OVERVIEW FOR 2016/17

Global coarse grain production is forecast to reach a near-record level driven by corn and sorghum, while barley production is expected to decline modestly. Global consumption is projected up with greater use of corn and sorghum. Global trade is forecast to decline slightly driven mostly by declines for barley and sorghum. China's import demand for corn, barley, and sorghum is expected to fall as changes in the corn support program are expected to promote domestic corn use.

Global corn production is projected higher. The U.S. crop is expected to reach a record, while others – Argentina, EU, India, South Africa, Russia, and Ukraine – rebound from last year's levels. Global consumption is forecast to rise to a record level, largely due to the aforementioned changes in China, which has led to a sharp drop in domestic corn prices. The change in policies in China is expected to encourage domestic corn use, drawing down stocks. However, global ending stocks are forecast to decline only slightly with a nearly offsetting build-up in the United States. Global import demand is projected to marginally lower with reductions in China, EU, and Vietnam more than offsetting growth in Egypt, Iran, Mexico, South Korea, and Turkey. Brazilian exports are forecast to plunge about 30 percent from 2015/16 with tightening supplies. Exports are projected higher for the United States, Argentina, EU, and Ukraine.

World barley production is expected to drop modestly with reduced crops for Argentina, Morocco, Turkey, and Ukraine. Due to adverse weather conditions, Morocco's crop is slashed 71 percent year-over-year to 1.0 million, and Turkey's production is projected to fall 27 percent to 5.4 million tons. Trade is forecast lower with weaker demand for China and Iran more than offsetting stronger demand for Jordan, Morocco, Turkey, and Saudi Arabia.

Global sorghum production is forecast higher with larger crops in Ethiopia, Mexico, and Sudan more than offsetting a smaller U.S. crop. Trade is forecast lower on the expectation of reduced demand in China. However, future Chinese demand for sorghum, and for other imported feedstuffs, remains highly uncertain as the country deals with massive corn stockpiles.

HIGHLIGHTS FOR 2016/17

Selected Exporters

  • U.S. corn is projected to surge 5.5 million tons to 49.0 million on record supplies and less competition from Brazil. The season-average farm price is projected down to a range of $3.05 to $3.65/bushel, with the midpoint 25 cents lower than the 2015/16 forecast. U.S. sorghum is forecast down 1.9 million tons to 5.5 million with the expectation of weaker demand from China, evidenced by the slow pace of new crop sales.
  • Argentine corn is forecast 2.5 million tons higher to 22.5 million with a much larger projected crop. Likewise, sorghum is boosted 150,000 tons to 1.2 million with the expectation of a larger crop. However, barley is down 600,000 tons to 1.9 million based on a smaller crop projection.
  • Brazilian corn is expected to plunge 11.5 million tons to 25.0 million on tightening domestic supplies.
  • EU corn is projected to rise 1.6 million tons to 3.0 million while imports are down 2.0 million tons to 13.0 million with prospects for a larger crop. Barley is forecast down 1.1 million tons to 8.7 million reflecting weaker demand in China.
  • Serbian corn is up 500,000 tons to 2.2 million on prospects for a larger crop.
  • South African corn is forecast to climb 600,000 tons to 1.3 million with the export pace likely to increase following next year's harvest. A relatively marginal drop is expected for imports, forecast at 2.5 million tons, as tight supplies drive import demand through most of the year.
  • Ukrainian corn is forecast at 17.0 million tons, up 1.0 million from last year. Export opportunities to China are less promising due partly to changes in China's corn reserve policies, which would encourage domestic corn use. Barley exports are projected to shrink 300,000 tons to 3.2 million on smaller crop prospects.
  • Australian barley is forecast up 300,000 tons to 5.8 million tons on stronger demand from the Middle East. Sorghum is expected to remains steady at 1.0 million tons.
  • Canadian barley is forecast down marginally to 1.4 million tons on account of strong domestic feeding and lower demand from China.
  • Russian barley is forecast to grow 600,000 tons to 4.0 million with strong expected demand from traditional markets in the Middle East.

Selected Importers

  • Chinese corn is forecast lower at 1.0 million tons with expectations of greater use of domestic feedstuffs. Prices for domestic corn have dropped sharply since last fall. Furthermore, the government's effort to reduce stocks by promoting domestic corn use should erode demand for imported feedstuffs, including barley and sorghum. Barley imports are projected down 1.5 million tons to 6.0 million, and sorghum is lowered 1.8 million tons to 5.0 million.
  • Egyptian corn is forecast to rise 500,000 tons to a record 8.8 million on continued growth in feed demand.
  • Iranian corn is forecast up 500,000 tons to 5.5 million with growing feed demand. Alternately, barley is forecast down 800,000 tons to 1.1 million with ample supplies and favorable pasture conditions.
  • Japanese corn is forecast down 200,000 tons to 14.5 million based on slow demand from the livestock sector. Barley and sorghum are forecast steady.
  • Mexican corn is up 1.5 million tons to a record 13.5 million on a smaller expected crop and higher feed demand. Sorghum is unchanged at 700,000 tons.
  • South Korean corn is projected 500,000 tons higher to a record 10.5 million with growth in feed demand from the swine sector more than offsetting reduced use in the cattle sector, while poultry production remains steady.
  • Turkish corn is raised 600,000 tons to 1.5 million on a smaller expected crop as a result of ongoing drought. Likewise, barley is up 350,000 tons to 400,000.
  • Vietnamese corn is projected down 900,000 tons to 6.0 million as growth in feed use is expected to slow. Starting with 2013/14, the import series is revised to incorporate trade data and increased residual disappearance.
  • Saudi barley is forecast up 500,000 tons to 9.5 million driven by strengthening demand for feed with ongoing price supports and lower world barley prices.

OVERVIEW FOR 2015/16

World corn production is lower from last month reflecting reductions in Argentina and Brazil. Global imports are higher with increases for Brazil and Vietnam more than offsetting a reduction for China. Estimated changes for exporters are mostly offsetting, highlighted by larger U.S. exports and cuts for Argentina and Brazil. The U.S. season-average farm price is raised a nickel at the midpoint.

PRICES

During the period from the release of the April WASDE report into early May, quotes for U.S. corn are up $5 to $169/ton, but now hold a considerable discount to other major exporters. The price gap is mainly attributed to relatively large nearby supplies. Black Sea quotes surged to $19 to 185/ton in tandem with other exporters' quotes and magnified by tight nearby supplies. For the same period, Argentine quotes rose $12 to $177/ton as adverse weather disrupted the harvest. Brazilian quotes reappeared in April and rose sharply with concerns over potential impact of hot and dry conditions on the second crop, and are now just above Argentine price levels at $179/ton. Recent Brazilian quotes are for August delivery, while the other exporters' quotes are current.

TRADE CHANGES IN 2015/16

Selected Exporters

  • U.S. corn is raised 1.5 million tons to 43.5 million on robust sales and shipments and relatively competitive prices.
  • Argentine corn is down 500,000 tons to 20.0 million on reduced production.
  • Brazilian corn is cut 1.0 million tons to 36.5 million on a smaller crop.
  • Indonesian corn is slashed 200,000 tons to 50,000 on trade to date and restrictions on imports that make exports uncompetitive.
  • Ukrainian corn is up 300,000 tons to 16.0 million reflecting the pace to date.
  • EU barley is raised 800,000 tons to 9.8 million on a robust pace to date, particularly to countries in the Middle East.

Selected Importers

  • Brazilian corn is boosted 500,000 tons to 1.0 million on tight domestic supplies.
  • Chinese corn is lowered 500,000 tons to 2.0 million on trade to date.
  • Vietnamese corn is raised 1.9 million tons to a record 6.9 million reflecting strong demand for competitively priced imports mainly from South America. Starting 2013/14, the import series is revised to incorporate trade data and increased residual disappearance.
  • Saudi barley is up 500,000 tons to 9.0 million on larger-than-expected shipments from the European Union.
  • U.S. oats is down 100,000 tons to 1.5 million on trade to date.