly 13 percent. The January estimate for 2012/13 beginning stocks is increased by 624,000 bushels to a total of 989 million.

Projected corn feed and residual use for 2012/13 is raised 300 million bushels to 4,450 million. December 1 stocks indicated a September-November feed and residual estimate of 2,053 million bushels, sharply higher than expected, and up 228 million from the same quarter for 2011/12. The large first-quarter feed and residual implies likely new crop feeding before September 1. Feed and residual for 2011/12 is estimated at 4,548 million bushels, up 0.5 million from last month’s estimate, reflecting the higher production and carryout projections.

U.S. corn exports for 2012/13 are lowered 200 million bushels to 950 million as year-to-date shipments lag and larger expected supplies and exports for South America this month put further pressure on U.S. export prospects. The combination of reduced exports and increased feeding serve to increase projected total corn use for 2012/13 by 100 million bushels to 11,267 million. Corn ending stocks for 2012/13 are expected to be 602 million bushels, down 44 million from last month as the increase in production is more than offset by higher feed and residual use. Ending stocks are down 387 million bushels from last year. The stocks-to-use ratio is projected at 5.3 percent, the lowest level since 1995/96, when the ratio dropped to 5.0 percent.

Based on the increase in production and reported prices received by farmers to date, the projected 2012/13 season average farm price for corn is unchanged at $6.80 to $8.00 per bushel. The average farm price midpoint is forecast at $7.40 per bushel. Producer deliveries of corn that was forward contracted earlier in the season and at prices below current market values, are reducing the monthly farm prices reported by USDA’s National Agricultural Statistics Service (NASS).

Changes are also made this month to the 2011/12 corn supply-and-use tables. Corn ending stocks are increased 0.6 million bushels to 989.0 million. However, production is revised up more than ending stocks, resulting in an increase in feed and residual to 4,547.7 million bushels.

Sorghum Feed and Residual Use up Sharply, Production Lower

Lower yields and harvested area serve to reduce estimated U.S. sorghum production for 2012/13 by 9.2 million bushels from last month’s forecast to 246.9 million. Lower production combines with a significantly increased feed and residual estimate to tighten the sorghum supply-and-demand balance sheet and support a $0.20-per-bushel increase in the average farm price.

A reduction of 61,000 acres of harvest sorghum acres more than offsets a very slight increase of 6,000 acres in planted area. Total U.S. planted and harvest acres for 2012/13 are estimated at 6.24 million and 4.96 million, respectively. This month, yield is reduced by 1.3 bushels per acre to 49.8 bushels, the lowest yield since 1983/84. The 2012/13 yield forecast is 4.8 bushels lower than the 54.6-bushel- per acre yield calculated for the drought-affected 2011/12 season.

Significant year-to-year yield declines were experienced in several sorghum- growing States. In Kansas, which accounted for approximately 33 percent of the 2012/13 U.S. crop, yields are estimated to have fallen by 16 bushels per acre to 39 bushels, compared with 2011/12 levels. In Texas, which accounted for about 45 percent of the 2012/13 U.S. crop, yields increased by 10 bushels to 59 bushels per acre. On net, yield gains in Texas, Oklahoma, Arkansas, Louisiana, and Mississippi are not significant enough to offset the yield declines observed in Kansas and six sorghum-producing States.

Beginning stocks and imports are up slightly over the previous month’s estimates with gains of 0.013 million and 1.085 million bushels, respectively. Reductions in production offset slight gains in other supply categories and result in a total supply estimate of 271.0 million bushels, down 8.1 million from the December 1 projection.

According to NASS’s January Grain Stocks report, sorghum feed and residual use increased significantly during the first quarter of 2012/13. Feed and residual for September-November 2012 grew to 88.2 million bushels, nearly double the amount for the same quarter of the previous year. Based on observed and anticipated sorghum feeding use estimates, the 2012/13 sorghum feed and residual forecast is increased by a full 50 million bushels to 125 million, up from 75 million bushels projected in the December Feed Outlook.

The export projection for 2012/13 is lowered 35 million bushels to 65 million this month, compared with the December projection. Sorghum used for ethanol during 2012/13 is also projected lower, leaving total food, seed, and industrial use down 20 million bushels to 60 million. The collective reduction in ethanol use and exports limits the decline in projected total use to 5 million bushels.

The January ending stocks forecast for 2012/13 is trimmed by 3.1 million bushels to 21.0 million bushels. This figure is 9 percent lower than the 23.0-million-bushel ending stocks estimate for 2011/12. The lowered ending stocks figure reflects reduced supplies and higher expected feed and residual disappearance for sorghum. All factors serve to support a $0.20-per-bushel increase in the average sorghum farm price to a midpoint of $7.30 per bushel, or approximately 98.6 percent of the per-bushel average corn price forecast at the midpoint. The low and high end of the projected sorghum price range is raised by $0.20 each to $6.70 to $7.90 per bushel.

Slight Increase in Barely Feed and Residual Use

The 2012/13 U.S. barley production estimate is unchanged this month, with no modifications to the yield or harvested acreage estimates. Total supplies are estimated at 300 million bushels. Total use is increased by 5 million bushels to 225 million and stems from a 5-million-bushel rise in the feed and residual forecast to 60 million. The noted increase is attributed to an escalation in first and second quarter barley feeding. Ending stocks are correspondingly reduced by 5 million bushels to accommodate increased demand for barley feed and residual use.

Lower malt barely prices serve to reduce the average all-barley farm price by $0.05 at the midpoint to $6.40 per bushel. The price range is narrowed by $0.10 on the high end to $6.70 per bushel. The low end of the range remains $6.10 per bushel.

Oats Feed and Residual Use Increased, Exports Lowered

U.S. oats production for 2012/13 is unchanged this month. Estimated total planted and harvested area remain at 2.8 and 1.1 million acres, respectively. The yield forecast is unchanged at 61.3 bushels per acre, and total production is estimated at 64 million bushels. With a slight increase in beginning stocks, total oats supplies are projected at 214 million bushels.

The feed and residual use forecast for 2012/13 is raised by 5 million bushels following higher first and second quarter oats feed and residual use as indicated by the December 1 stocks. Trade data indicate a slower-than-forecast pace of oats exports leading to a lower outlook for 2012/13 oats exports at 2 million bushels. The collective effect of reduced exports and increased feeding is to augment the total use estimate by 4 million bushels and reduce projected ending stocks by a similar amount.

The 2012/13 oats farm price range is narrowed slightly with a $0.05 reduction in the maximum price to $4.00 per bushel. The minimum price is increased $0.05 to $3.60 per bushel. The average farm price is unchanged at $3.80 per bushel.

Hay Stocks, Production Down in 2012/13

NASS’s January Crop Production report indicates that stocks of all U.S. hay stored on farms totaled 76.5 million tons on December 1, 2012, down 15.6 percent from a year ago. Hay disappearance totaled 64.7 million tons from May 1-December 1, compared with 62.7 million tons for the same period a year ago. While some Atlantic Coast States and sections of the northern tier report an increase in onfarm hay stock as a proportion of total production, the majority of States experienced a reduction in December 1 stocks, compared with the previous year.

Much of the central and western regions of the country experienced prolonged dryness and hot temperatures that served to limit pasture and range growth as well as production on commercially harvested hay and alfalfa fields. In some circumstances, where drought conditions served to reduce the availability of forage on pasturelands, producers were obliged to begin feeding their herds earlier than usual, ultimately drawing down available onfarm hay stocks.

To assist livestock producers affected by the prolonged drought of 2012, a record 2.8 million acres of Conservation Reserve Program (CRP) land managed under 57,000 separate CRP contracts was opened to haying and grazing. By comparison, just over 1 million acres of CRP land was made available for emergency haying and grazing in 2011. In 2005, 1.7 million acres of CRP land was made available under similar circumstances.

Roughage-consuming animal units (RCAU) in 2012/13 are estimated at 67.3 million, down slightly from 67.9 million in 2011/12. Despite reduced RCAUs, reduced hay supplies serve to decrease December 1 hay stocks per RCAU to 1.1 tons, down from 1.3 tons last year.

For 2012, the all-hay production figure totals 119.88 million tons, down from the October 1 forecast of 121.97 million tons and down 11.34 million tons from the 2011 total. Harvested area is estimated at 56.3 million acres, down 1.3 million acres from the October 1 forecast and up slightly from the 2011/12 forecast of 55.7 million acres. The average yield is 2.1 tons per acres, a decline of nearly 10 percent relative to the 2011/12 yield estimate of 2.4 tons per acre. The largest year-to-year yield declines are observed for South Dakota (down 1.1 tons/acre), Michigan (down 0.8 tons per acre), Minnesota (down 0.7 tons/acre), and several other States in the central and western United States. Additional declines occurred in several coastal States, including Maine, Washington, and Oregon. Overall, 30 States recorded year- to-year declines in hay yields.

For 2012, U.S. alfalfa and alfalfa mixture hay production, yield, and harvested area estimates are lower than 2011 figures. Production is forecast at 52.1 million tons, down from 55.6 million tons reported on October 1 and down slightly more than 20 percent from 2011. This is the lowest U.S. production level since 1953. The 2012 yield is estimated at 3.0 tons per acre, down from 3.4 tons per acre in 2011. Harvest area is down 8 percent from the October 1 forecast and is estimated at 17.3 million acres. Only in 1948 was the alfalfa harvest area estimate lower than in 2012.

Other hay production in 2012 totaled 67.8 million tons, up 2 percent from the October 1 forecast and up 3 percent from the 2011 total of 65.9 million tons. At 1.7 tons per acre, yields are down 0.07 tons relative to 2011 and up 0.03 tons from October. Harvested area increased to 39.0 million acres in 2012, up 7 percent over 2011 and up slightly from the October 1 forecast. Large year-to-year increases in harvested area in Texas (up 1.4 million acres) and Oklahoma (up 0.7 million acres) are reported, despite the severe drought. The opening of CRP land for haying boosted harvested acreage in Texas and Oklahoma as well as in a number of other States in the central and southern United States.

U.S. corn silage production is estimated at 113.5 million tons in 2012, up 4 percent from 2011. This is the highest level of silage production since 1982, when 117.8 million tons of corn silage was produced. Area harvested for corn silage is estimated at 7.4 million acres, up 24 percent from the 2011 estimate and the highest level since 1988, when 8.3 million acres were harvested. The average corn silage yield estimate is 15.4 tons per acre, down 16 percent from the 2011 yield estimate of 18.4 tons per acre. The total corn silage available per RCAU is 1.685 tons.

Sorghum silage production is estimated at 4.1 million tons, up fully 80 percent over the 2011 estimate. The 2012 sorghum silage yield is forecast to be 11.4 tons per acre, up 11 percent from the 2011 figure of 10.3 tons per acre. Area cut for silage in 2012 is 363,000 acres, up 62 percent from the 224,000 acres harvested in 2011. Total sorghum silage per RCAU in 2012/13 is estimated at 0.061 tons, a significant increase from the 0.034 tons per RCAU estimated in 2011/12. Collectively, total corn and sorghum silage available per RCAU is approximately 1.747 tons.

ERS Animal Unit Estimates: A Tool for Estimating Feed Use in USDA Commodity Supply-and-Use Tables

Feed use of individual grains is a component of the “feed and residual use” category in USDA supply-and-use tables. Feed and residual use accounts for remaining disappearance after other uses, including food, seed, industrial use, exports, and stocks. Supply-and-use estimates for corn and other feed grains are compiled monthly using the latest available data from many sources. NASS regularly conducts surveys of farmers and grain handlers to estimate annual production volumes and the level of stocks (i.e., inventories) held throughout the year; USDA’s Foreign Agricultural Service provides timely and reliable estimates of imports and exports; and food, seed and industrial use (including use by ethanol producers) can be reliably estimated using data from several Federal agencies, including the U.S. Department of Energy. However, there is no survey or other direct measurement available for the volume of feed grains fed to livestock.As a result, feed use becomes part of the “residual” category of use after total supply and all of the other directly measurable usage categories have been estimated and accounted for in supply-and-use tables.

Along with the implied volume used for feed, the “feed and residual” category also includes measurement errors or inconsistencies unaccounted for in the estimates of the other supply and use categories, such as production, stocks, food, seed and industrial use, and trade. Several factors may contribute to measurement error, including shrinkage due to changes in moisture content; waste and spillage during shipping and handling; volume in transit that is not accounted for in total supply; and human errors associated with data collection and reporting that can affect estimates of trade and nonfeed and residual use.

Animal Unit Estimates as an Indicator of Feed Use

To provide an indicator of implied feed use despite the absence of a survey or other direct measure, ERS calculates standardized estimates of the size of the US livestock herd. The estimates are an effort to account for differences in the volume of feed consumed across species (i.e., hogs, cattle, broilers, etc.) to arrive at a single metric for the number of “grain consuming animal units” (GCAU), “high protein animal units” (HPAU), “roughage consuming animal units” (RCAUs), and “grain and roughage consuming animal units” (G&RCAUs). Each of these animal unit measures incorporates weights that reflect estimated high protein feed use by each species relative to the standard consumption of a dairy cow. The results are standardized indices of livestock populations that can be used as indicators of feed use. The indexing procedure uses weights developed in 1969-71 (the time of the last survey) To calculate the various animal unit measures, animal numbers routinely reported by NASS are used along with estimates of horses and mules constructed by ERS (since NASS does not report these numbers). NASS reports of January 1 inventories for each livestock type are multiplied by the respective weighting factor to calculate the indices. For time periods when NASS data are not yet available, proxies are used. For instance, for some types of poultry, reports of egg production serve as a proxy to estimate the current poultry inventory.

Inventory sources vary by livestock category. NASS January 1 inventory data is used for dairy cattle, other dairy cattle, cattle on feed, other beef cattle, and sheep and goats. Poultry inventories are based on numbers of poultry raised. To be consistent with the crop production and marketing cycle, all monthly livestock production numbers are converted to a September-August year basis.

Data Sources for Livestock Type Inventories

The data used to calculate animal inventories come from several different NASS reports. In many cases, the data are available in multiple publications. The January 1 inventory is used for each crop year. Since crop years are run from September through August, the January 1 inventory for 2010/11 would correspond to January 1, 2011.

  • Dairy and beef cattle: Data are from the January issue of the NASS publication Cattle, which provides the January 1 inventory in the table “Cattle Inventory by Class and Calf Crop – United States: January 1.”
  • Sheep: Inventory is from the January issue of the NASS publication Sheep and Goatscontaining the January 1 inventory for all sheep and lambs in the table “U.S. Inventory by Class.”
  • Goats: Inventory is from the NASS Sheep and Goats report. The January inventory of goats in Texas is used for goat inventory. It is found by adding the Texas goat inventories from the following tables: “Angora Goat Inventory by State,” “Milk Goat Inventory by State,” and “Meat and Other Goat Inventory by State.”
  • Horses and mules: There are no NASS data available for horses and mules so this inventory is estimated using a 0.05-percent increase each year.
  • Layers: The layer inventory is an average of the monthly average number of layers on farms for September through August. It is calculated from the NASS publication Chickens and Eggs in the table “Average Number of All Layers on Hand During the Month – United States.”
  • Broilers: Data are from the NASS publication Poultry Production and Value, which reports the number of broilers raised in the table “Broiler Production and Value – States, Total, and 19 Weekly States.” The animal unit inventory calculation uses 25 percent of the prior year and 75 percent of the current year.
  • Pullets: Inventory data are derived from the NASS publication Chickens and Eggs in the table “Egg-Type Chicks Hatched by Month – United States,” and the table, “Intended Placements of Egg-Type Pullet Chicks for Hatchery Supply Flocks by Month –United States.” From these two tables, pullet numbers are calculated as one-half the egg-type chick hatch plus the number of pullets placed in the broiler supply flocks, for September through August.
  • Turkeys: Inventory is calculated from the NASS publication Poultry Production and Value, using the table “Turkey Production and Value – States and United States.” As with broilers, 25 percent of the previous year and 75 percent of the current year (which corresponds to the feed year) are used to calculate January 1 inventory.
  • Hogs: Hog numbers are based on the spring and fall pig crops. The June and January releases of the NASS publication Hogs and Pigs reports U.S. pig crops in the table “Sows Farrowing, Pig Crop, and Pigs per Litter – United States.” The spring pig crop corresponds to December-May, and the fall pig crop corresponds to June-November. Hogs are assumed to be fed for 6 months, with the spring pig crop from the past feed year still on feed in the current feed year. All of the pigs from the fall crop and part of the pigs from the spring crop will also be on feed during different quarters of the current feed year. For example, in the 2010/11 feed year, 20 percent of the spring 2010 pig crop, all the fall 2010 pig crop, and 80 percent of the 2011 pig crop would be on feed and sum to the January 1, 2010, inventory.

Calculating Animal Unit Indices

In general, the various animal unit calculations are simply the January 1 inventory for a given crop year multiplied by the appropriate factor for the livestock type. In the case of grain and roughage calculations for broilers and turkeys, the inventory is adjusted by using 25 percent of the previous year and 75 percent of the current year’s inventory, to reflect the fact that the September-December quarter falls in one calendar year while the last three quarters (January-August) fall in the following calendar year.

By way of example, the GCAU calculation for dairy cattle for 2012/13 is equal to the 9.150 million dairy cows projected on hand on January 1, 2013, multiplied by the appropriate factor 1.0474, to give 9.515 million GCAUs. A similar procedure is used for other livestock types, and the GCAUs are summed to provide the total GCAU for the period.

January 2013

Published by USDA Economic Research Service

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