Foreign grain production up slightly

WASHINGTON — Foreign coarse grain production in 2007-2008, forecast at 708 million tons, is up 1 percent from a year earlier.

Foreign is defined as world production less U.S. production.

Area increased in response to attractive prices, but average yield declined slightly due to poor weather in several key regions.

Corn

Foreign corn production is expected to increase slightly, to a record 440 million tons. Foreign corn area is projected up 3 percent, as corn prices were attractive enough relative to other crops in most countries to maintain or increase area.

However, in the European Union, strong prices for wheat and oilseeds, limited corn plantings, and severe drought led to the abandonment of some planting area, especially in Romania.

Europe’s harvested corn area dropped 12 percent, and average yield declined 3 percent. EU corn production dropped to its lowest level since 1995-1996.

Corn production in other areas of Europe also dropped, mainly as a result of a drought in Serbia.

Argentina, the world’s second-largest corn exporter, is projected to have reduced corn production in 2007-2008. Attractive prices encouraged area expansion, but a late freeze in some areas and dryness during critical growth stages contributed to a drop in yields. Production is forecast down 4 percent to 21.5 million tons.

Offset

Increased corn production prospects in most other regions are offsetting the declines in Europe and Argentina.

Brazil increased planted area, and good weather supported record first-crop yields and prospects for record second-crop yields, allowing Brazil to emerge as a large corn exporter despite strong internal demand.

Strong corn prices increased corn area in South Africa, and rains there have been favorable in 2007-2008, in dramatic contrast to drought a year ago. Corn production is projected up over 50 percent to 11.0 million tons.

With increased area encouraged by high prices and year-to-year gains in yields, corn production is also forecast at a record for India, Indonesia, and the Philippines.

However, in China and Russia, dry weather reduced yield prospects, offsetting increased area. China corn production stagnated at a forecast 145 million tons.

The corn production increase projected for Russia is relatively small.

In Ukraine, higher area and a small increase in yields, despite growing-season heat and dryness, boosted corn production 16 percent.

Oats

Foreign oat production increased 12 percent to 24 million tons, mostly due to increased yields in the EU and area expansion in Canada.

Good yields for oats in Finland and Sweden helped boost European production 1.2 million tons to 8.9 million.

Canada produced its largest oat crop in 31 years, mostly due to increased area due to attractive prices. Average yields were slightly better than the previous year, but well below record levels. Production increased 22 percent to 4.7 million tons.

Russia’s oat production is estimated up 0.5 million tons to 5.4 million mostly, due to increased yields.

Global stocks

Global coarse grain beginning stocks are estimated at 138 million tons, down 28 million from the previous year, with much of the drop occurring in the United States.

Foreign coarse grain beginning stocks are estimated down 10 million tons to 102 million. The largest declines are for the EU, China, Canada, and Australia.

Corn stocks are 79 percent of estimated global coarse grain stocks, and in China and the United States account for 48 percent of the estimate. China has been reducing expensive-to-maintain government stocks for the last 8 years.

U.S. coarse grain stocks at the start of 2007-2008 were down 19 million tons from 2006-2007, but accounted for 26 percent of the world total.

Canada’s coarse grain beginning stocks were also relatively tight at 3.5 million tons.

Use expectations

World coarse grain consumption in 2007-2008 is forecast up 60 million tons to a record 1,069 million tons, despite record high prices.

Foreign coarse grain consumption is projected up 20 million tons, a growth of 3 percent.

Foreign coarse grain feed use is forecast up 11 million tons to 493 million tons. Foreign wheat feed use is forecast down 7 million tons, with coarse grains replacing wheat in some animal rations in the EU.

Livestock sectors in some countries continue to adjust to outbreaks of animal diseases, especially avian influenza.

Income growth has supported strong demand for meat, especially in countries such as China and India. Record high corn prices prevalent in most parts of the world during 2007-2008 are supported by this demand.

European effect

The EU is playing a crucial role in coarse grain use. After a second consecutive year of weather problems that reduced wheat and coarse grain production, the EU has responded by eliminating import levies.

The EU is electing to import coarse grains, mostly corn and sorghum, to partly offset shortfalls in feed supplies.

In China, economic growth remains robust, and demand for meat is growing, but animal diseases, especially blue ear in hogs and highly pathenogenic avian influenza in poultry, have limited the supply response.

Coarse grain feed use is expected to grow 2 percent to 107 million tons in China. The very dramatic rise in soybean meal use may be moderating the increase in corn use, as feed rations become more balanced and efficient.

East Asia — Japan, South Korea, and Taiwan — is expected to have stagnant consumption of feed grains, declining about 1 percent.

Southeast Asia is expected to increase coarse grain use 1 million tons to 28 million as poultry production and consumption have adjusted to chronic problems with avian influenza and are again expanding.

India’s coarse grain consumption in 2007-2008 is forecast up 9 percent to 35 million tons.

Food, seed, and industrial use of coarse grains is expected to account for all the growth due to increased production and the high prices of wheat and rice.

Consumption of coarse grain in the former Soviet Union is expected to decline nearly 2 percent to 50 million tons in 2007-2008 as reduced production in Ukraine leads to decreases for both feed and other uses, more than offsetting increases in some other countries.

Food use

High prices for wheat and rice are expected to encourage coarse grain food use.

Coarse grain consumption in Latin America (excluding Mexico) is expected to increase 3 million tons to 83 million in 2007-2008. Modest growth is expected throughout the region, with Brazil accounting for more than half the increase.

In Canada, coarse grain consumption is expected to be nearly unchanged at 25 million tons. The high price of grains, along with the strong exchange rate relative to the U.S. dollar, is squeezing margins for meat producers.

A second year of drought limited wheat and barley production in Australia, but good rain is producing a record sorghum crop. Australia’s coarse grain use is projected to expand 15 percent to 7 million tons.