Corn yields in the U.S. this year are expected to hit another record yield set in 2003, say USDA analysts, who are forecasting 10,410 million bushels of production from 73.2 million acres, with a national average yield of 142.2 bushels per acre.
And corn used for ethanol production is expected to increase by 13 percent.
The projected farm price of $2.60 per bushel is 15 cents higher than the midpoint of the 2003/04 range.
The predictions were announced at the annual Agricultural Outlook Forum at Arlington, Va., by USDA's Interagency Commodity Estimates Committees.
The forecast yield is up almost 300 million bushels over 2003.
However, says commodity analyst William Tierney, reduced carryin stocks will be partially offsetting, and total supplies are projected at 11,321 million bushels, up just 110 million over 2003/04.
Tierney, who is with the World Agricultural Outlook Board, Office of the Chief Economist, USDA, says an expanding ethanol market will push use of corn by another 1.3 billion bushels in 2004/05.
“Ethanol production has expanded rapidly, and as of January, 2004, is approximately 3.1 billion gallons per year, with additional capacity planned or in the process of being built.”
Ethanol producers have made a commitment to those states that have banned MTBE in gasoline fuels that they will have sufficient supplies of ethanol to replace the MTBE.
Feed and residual use of corn is expected to decline from 2003/;04 levels because other feed grains are expected to provide additional feed, and beef production is expected to decline.
“With normal weather, grain sorghum production will increase from the drought-reduced levels of prior years,” Tierney says. “With larger supplies, feed and residual use of sorghum is expected to increase. Total beef production is projected to decline as more heifers are held back to rebuild the cow herd. In addition, byproducts from ethanol production will displace feed grains in some rations.”
Other corn food, seed, and industrial uses are now “mature markets,” he says, and while they are continuing to grow, that growth will depend on an increasing population and expanding economic growth. Corn used to make high fructose corn syrup is expected to grow 1 percent. The syrup is used mostly in soft drinks, a market that is being hit by weight-reduction campaigns. Corn used to make starch is expected to increase as the economy grows and consumes more paper and building materials. Corn cereals and other corn products are growing along with population growth.
U.S. corn exports
U.S. corn exports are projected at 2,100 million bushels, Tierney says, an increase of 100 million from the 2003/04 forecast.
“The global setting for U.S. feed grain trade is more favorable than for wheat, and corn exports will face less competition from China and South Africa. But normal growing conditions for Argentina in 2004/05 should lead to an increase of exports from that country. Feed-quality wheat exportable supplies should return to a more normal level, displacing some corn feed use. The European Union, Russia, and Ukraine will all return as major feed-quality wheat exporters.”
With more feed-quality wheat available on the world market, corn imports will decline in some countries, such as South Korea, the European Union, the Philippines, and Israel. Eastern Europe will have more normal feed crops and higher feed exports. With the accession of 10 Eastern European countries to the European Union, much of Eastern Europe's grain exports will go to the rest of the European Union, reducing the external import needs of corn and freeing up more feed-quality wheat for export from the EU.
China's corn imports “will have a major impact on the U.S.' share of the world feed grain trade,” Tierney says. “Although Chinese domestic corn prices rose sharply in the fall and winter of 2003/04, and the government announced a number of measures to increase crop plantings, China's farmers are expected to continue to switch crop land to soybeans, cotton, and other high value crops. In addition to competition from more profitable crops, corn and wheat plantings are imperiled by the conversion of arable land to non-agriculture uses and by the reduced availability of water for irrigation.”
But, he says, the volume of China's corn exports will continue to depend largely on the level of its corn stocks and by government export incentives.
U.S. corn exports in 2004/04 could also be affected by the avian influenza outbreaks in the poultry flocks of at least 10 Asian countries. “Most analysts agree that the greatest impact of the disease is the reduction in production due to the loss of export markets, and the decline in consumption as consumers react to stories about the disease being transmitted to humans,” Tierney says. “But from a global perspective, the increase in poultry production in countries unaffected by the disease, or an increase in pork production, may act to absorb some of the feed ingredients that are no longer consumed by the Asian poultry industry.”
Ending corn stocks are projected at 821 million bushels, a drop of 80 million from the forecast for 2003/04.
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