Coarse Grains. World Markets and Trade. September 2019 – USDA Sept. 12, 2019
OVERVIEW FOR 2019/20
Global corn production is forecast down with smaller crops for the United States and Ukraine. Global trade is little changed from last month. The U.S. season-average farm price is unchanged at $3.60 per bushel.
OVERVIEW FOR 2018/19
Global corn production is slightly lower this month driven by India and Paraguay. Global trade is up with higher imports for the European Union and Iran more than offsetting lower imports by Mexico. For exports, Brazil is up reflecting record shipments in August. U.S. exports are cut based on sales and shipments observed through early September. The U.S. season-average farm price is unchanged at $3.60 per bushel.
Global: Since the August WASDE, major exporters’ bids have all dropped, reflecting abundant supplies. Argentine bids are down $23/ton to $140 and Brazilian bids are down $21/ton to $151. Black Sea bids have fallen $32/ton to $155. U.S. bids have dropped $29/ton to $156 as sales and shipments remain weak in the face of strong competition. Although forecast greater exportable supplies have depressed prices, the spread against Brazilian bids has narrowed from last month with the approach of harvest in the United States.
Large Global Barley Production Drives Prices Down
Barley harvest is largely complete for Northern Hemisphere countries. Crops for Canada, the European Union, Russia, and Ukraine are larger than a year ago, contributing to sharply higher global production for 2019/20, the largest since 2008/09. Harvest in the Southern Hemisphere countries, mainly Argentina and Australia, is still a few months away, although Australia’s prospects are lowered this month. Prospects of large exportable supplies have already driven export prices down 25 percent ($60 per ton) from a year ago. Note the high prices for Australia are likely a function of current crop expectations.
Growth in import demand, nevertheless, is expected to be limited due to developments in the top importing countries. Saudi Arabia has been shifting away from feeding raw barley to using manufactured feed in feed rations to improve feed efficiency. China’s imports from its top supplier, Australia, have slowed down amid the ongoing antidumping investigation. Any growth in feed use in China will likely be constrained by animal losses from African Swine Fever. Saudi Arabia and China combined account for 60 percent of global barley imports.
Moreover, abundant supplies of corn in the global market will also heighten competition in feed demand, as corn is priced much lower than feed barley and generally considered to be of higher energy value in feed rations.
China’s Sorghum and Barley Balance Sheet Revised
This month, China’s Supply and Demand balance sheets for sorghum and barley are revised to incorporate the revisions by China’s National Bureau of Statistics (NBS). In August, the NBS released revised area, yield, and production estimates for sorghum and barley from 2007/08 through 2017/18 based on its most recent agricultural census.
For sorghum, the NBS revision takes away a cumulative 4.6 million tons in production for the 10-year period. For barley, the revision removes a cumulative 2.3 million tons in production for the period. With substantial reductions in supply, total consumption in both categories - food, seed, industrial use as well as feed and residual use - are adjusted slightly lower, reflecting relatively strong demand at the time. Ending stocks fall lower on smaller production and this relatively strong use.
The magnitude of the revision appears significant for both sorghum and barley. However, the revision has little impact on supply and use for coarse grains (corn, barley, sorghum, oats, and rye) because corn is the largest and most commonly produced and used crop. Sorghum and barley combined account for only about 2 percent of coarse grain production and 5 percent of coarse grain use.