The Grain News
Grain News: April 2011
- Category: Grain News
- Published on Friday, 08 April 2011 19:44
U.S. estimates increase in planted hectares for all feed grains
Farmers in the United States plan to increase corn, sorghum and barley hectares in 2011, which, according to farmers, indicates their response to market demands.
“In Kansas, our total corn and sorghum acres are expected to increase 5.5 percent over 2010, which just shows that our growers are responding to the needs of our customers,” said Terry Vinduska, a corn and sorghum farmer from Marion, Kan.
“That’s about 7.6 million acres (3.1 million hectares) of feed grains for livestock and ethanol in Kansas, with a substantial amount left over to meet the needs of our foreign buyers,” said Vinduska, who is also chairman of the U.S. Grains Council.
The increases in Kansas are similar to those across the country (see the table below). If realized, the national planting estimate of 35.69 million hectares (92.2 million acres) for corn would be the second-highest in the United States since 1944, behind only the 37.83 million hectares (93.5 million acres) planted in 2007.
Planting estimates come from a survey conducted by the U.S. Department of Agriculture during the first two weeks of March. The 2011 estimates can change based on weather conditions at planting or changes in commodity prices before planting that influence last minute changes by farmers.
“This healthy expansion of corn planted area comes at a time when world coarse grains demand is increasing,” said Thomas C. Dorr, U.S. Grains Council president and CEO. “The planting report is the first official indication that U.S. farmers are responding to market signals by significantly expanding production area.”
Dorr said U.S. farmers are reliable, long-term suppliers of course grains and co-products, and demonstrate their commitment to international customers’ needs when making planting decisions.
“Farmers have responded to market indicators and will plant more corn acres this year. We anticipated these planting numbers because farmers have invested in building demand and take a great interest in meeting the needs of their customers,” said Dwayne Siekman, CEO of the Ohio Corn & Wheat Growers Association.
Industry analysts said planting estimates were within expectations, although they continued to stress final numbers can vary depending on weather through planting time. Final planting numbers will be released in a June 30 USDA report.
Grain Stocks Surprise
Although planting intentions were within a range of what analysts expected, U.S. corn stocks were 3.7 million tons (170 million bushels) smaller than most anticipated.
USDA said there were 142.0 million tons (6.52 billion bushels) in storage as of March 1, down 15 percent from March 2010 (see chart below).
“The smaller-than-expected inventory implies that consumption during the second quarter of the 2010-11 marketing year was larger than expected,” said Darrel Good, an agriculture economist with the University of Illinois.
Good said it appears as though corn consumption is continuing at a rate that “cannot be sustained by available supplies.” He noted that farmers have sold more corn into the marketplace as prices surged.
This has created a tighter U.S. stocks situation than anticipated while U.S. corn use and prices continue to be strong. However, global course grain supplies have increased 6.5 million tons, due mostly to increased production in other markets.
Looking further ahead, trend U.S. corn yields estimated by the National Corn Growers Association would result in a U.S. corn crop of 348.0 million tons (13.7 billion bushels) and would rebuild U.S. ending stocks by 4 million tons or more by the end of the 2011 marketing year.
That depends, of course, on corn usage numbers, which continue to evolve. However, analysts said they believe some use estimates are overstated and will come down, increasing overall grain supplies.
“Even after a difficult growing season last year, farmers produced the third largest crop and it initially shows they will produce another record crop this year,” said Bart Schott, a farmer from Kulm, N.D., a state that is expecting an increase of 182,100 corn hectares (450,000 acres) this year.
U.S. corn total supply and quarterly use since the 1975-76 marketing year
In addition to Kansas and North Dakota, significant corn planting increases are expected in South Dakota (344,000 additional hectares), Iowa (202,300 additional), Nebraska (141,600 additional) and Ohio (101,200 additional).
The U.S. Corn Belt overall is in good shape, an analyst said. Harvest weather last fall was nearly perfect, and that allowed farmers to get a lot of fields ready for planting this spring. He said that should make planting faster should weather cooperate, and early planting tends to boost yields.
Feed, grain recovery moves quickly in Japan
The earthquake and tsunami that devastated Japan – and is considered by the Red Cross to perhaps be the largest natural disaster in history – has not yet significantly impacted feed and grain demand in the country and is not likely to do so.
“In spite of the horrendous losses suffered in Japan, the U.S. Grains Council believes the consumer demand in Japan will remain strong and will drive continued imports of U.S. coarse grains,” said Tommy Hamamoto, the Council’s director in Japan. “In the short-term, logistical issues will continue to be a problem, but the Japanese feed industry is working hard to recover from the damage and in fact has already recovered significantly.”
Four of Japan’s major importing facilities and attached feed mills that account for about 15 percent of the country’s compound feed production were significantly damaged in the earthquake and subsequent tsunami on March 11.
Unaffected mills, however, were able to make up the difference and most mills were back up and running relatively quickly. Only about 5 percent of the port damage had yet to be repaired as of April 5, but it may take up to a year before becoming fully operational.
A majority of livestock and poultry operations in Japan are located on the west side of Japan and were furthest away from the earthquake and tsunami, although there was some concern about radiation levels in some agriculture production areas.
As a result, Hamamoto said he expects overall feed production to be down only 5 percent – or less – for the year.
“Council staff in Tokyo have been working day and night since the disaster, talking to all major grain, transportation, feed mill and livestock industry contacts,” said Thomas C. Dorr, U.S. Grains Council president and CEO.
“Our Tokyo office has become an important source for up-to-date information on the grain and livestock sectors for Ministry of Agriculture in Japan (MAFF), the U.S. Embassy and, of course, to the Council,” Dorr said.
Japan is a very advanced country that was well prepared for a disaster and is recovering quickly, Dorr said.
He noted that Japan had not asked for any specific assistance in the agriculture sector. Instead, it suggested focusing on supporting the Red Cross, which is helping people recover and deal with the disaster. Many agriculture groups in the United States have supported such efforts, including by donating grain that is sold in Red Cross’ name, with dollars then going to Red Cross efforts.
The Red Cross said as of April 6, a vast majority of key infrastructure such as highways, ports and airports had been restored and there were improvements in electric, gas and water supplies.
Council efforts moving forward in key regions
Sorghum feeding trials are underway in Saudi Arabia, where the U.S. Grains Council is demonstrating the higher value of low-tannin U.S. sorghum compared to high-tannin varieties common in some markets.
“We’re also working to help buyers there understand Free On Board (FOB) contracts compared to Cost and Freight (CFR), and we recently had a group to the United States to explore the use of dried distiller’s grains with solubles (DDGS),” said Chris Corry, the Council’s senior director for international operations.
In Algeria, Corry said the Council has partnered with the Ministry of Agriculture to share the positive results of a U.S. DDGS feeding trial. “The goal is to help them see the value so they lower import duties,” he said. “Lower import duties mean it costs less to feed livestock, which means food costs will go down.”
Efforts also continue in Morocco, Jordon and Tunisia. In Tunisia, Corry said, a memorandum of understanding to develop grain labs was approved. He said that shows “opportunities are opening up” and policies may be forthcoming to open markets and improve efficiencies.
“That means jobs, consumer confidence and a whole range of benefits for their citizens,” he said.