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July2011USDAWASDEReportCorn&GrainSorghum

DanielOBrienExtensionAgriculturalEconomist,KStateResearchandExtension
Email:dobrien@ksu.edu,Twitter:@KSUGrains
July14,2011

SummaryofJuly2011USDAWASDEReportforFeedgrains
TheJuly12thUSDACropProductionandWorldAgriculturalSupplyDemandestimatesreportswere
initiallyinterpretednegativelybyfeedgrainmarkets.However,ongoingquestionsanduncertainties
abouta)final2011U.S.cornplantedandharvestedacreage,b)2011growingseasonweather
patternsandfeedgrainyieldproductionprospects,c)theeffectsofincreasinglylikelychangesin
domesticethanolsupportpolicyonethanolproductionandneededcornusage,andd)influencesof
broaderfinancialandeconomiceventsandtrendsoncorn,grainsorghumandotheragricultural
commodityprices.Giventhequestionsremainingtobeansweredabout2011cornandgrain
sorghumproduction,theinformationinupcomingAugust,SeptemberandOctoberUSDACrop
ProductionandWASDEreportswillhaveagreaterimpactonU.S.feedgrainmarketpriceprospects
thanwilltheJulyWASDE.
U.S.CornSDAdjustmentsforOldCropMY2010/11:Severaladjustmentsweremadetotheoldcrop
2010/11supplydemandbalancesheetreflectingtheresultsoftheJune30thUSDAGrainStocks
report.The2010/11marketingyearlastsfromSeptember1st,2010tillAugust31st,2011.After
moderatelyloweringexportsandnonethanolFSIuse,sharplydroppinglivestockfeedandresidual
use,andanincreasinginethanolusageforcorn,oldcropMY20100/11endingstockswereprojected
toincreaseby150millionbushelsfromJuneto880millionintheJulyWASDE.ProjectedMY2010/11
endingstockstousewereincreasedmarginallyto6.6%.Assmalldecreaseof$0.10wasmadeforMY
2010/11projectedU.S.cornpricesdownto$5.15$5.35perbushel.
U.S.CornSDAdjustmentsforNewCropMY2011/12:TheUSDAWASDEreportreflectedincreased
projectionsof2011U.S.cornplantedandharvestedacreage,takenfromtheJune30thUSDANASS
Acreagereport.IncreasedU.S.cornplantedacres(upto92.3millionafterdroppingto90.7millionin
theJuneWASDE)wasasurprisetothecornmarketscausingsomemarketanalyststodiscounttheir
accuracy.Toatleastpartiallyaddressthisissue,USDANASSplanstoresurveyselectednorthernCorn
Beltstates(NorthDakota,Minnesota,SouthDakota,andMontana)inJulytoattempttoaccountfor
theimpactofeitherdelayedorpreventedplantingoffeedgrainsandothercropsinthoseregions.
ProjectedincreasesinU.S.2011cornproduction(up420millionbushelsfromtheJuneprojectionto
13.427billion)combinedwithincreasedbeginningstocksforMY2011/12motivatedanincreasein
projectedtotalusageofcorn(i.e.,increasedethanol,exportandfeedandresidualuseoffsettinga
decreaseinnonethanolFSIuse).Takentogether,evenwithexpectedincreasesinprojectedcorn
usage,MY2011/12U.S.cornendingstocksareprojectedtoincreaseto870millionbushels.
Projectedendingstockstouseincreasedto6.4%fromtheJuneprojectionof5.2%forMY2011/12.
Asaresultoftheincreasedendingstocksandstockstouse,projectedcornpricesforMY2011/12
weredroppedby$0.50to$5.50$6.50perbushel.

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U.S.GrainSorghumSDAdjustmentsforMY2010/11andMY2011/12:U.S.grainsorghumoldcrop
andnewcropsupplydemandbalancesbothwereprojectedtonarrowintheJulyWASDEreport.
Accountingfora)asmallincreaseinoldcropMY2010/11feedandresidualusewhichleadtoa5
millionbusheldecreaseinMY2010/11endingstocksto27millionbushels,b)300,000acredeclines
inU.S.grainsorghumplantedandharvestedacreagefollowingfromtheJune30thUSDANASS
Acreagereport,andc)requisitedeclinesin2011productionandMY2011/12totalsupplies,feedand
residualuse,FSIuseandexports,projectedMY2011/12U.S.grainsorghumendingstockswere
projectedtodeclineto27millionbu..ProjectedU.S.grainsorghumendingstockstouseforMY
2011/12declinedto9.0%.However,evenwithadeclineinendingstocksandendingstockstouse,
U.S.grainsorghumpriceprojectionsfollowedthedirectionofthemuchlargerU.S.cornmarket,with
projectedMY2011/12grainsorghumaveragepricedeclining$0.50perbusheltoarangeof$5.10
$6.10perbushel.
WorldCoarseGrainSupplyDemandTrendsforMY2011/12:EvenwithincreasedWorldcoarsegrain
andcornendingstocksforMY2011/12,theseUSDAWorldprojectionsaresubjecttomajorchange
overthecoming35months.TheincreasedWorldcoarsegrainandcornproductionandending
stocksprojectionsforMY2011/12stemmingfromtheJulyWASDEreportareheavilydependenton
increases2011U.S.cornproductionnumbers.Forreasonsdiscussedabove,prospectsforincreased
U.S.feedgrainproductioninMY2011arehighlyuncertainatthistime,andaresubjecttochanging
2011acreagenumbers,worrisomeweatherpatternsintheU.S.CornBelt,andprospectsforbehind
schedulecropdevelopmentandmaturityissuesinfall2011.Itmaybethattheseissuesdonotcome
tofruitionintermsoflimitingU.S.feedgrainproductionin2011.Untilmoreisknownwithsurety
about2011U.S.feedgraincropprospects,judgementneedstobereservedaboutWorldcoarsegrain
andcornsupplydemandbalancesforMY2011/12.

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I.U.S.Corn&GrainSorghumMarketSituationandOutlook
Corn&GrainSorghumMarketsContinuedatleastmoderatelystrongsupportforfeedgrainprices,
withacreage,yieldandproductionuncertaintydominatingmarketsthroughsummerfall2011.
However,withUSDAcornsupplydemandbalancesatleastmodestlymorenegativefollowingthe
JulyCropProductionandWASDEreports,farmersshouldbewaryofmajordownturnsthatcould
occurincornfuturesmarketsifthe2011U.S.corncropfullyovercomesthelingeringquestionsand
problemsitnowfacesgoingthroughthesummergrowingseason.

U.S.CornSupplyDemand&PriceProjectionsforMY2010/11&MY2011/12
ChangesinOldCropMY2010/11U.S.SupplyDemand&Prices:TheUSDAmadeseveralchangesin
theoldcropMY2010/11U.S.supplydemandbalancesheetinresponsetolargerthanexpectedJune
1stU.S.cornstocksintheJune30thU.S.GrainStocksreport(Table1).The2010/11marketingyear
forU.S.cornrunsfromSeptember1,2010toAugust31,2011withthesummerquarter(June
August)stilltobecompleted.
Table1.U.S.CornSupplyDemandBalanceSheet:MY2007/08throughMY2011/12
(July12,2011USDAWASDEReport)
Item
PlantedArea(millionacres)
HarvestedArea(millionacres)
Yieldperharvestedacre(bushels/acre)

BeginningStocks
Production
Imports
TotalSupply
Ethanolforfuel
NonethanolFood,Seed&Industrial
Exports
Feed&Residual
TotalUse
EndingStocks
%EndingStockstoTotalUse
U.S.AverageFarmPrice($/bushel)

2007/08
93.5
86.5
150.7

2008/09
86.0
78.6
153.9

2009/10
86.4
79.5
164.7

2010/11
88.2
81.4
152.8

2011/12
92.3
84.9
158.7

1,708
12,447
30
14,185
5,050
1,380
1,875
5,000
13,305
880
6.6%
$5.15$5.35

880
13,470
20
14,370
5,150
1,400
1,900
5,050
13,500
870
6.4%
$5.50$6.50

Midpoint=

Midpoint=

$5.25

$6.00

millionbushels

1,304
13,038
20
14,362
3,049
1,393
2,437
5,858
12,737
1,624
12.8%
$4.20

1,624
12,092
14
13,729
3,709
1,316
1,849
5,182
12,056
1,673
13.9%
$4.06

1,673
13,092
8
14,774
4,568
1,371
1,987
5,140
13,066
1,708
13.1%
$3.55

EthanolproductionusageofcorninMY2010/11wasestimatedtobe5.050billionbushels(bb),up50
millionbushel(mb)fromtheJuneWASDEreport.Nonethanolfood,seedandindustrialuseofcorn
wasestimatedtobe1.380bb,down20mbfromJune.Cornexportsareprojectedtobe1.875bb,
down25mbfromJune.Feedandresidualusageofcornwasestimatedtobe5.000bb,down150mb
fromJune.Totalusageofcornisprojectedtobe13,305bb,down145mbfromJune.

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U.S.cornendingstocksforMY2010/11areestimatedat880mbforMY2010/11,up150mbfrom
June.The%endingstockstouseforMY2010/11isprojectedtoby6.6%,upfrom5.4%intheJune
WASDEreport,andmarginallyhigherthantherecordlowof5.0%inMY1995/96.AverageU.S.corn
pricesforMY2010/11wereadjustedlowerto$5.15$5.35perbushel,downfrom$5.20$5.50inthe
JuneWASDE,andabovetheaveragepriceof$3.55inMY2009/10.
Comments:AdjustmentsmadeinMY2010/11oldcropU.S.cornsupplydemandbalancesreflecttheUSDAs
effortstoreconcilepreviousJuneWASDEprojectionswithlowerthanexpectedcornusageduringtheMarch
May2011periodasindicatedintheJune30thUSDANationalAgriculturalStatisticsService(NASS)GrainStocks
report.Accordingtothesefigures,thebruntofoldcropcornpricerationingwasbornebyreducedlivestock
feedusage(down150mb),withexports(down25mb)andnonethanolFSIuse(down20mb)alsodeclining.
ThesecumulativereductionsinprojectedMY2010/11useof195mbwereoffsettosomedegreebyaprojected
increaseincornethanoluse(up50mb),givinganetreductionincornusageof145mb.Combinedwithasmall
(5mb)increaseinU.S.cornimports,endingstocksofU.S.cornintheoldcrop2010/11marketingyear
increasedtoby150mb,from730mbto880mb.

U.S.NewCropCornProductionin2011:TheUSDAWorldAgriculturalOutlookBoardincreasedits
projectionof2011U.S.cornproductionintheJuly12,2011WASDEreport(Table1).Plantedacreage
ofcornin2011isprojectedtobe92.3millionacres(ma)up1.6mafromthe90.7maprojectionin
theJuneWASDEreport.ThisincreasewasbasedontheresultsoftheJune30thUSDANASSAcreage
report,andwillbesubjecttoadjustmentintheAugustCropProductionreportduetoadditionalJuly
surveystobetakeninthenorthernstatesofMinnesota,Montana,NorthDakota,andSouthDakota.
HarvestedcornareaintheU.S.in2011isprojectedtobe84.9ma,up1.7mafromtheJuneWASDE
reportbutalsosubjecttopotentialadjustmentsintheAugustCropProductionreport.
Theaverage2011U.S.cornyieldisprojectedtobe158.7bu/ac.,unchangedfromtheMayandJune
WASDEreports.Thisyieldestimateisbasedonasimplelineartrendofthenationalaverageyieldfor
19902010adjustedforslowerthannormal2011U.S.cornplantingprogress.U.S.cornproductionin
2011isprojectedtobe13.470billionbushels(bb),upfromtheJuneWASDEestimateof13.200bb,
andarecordhighcomparedto12.447bbin2010and13.092bbin2009.
Comments:ThisprojectionofU.S.2011cornproductionishighlytentative.Questionsabouta)theimpact
oflateplantedcornintheeasternandnorthernU.S.CornBeltoncropdevelopmentandmaturityinfall2011,
b)theamountofflooddamagedcornandothercropacresintheU.S.alongtheMissouri,OhioandMississippi
riversandthetribututaries,c)extremewinddamagetocorninpartsofIowaandadjoiningstatesinresponset
arecentmajorstorm,andd)potentialdryweather/droughteffectsinthewesternCornBeltduringthelater
halfofJulyfollowingfromintermediatetermweatherforecastsareallrelevanttoreasonableexpectationsfor
final2011U.S.cornproduction.
InmostyearsamajorityofthepossibleenvironmentalthreatsduringthegrowingseasontoU.S.corn
productiondonotcometofruition.However,giventhenumberofpotentialdamagingfactorsthatare
affectingtheprospectsforthe2011U.S.corncrop,thelikelihoodofsignificantproductionshortfallsseemtobe
largerthanusual.

TotalNewCropCornSuppliesforMY2011/12:FollowingfromchangesinprojectedoldcropMY
2010/11endingstocks,beginningstocksforMY2011/12wereprojectedtobeof880mb,up150mb
fromtheJuneWASDEreport.With2011U.S.cornproductionprojectedtobe13.470bb(see
commentsabove),andimportsof20mb,totalU.S.cornsuppliesforMY2011/12areprojectedtobe
14.370bb,up420mbfromtheprojectionintheJuneWASDE.Totalcornsuppliesof14.470bbinMY
2011/12wouldbeupfrom14.185bbinMY2010/11,butdownfrom14.774bbinMY2009/11.
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Comments:ThelargechangesorswingsinUSDAprojectionsof2011cropproductionfromtheMayWASDE
(14.255bb),toJune(13.950bb),andthentoJuly(14.370bb)areamajorcontributingfactorintheincreasing
volatilityofcornfuturespricesduringspringsummer2011.Concernsabout2011cornproductionandsupply
prospectsandthelikelihoodofcontinuedchangesandadjustmentsinUSDAcornproductionandsupply
projectionsarelikelytocontinuetocausecornpricestobevolatilethroughtheremainderofthesummerand
possiblytheearlyfallof2011.

U.S.CornUsageforMY2011/12:EthanoluseofU.S.cornforMY2011/12isprojectedtobe5.150
bb,up100mbfrom5.050bbinMY2010/11andfrom4.568bbinMY2009/10.Theannualrateof
increaseinU.S.ethanolproductionhasslowed,andmaybeaffectedbywhatappeartobe
increasinglylikelychangesinU.S.ethanolpolicyinregardstoblenderscreditsandimporttariffs
duringMY2011/12.U.S.ethanolexportshaveincreasedrecently,withtheU.S.steppingintoexport
marketnichespreviouslytakenbyBrazil.Nonethanolfood,seedandindustrialcornuseisprojected
tobe1.400bbinMY2011/12,down5mbfromJune,butstillupfrom1.380bband1.371bbinMY
2010/11andMY2009/10,respectively.
Cornexportsareprojectedtobe1.900bbinMY2011/12,upfrom1.800bbintheJuneWASDE,and
upfrom1.875bbinMY2010/11,butdownfrom1.987bbinMY2009/10,respectively.Feedand
residualuseofU.S.cornisprojectedtobe5.150bbinMY2011/12,up50mbfromtheJuneWASDE,
andupfrom5.000bbinMY2010/11,andfrom5.140bbinMY2009/10.Increasedprojectionsof
newcropU.S.cornexportsandfeedandresidualuseresultfromtheprojectedincreaseinU.S.corn
supplies,lesstightnessinsupplydemandbalances,andlowerprojectedcornpricesforMY2011/12
intheJulyWASDE.
Comments:ProspectsforU.S.cornexportsremainpositiveintheneartermevenwiththerationingeffectof
higherpriceshavinganegativeimpact.ConsistentincreasesinWorldcoarsegrain/cornusagesinceMY
2009/10areoutpacingtheseWorldcoarsegrainproductionincreases,keepingforeign(nonU.S.)exporttrade
ofcoarsegrainsrunningstrongandleadingtoprojectionsoftighterWorldcoarsegrainandcornending
stocks.OvertheMY2009/10MY2011/12period,projectionsareforWorldcoarsegrainproductionoverall
toincrease40.73mmt(up3.7%)whileusageincreases49.95mmt(up4.5%).Asaconsequenceofusage
outpacingproduction,Worldcoarsegrainendingstocksareprojectedtodeclineby45.89mmt(down23.5%)
overtheMY2009/10MY2011/12period.
Cornproductionprospectsin2011forothermajorWorldcornandothercoarsegrainexporters(Argentina,
Brazil,Ukraine,Russia,etc.)willcontinuetoinfluenceU.S.cornexportsinthecomingyear,alongwithbroader
financial(U.S.dollarexchangerate)andeconomic(economicgrowthofcornimportingcountries)factors.
Thecontinuedavailabilityofdistillersgrainsfromgrainstarchbasedethanolproductionforlivestockfeedingis
competingwithandaffectingtheuseofcornfordomesticlivestockfeeding.Prospectsforlivestockenterprise
profitabilityandfeedusageremainmoderatelypositiveforMY2011/12,butwouldbenegativelyimpactedifa
shortcrop/extremelyhighpricemarketoutcomeoccurredthisyear.USDAprojectionsofquarterlycashprices
forsteersandbroilersareprojectedtoremainstrongthroughtheremainderof2011andinto2012.Pricesfor
barrowsandgiltsareprojectedtodeclineseasonallyinfall2011,butthentobemoderatelystrongin2012.
Turkeypricesareexpectedtoremainstrongthroughout2011,butthentodeclineinthefirsthalfof2012.

CornEndingStocksinMY2011/12:EndingstocksofU.S.cornareprojectedat870mbinMY
2011/12,up175mbfromaprojectionof695mbintheJuneWASDE.Atotalof870mbendingstocks
isMY2001/12ismarginallylessthan880bbinMY2010/11andlessthan1.708bbinMY2009/10.
Thisrepresents6.4%endingstockstouse,upfromtheprojectionof5.2%fromMY2011/12inthe
JuneWASDE.Itisalsolowerthantheestimateof6.6%inMY2010/11(whichhadbeen5.4%inthe
JuneWASDE),andmarkedlylowerthan13.1%S/UinMY2009/10,13.9%inMY2008/09,and12.8%
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inMY2007/08.TherecordlowU.S.corn%stockstousefiguresincetheearly1970swas5.0%inMY
1995/96.
Comments:Given2011U.S.cornproductionuncertaintiesaboutacreageandyields,thisprojectionforMY
2011/12of880mbendingstocksand6.4%endingstockstouseishighlytentative.Iffinal2011U.S.corn
productionis250500mblowerthanthe13.470bbamountprojectedbytheUSDAintheJulyWASDEreport,
thenafteraccountingfortheimpactofpricerationingonusage,finalU.S.MY2011/12endingstockscould
dropto450650mb(anearrecordlow5%stockstouseorless).

CornUseandEndingStocksTrendsDuringMY2004/05throughMY2011/12:SinceMY2004/05,
U.S.feedandresidualuseofcornhasgenerallydeclined(Figure1).The5.050bbprojectionforMY
2011/12continuesthisgeneraltrend(althoughMY2010/11useof5.000bbismarginally50mb
lessthaninMY2011/12).Cornuseforethanolhasincreasedsteadilybutatadecreasingrateover
thesameperiodfrom1.323bbto5.150bb(iftheJulyWASDEprojectionholdstrue).Theseresults
indicatethatdomesticusageofU.S.cornforethanolproductionisgreaterthantheamountofcorn
useddirectlyfordomesticlivestockfeeding.However,ifdistillersdriedgrainandsolubles(DDGS)
productionasabyproductofcornethanolistakenintoaccountassuming17poundsofDDGSfor
each56lbbushelofcornthentheimpactofethanoluseonlivestockfeedavailabilityofcornor
cornfeedequivalentsisnotasnegative.
ExportsofU.S.cornhaveaveraged2.032bbforMY2004/05MY2010/11period,abovethe1.900
bbprojectionforMY2011/12.Cornendingstocksincreasedfrom1.304bbinMY2006/07toahigh
of1.708bbinMY2009/10.However,MY2009/10U.S.cornendingstocksareestimatedtodecline
markedlyto880bbinMY2010/11,withanearlyprojectionof870mbinMY2011/12.
Figure1.TrendsinU.S.CornUseandEndingStocks:MY2004/05throughMY2011/12
(July12,2011USDAWASDEReport)
7,000

6,155

6,152
5,591

5,913
5,182

MillionBushels

5,250

5,140

5,050

5,000

3,500
1,750
0
2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

MarketingYears
Feed+Residual

EthanolUse

Exports

OtherFSIUse

EndingStocks

ProjectedU.S.CornPricesinMY2011/12:UnitedStatesseasonaveragecornpricesforMY2011/12
areprojectedtobeintherangeof$5.50$6.50perbushelwithamidpointof$6.00,whichisdown
fromthe$6.00$7.00rangeintheJuneWASDE.ThiscomparestoanestimatedMY2010/11price
Page|6

rangeof$5.15$5.35($5.25midpoint),$3.55/buinMY2009/10,$4.06/buinMY2008/09,and$4.20
/buinMY2007/08.
Comments:TheseUSDAcornpriceprojectionsforMY2011/12arestillverytentative,andcouldchange
markedlybyfall2011dependingonthesizeofthe2011U.S.corncropandresultingU.S.cornsupplydemand
balances.

RelationshipofU.S.CornPricesto%EndingStockstoUse:ComparingU.S.cornpriceswithU.S.
corn%endingstockstousefortheperiodsinceMY1973/74showsaninverseornegative
relationshipwithcornpricestendingtomoveintheoppositedirectionofchangesin%ending
stockstouse(Figure2).
Comments:U.S.cornendingstockstouseforMY2011/12(6.4%)andMY2010/11(6.6%)arethe2ndand3rd
tightestonrecordsinceMY1973/74behindonlyMY1995/96(5.0%).Historicallyspeaking,projectedU.S.
cornendingstockstousearestillextremelytightleadingcornpricestorespondtoanythreatoftightening
supplydemandbalancesinanextremelyvolatileandstrongmannerthroughoutthesummerandearlyfallof
2011.TherecenttrendsinceMY2005/06towardhigherlevelsofcornpricesrelativetopricelevelsattained
priortothattimeisindicativeofrecentbroaderinflationarytrendsinagricultural,energyandothercommodity
prices.

Figure2.U.S.CornEndingStocksvsU.S.Avg.CashPrices:MY1973/74throughMY2011/12
(July12,2011USDAWASDEReport)
$6.00

$6

$5.25

120

$5

$4.20 $4.06

90
$3.02

60

$3.24

$3.12 $3.21
$2.63

$2.54
$2.55

$2.47

$2.54
$2.37

$2.23

30

$2.07$2.26

$1.94

$2.05
$1.50
7.0

$3.55
$3.04

$2.71
$2.42
$2.43 $2.32

$2.50

$1.94
$1.82

$4
$3
$2

$2.00

9.0

5.0

6.6

U.S.Cash$perbu

%EndingStockstoUse

150

$1

6.4
2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

$0
1973

MarketingYear

U.S.Corn%EndingStocks/Use

U.S.CornPrice

U.S.GrainSorghumSD&PriceProjectionsforMY2010/11&MY2011/12
SmallChangesinU.S.GrainSorghumSupplyDemandforMY2010/11:Anincreaseof5mbinfeed
andresidualuseforU.S.grainsorghum(upto125mb)leadtoanequal5mbincreaseintotaluse(up
to360mbforMY2010/11(Table2).U.S.grainsorghumendingstocksareestimatedat27mbforMY
2010/11,down5mbfromtheJuneWASDEanddownfrom41mbinMY2009/10.The%ending
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stockstouseis7.5%forMY2010/11,downfrom10.4%inMY2009/10,11.7%inMY2008/09,and
11.1%inMY2007/08.AverageU.S.GrainSorghumpricesforMY2010/11of$5.10$5.30perbushel,
werelowerthanthe$5.15$5.45rangeintheJuneWASDE,andabovetheaveragepriceof$3.22in
MY2009/10,$3.20inMY2008/09,andabovethepreviousrecordhighof$4.08inMY2007/08.
U.S.NewCropGrainSorghumProductionin2011:TheUSDAWorldAgriculturalOutlookBoard
decreaseditsprojectionof2011U.S.grainsorghumproductionintheJuly12,2011WASDEreport
(Table2).Plantedacreageofgrainsorghumin2011isprojectedtobe5.3millionacres(ma)down
0.3mafromthe5.6maprojectionintheJuneWASDEreport.Thisincreasewasbasedontheresults
oftheJune30thUSDANASSAcreagereport.HarvestedareaofgrainsorghumintheU.S.in2011is
projectedtobe4.6ma,down0.3mafromtheJuneWASDEreport.
Theaverage2011U.S.grainsorghumyieldisprojectedtobe65.4bu/ac.,up0.1bu/acfromtheJune
WASDEreport.Thisyieldestimateisbasedonasimplelineartrendofthenationalaverageyieldfor
20012010,excludinglowyieldsin2002and2003andhighyieldsin2007.U.S.grainsorghum
productionin2011isprojectedtobe300millionbushels(mb),downfromtheJuneWASDEestimate
of320mb,andlessthan345mbinMY2010/11and383mbinMY2009/08.ThisisthelowestU.S.
grainsorghumproductionamountsinceatleastMY2006/07(277mb),andthesecondlowestsince
MY1956/57(205mb).
Comments:Justasforcorn,thisprojectionof2011U.S.grainsorghumproductionishighlytentative,asdry
conditionsinmajorgrainsorghumproductionareas(KansasandTexas)couldverypossiblyleadtoatleast
marginalchangesinacreage,yieldsandproduction.Theyieldestimateof65.4bu/acislessthan71.8bu/acin
2010and69.4bu/acin2009reflectingdryearlyseasonconditionsinthecentralandsouthernGreatPlains.

GrainSorghumSupplies&UseinMY2011/12:Withprojectedbeginningstocksof27mb(down5
mbfromJune)andproductionof300mb,totalU.S.grainsorghumsuppliesforMY2011/12are
projectedtobe327mb,downfrom387mbinMY2010/11,andfrom438mbinMY2009/11.
Regardingusage,food,seedandindustrialcornuse(includingethanol)isprojectedtobe90mbin
MY2011/12,down5mbfromJune,andlessthan95mbinMY2010/11.Exportsareprojectedtobe
130mb,down5mbfromtheJuneWASDE,butdownfrom140mbinMY2010/11,anddownfrom
166mbinMY2009/10.
FeedandresidualuseofU.S.grainsorghumisprojectedtobe80mbinMY2011/12,down10mb
fromJune,anddownfrom125mbinMY2010/11anddownfrom140mbinMY2009/11.Totaluse
ofU.S.grainsorghumisprojectedtobe300mbinMY2011/12,down20mbfromtheJuneWASDE,
anddownfrom360mbinMY2010/11andfrom396mbinMY2009/11.
GrainSorghumEndingStocksinMY2011/12:Endingstocksareprojectedat27mbinMY2011/12,
down5mbfromtheJuneWASDE,butequalto27mbinMY2010/11,andlessthan41mbinMY
2009/10,55mbinMY2008/09,and53mbinMY2007/08.Thisrepresents9.0%endingstocksto
use,comparedto7.5%inMY2010/11,10.4%inMY2009/10,11.7%inMY2008/09,and11.1%inMY
2007/08.
GrainSorghumPricesinMY2011/12:UnitedStatesseasonaveragepricesforMY2011/12are
projectedtobeintherangeof$5.10$6.10perbushelwithamidpointof$5.60(down$0.50per
busheloneachendoftherange).ThiscomparestoanestimatedMY2010/11pricerangeof$5.10
$5.30($5.20midpoint),$3.22/buinMY2009/10,$3.20/buinMY2008/09,andarecordhigh$4.08
/buinMY2007/08.
Page|8

Table2.U.S.GrainSorghumSupplyDemandBalanceSheet:MY2007/08throughMY2011/12
(July12,2011USDAWASDEReport)
Item
PlantedArea(millionacres)
HarvestedArea(millionacres)
Yieldperharvestedacre(bu./acre)

BeginningStocks
Production
TotalSupply
Food,Seed&Industrial
Exports
Feed&Residual
TotalUse
EndingStocks
%EndingStockstoTotalUse
U.S.AverageFarmPrice($/bu.)

2007/08
7.7
6.8
73.2

2008/09
8.3
7.3
65.0

32
497
530
35
277
165
477
53

53
472
525
95
143
233
471
55

2009/10
6.6
5.5
69.4

2010/11
5.4
4.8
71.8

2011/12
5.3
4.6
65.4

41
345
387
95
140
125
360
27

27
300
327
90
130
80
300
27

millionbushels

11.1%
$4.08

55
383
438
90
166
140
396
41

11.7%
$3.20

10.4%
$3.22

7.5%
$5.10$5.30

9.0%
$5.10$6.10

Midpoint=

Midpoint=

$5.20

$5.60

U.S.GrainSorghumUseandEndingStocksTrendsDuringMY2004/05throughMY2011/12:
Increaseduseofgrainsorghumforethanolproductionforthelastfourmarketingyears(MY2008/09
throughMY2011/12)isreflectedbyhigherfood,seedandindustrialuseinFigure3.Endingstocks
forU.S.grainsorghumhaveremainedintherangeof27to66mbsinceMY2004/05,with27mbof
endingstocks(9.0%stockstouse)projectedforMY2011/12beingequaltothebottomofthat
range.
Figure3.TrendsinU.S.GrainSorghumUse&EndingStocksDuringMY2004/05thruMY2011/12
(July12,2011USDAWASDEReport)

MillionBushels

320

277
233

240
191184

194
165

153

140

160

113
80

55 57

50

66

166

143
95

45

32

3553

140
125
95

140
90
55

41

130
80 90
27

27

0
2004/05

2005/06

Feed+Residual

2006/07
Exports

2007/08
2008/09
MarketingYears

2009/10

Food,Seed&IndustrialUse

2010/11

2011/12

EndingStocks

SinceMY2008/09thegeneraldeclineinU.S.grainsorghumproductionhashadamarkedimpacton
usagebycategory,withfeedandresidualusedecliningsharply,whilefood,seedandindustrialuse
andexportshaveremainedsomewhatsteady.
Page|9


Comments:AlthoughacreageandproductionofU.S.grainsorghumhavebeendeclininginrecentyears,
suppliesofthecropasacompetitivesubstituteforcornareespeciallyimportantinMY2011/12.AsU.S.corn
supplieshavetightenedandprospectsfor2011U.S.cornproductionareuncertain,itislikelythatthesupply
demandbalanceforU.S.grainsorghumwilltightenupevenfurther.Asevidenceofthis,oldcropspotbasis
bidsforgrainsorghuminSalina(centralKansas)andScottCity(westcentralKansas)havetightenedmarkedly
inthelast3060daysashavethoseforcorn.

II.WorldSupplyDemandforCoarseGrains
WorldCoarseGrainSupplyDemandinMY2011/12
WorldcoarsegrainsupplydemandbalanceshavebeentighteningsinceMY2008/09,withthe
largestyeartoyeardeclineoccurringbetweenMY2009/10andMY2010/11(Figure4).Although
thecategoryofcoarsegrainsincludescorn,grainsorghum,barley,oats,rye,milletandmixed
grains,cornisthepredominantcrop,makingupanestimated76%oftotalWorldcoarsegrain
productioninMY2011/12.
Figure4.WorldCoarseGrainUsage&EndingStocks:MY2004/05thruMY2011/12

(July12,2011USDAWASDEReport)

MillionMetricTons(mmt)

1400
1200
1000

194

195

157

149

166

141

669

639

648

649

645

656

649

634

333

354

375

402

431

459

479

489

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

180

800
600

164

400
200
0

MarketingYear

Food,Seed&IndustrialUse

Feed&Residual

EndingStocks

ProductionofWorldcoarsegrainsinMY2011/12isprojectedtobe1,150.3mmt,up6.5mmtfrom
June,andupfrom1,089.9mmtinMY2010/11,andfrom1,109.6mmtinMY2009/10.Noadjustment
wasmadeinSouthAmericanproductioninthisreport,althoughreportsofproductionproblemshave
beencirculatinginrecentweeks.Totalsuppliesareprojectedtobe1,307.6mmt,up10.3mmtfrom
June,andupfrom1,285.1mmtinMY2010/11,butlessthan1,303.6mmtinMY2009/10.Mostof
theincreaseinWorldcoarsegrainsuppliesareattributedtoincreasesinU.S.cornbeginningstocks
and2011U.S.cornproductionprospects.
Worldcoarsegraintradeisprojectedtobe115.9mmtinMY2011/12,up1.6mmtfromJune.Trae
of115.9mmtinMY2011/12isupfrom114.4mmtinMY2010/11,butdownfrom123.1mmtinMY
2009/10.Chinaisprojectedtohave3.73mmtcoarsegrainimportsinMY2011/12,up1.60mmtfrom
theJune,andupfrom3.18mmtinMY2010/11,butmarginallylessthan3.78mmtinMY2009/10.
Page|10

Totaluseofcoarsegrainsisprojectedtobe1,158.4mmt,up6.3mmtfromJune,andupfrom1,127.8
mmtinMY2010/11,andupfrom1,108.5mmtinMY2009/10.
Worldcoarsegrainendingstocksareprojectedtobe149.2mmt(12.9%S/U)inMY2011/12,up4.0
mmtfromJune,butdownfrom157.3mmt(13.9%S/U)inMY2010/11,anddownfrom195.1mmt
(17.6%S/U)inMY2009/10.ProjectedMY2011/12Worldcoarsegrainendingstocksof149.23mmt
(12.6%S/U)arethesmallestsince141.22mmt(14.0%S/U)inMY2006/07(Figure4).
Comments:Questionsanduncertaintyabout2011U.S.cornproductionprospectshaveasignificantimpact
onthepotentialvariabilityoftheseWorldcoarsegrainsupplydemandestimates.IncreasesinprojectedMY
2011/12U.S.coarsegrainproductionfromtheJunetotheJulyWASDEreports(i.e.,from348.45mmtinJuneto
354.52mmtinJulyanincreaseof6.07mmt),accountsfor94%oftheincreaseinWorldcoarsegrain
production(i.e.,from1,143.86mmtinJuneto1150.34mmtinJulyanincreaseof6.48mmt).
Similarly,increasedU.S.coarsegrainusagefromtheJunetoJulyreports(up3.14mmt)accountsfor50%ofthe
increaseinWorldcoarsegrainusage.IncreasedprojectedU.S.coarsegrainendingstocksinthefromJuneto
July(up4.08mmt)arelargerthantheincreasesmadeinWorldcoarsegrainendingstocks(up3.97mmt).
ThesecalculationssupporttheideathatWorldcoarsegrainsupplydemandbalancesarevulnerableto
changingU.S.feedgraincropproductionprospectsinthesummerof2011.

WorldCoarseGrainMarketSpecifics
ProspectsforMY2011/12Worldcoarsegrainsupplydemandareveryuncertainatthispointtime,
dependingon2011productionprospectsprimarilyintheU.S.,China,theEuropeanUnion,Argentina,
Mexico,andelsewhere.
Globalcoarsegrainproductionisprojectedtoberecordhighof1,150.3mmtinMY2011/12,with
yearoveryearincreasesinmanycountries.

HighercoarsegrainproductionisprojectedintheUnitedStates(up7.4%to354.5mmt),China(up2.8%to184.3mmt),
theEuropeanUnion(up2.7%to143.4mmt),Argentina(up12%to33.1mmt),Mexico(up11.6%to31.7),North
Africa/MiddleEast(up4.3%to29.8mmt),Russia(up79.0%to29.4mmt),SoutheastAsia(up7.9%to25.0mmt),Ukraine(up
13.8%to24.4mmt),andCanada(up3.3%to22.8mmt).
CanadiancoarsegrainproductioninMY2011/12maybeloweredinlaterreportstoreflectplantingandcrop
developmentproblemsencounteredinspringearlysummer2011.

Nearlyunchanged/marginallylowercoarsegrainproductionfromthepreviousyearisprojectedforBrazil(unchanged
at57.3mmt)andAustralia(down1.7%to13.4mmt).

Globalcoarsegrainimportprojectionsof112.6mmtinMY2011/12showssignsofpricerationing
andrecoveryinproductionprospects,asanumberofmajorcoarsegrainimportingcountriesare
expectedtodecreasepurchases.

DecreasedincoarsegrainimportsforMY2011/12areprojectedfortheEuropeanUnion(down36.4%to5.3mmt),
SaudiArabia(down11.1%to7.2mmt),SouthKorea(down3.7%to7.8mmt),andSoutheastAsia(down1.4%to7.2mmt).

NearlyUnchangedcoarsegrainimportsareprojectedforJapan(unchangedat19.1mmt).
Japanimportshaveremainedsteadyinspiteofthecarryovereffectsofearthquake/tsunamidamagetocoastal
livestockfeedingindustriesandports

IncreasedcoarsegrainimportsareprojectedforChina(up17.3%to3.7mmt),Mexico(up12.9%to11.6mmt)andNorth
Africa/MiddleEast(up1.7%to21.2mmt).
ProjectedChinacornimportsinMY2011/12havebeenincreasedfrom2.13mmtinJuneto3.73mmtintheJuly
WASDEreport.ChinasparticipationinWorldcorntradewouldbeviewedasanextra,additionalsourceofdemand
supportingcoarsegrain/cornmarketsinMY2011/12.

Page|11

Globalcoarsegrainexportprojectionsof115.9mmtinMY2011/12showapositiveresponseto
increasedWorldcoarsegrainproductionprospectsandlowerprojectedpricesforMY2011/12
althoughexportsaremarkedlylowerthan123.1mmtinMY2009/10.

DecreasedincoarsegrainexportsforMY2011/12areprojectedforBrazil(down5.9%to8.0mmt),theEuropeanUnion
(down61.2%to2.3mmt),andCanada(down33.0%to3.0mmt).
Canadianexportprospectsaredeclininginconjunctionwithreduced2011coarsegrainproductionprospects.

IncreasedcoarsegrainimportsareprojectedfortheUnitedStates(up0.8%to51.8mmt),Argentina(up20.4%to21.3
mmt),Ukraine(up18.8%to10.4mmt),Australia(up0.9%to5.7mmt),andRussia(up236.4%to1.1mmt)

Uncertaintyabout2011U.S.andCanadiancoarsegrainproductionprospectsandcropweatherriskselsewherein
theWorldmaketheseMY2011/12exportprojectionsverytentative.
Globalcoarsegrainusagecontinuestotrendhigher,withrecordhighuseof1,158.4mmtprojected
forMY2011/12.

LargestprojecteddomesticusersofcoarsegrainsaretheUnitedStates(up0.9%to306.3mmt),China(up5.9%to190.6
mmt),theEuropeanUnion(down2.9%to148.4mmt),Brazil(up3.3%to53.3mmt),NorthAfrica/MiddleEast(up2.2%to
51.8mmt),Mexico(up8.9%to42.1mmt),SoutheastAsia(up4.3%to31.6mmt),Russia(up48.7%to27.3mmt),Canada(up
0.8%to21.4mmt),Japan(down0.7%to19.4mmt),Ukraine(up2.3%to13.7mmt),Argentina(up4.1%to11.5mmt),
followedbySaudiArabia(8.3mmt),SouthKorea(8.1mmt),andAustralia(7.7mmt).
ChangingproductionprospectsinRussiaandtheEuropeanUnionaffectthesecoarsegrainusageprojections.
ProjectedRussiacoarsegrainusageof27.3mmtinMY2011/12isabove18.4mmtinMY2010/11,butbelow30.6
mmtinMY2009/10.
ProjectedEuropeanUnioncoarsegrainusageof148.4mmtinMY2011/12islessthan152.8mmtinMY2010/11
and150.4mmtinMY2009/10.

RationingofCoarseGrainUse:IfJulyprojectionsoflarger2011U.S.coarsegrain/cornproductionholdtrue,then
thereislikelytobeaweakeningofthepressuretorationcornusagethroughtheremainderofMY2010/11andon
intoMY2011/12.However,ifJulyWASDEWorldandU.S.coarsegrainandcornproductionfallsmarkedlybelow
currentUSDAWASDEprojections,thentheepisodeofpricerationingthathasoccurredtodatein2011wouldlikely
continueinbionenergyproduction,livestockfeedingandimports/exports.
Shouldenergypricesmovehigherinthesummerof2011,itwouldleadtohigherbreakevenpurchasingpricesfor
coarsegrainsforenergyproductionleavingWorldlivestockfeedingenterprisesinalesscompetitiveposition(in
turnhavingalimitingeffectonU.S.coarsegrainexports)

WorldCoarseGrain&CornEndingStocks:CurrentprojectionsofWorldcoarsegrainandcornending
stocksforMY2011/12areverytentative,withuncertaintysurroundingcornandothercoarsegrain
productionintheUnitedStates,Canada,theEuropeanUnion,China,Mexicoandelsewhere.

ProjectedWorldCoarseGrainendingstocksinMY2011/12=149.23mmt(12.9%S/U)
Comparedto157.3mmt(13.9%S/U)forMY2010/11,and195.1mmt(17.6%S/U)forMY2009/10

WorldCornSupplyDemandinMY2011/12
Worldcornproductionandtotalusebothareprojectedtoaccountfor75.8%ofbothWorldcoarse
grainproductionandtotaluse,respectively,inMY2011/12.MarkedlylowerWorldcornbeginning
stocksoffsetprojectedincreasesinWorldcornproductionbyalargeenoughamountthatprojected
increasesinWorldcornusagearelargerthanincreasesintotalsupplies.Thishasledtoaprojected
declineinMY2011/12cornendingstocksfromMY2010/11toMY2011/12.Sincemostofthe
increasein2011WorldcornproductionisattributedtotheUnitedStates,projectedincreasesin
WorldcornusagearelargerthanincreasesinWorldcornproductioninMY2011/12,leadingtoa
markedtighteningofbothWorldcornendingstocksand%endingstockstouseincomparisontoMY
2010/11levels,andespeciallyincomparisontoMY2009/10.
Page|12

ProductionofWorldcorninMY2011/12isprojectedtobe872.4mmt,up6.3%from820.0mmtin
MY2010/11,andupfrom813.0mmtinMY2009/10(Figure5).Totalcornbeginningstocksplus
productionisprojectedtobe993.3mmt,up3.1%from963.7mmtinMY2010/11andupfrom960.2
mmtinMY2009/10.Worldcornexportsareprojectedtobe94.9mmtinMY2011/12,upfrom90.2
mmtinMY2010/11,butlessthan97.0mmtinMY2009/10.Totaldomesticuseofcornisprojected
tobe877.6mmt,up4.1%from842.8mmtinMY2010/11,andupfrom816.6mmtinMY2009/10.
Worldcornendingstocksareprojectedtobe115.7mmt(13.2%S/U)inMY2011/12,downfrom
120.9mmt(14.3%S/U)inMY2010/11,anddownfrom143.6mmt(17.6%S/U)inMY2009/10.
Comments:Figure5showsthatWorldcornusagehasbeengrowingsteadilyduringtheMY2007/08through
MY2010/11periodatanaveragerateof17.75mmtannually.Usageisprojectedtogrowby30mmtinMY
2011/12.WorldcornproductionhasalsogrownduringtheMY2007/08MY2010/11timeframeataslower
averageannualrateof6.25mmt.ProjectedgrowthinMY2011/12is52mmt.WhileWorldcornexportshave
variedintherangeof84to99mmtovertheMY2007/08MY2010/11period(with95mmtprojectedforMY
2011/12),WorldcornendingstockshavebeendecliningsinceMY2008/09(147mmt)downtoaprojectedlevel
of116mmtinMY2011/12.
Illustration:ThisFigureillustratestherisktoWorldcornsupplydemandbalancesofanyshortfallin2011U.S.
cornproduction.Forexample,a12.7mmt(500millionbushel)shortfallin2011U.S.cornproductionfrom
currentprojectedlevels(13.470billionbu)wouldleadtoareductioninWorldcornproductiondowntothe
UnitedStatesin2011woulddrop2011Worldcornproductiondownto859mmt.Assumingthatsomefurther
rationingofWorldusageduetotighterendingstockstouseandconsequentlyhighercornprices,itislikely
thattherewouldbeapproximatelya1012mmt(i.e.11mmt)reductionintotalWorldcornusagedownto
approximately863mmt.Worldcornendingstockswouldbereducedbythedifferenceintheproductionversus
usagedeclinesinWorldcornorofthe1.7mmtdifference,downtonear114mmt(withapproximatelya12.0%
13.0%Worldcornendingstockstouse).
Giventhata500mbor12.7mmtreductionintheU.S.2011corncropfromtheJulyUSDAprojectionof13.470
bbisentirelypossible,thenitshouldbenotedhowvulnerableWorldcornsupplydemandbalancesandmarket
pricesaretopossibleshortfallsinthe2011U.S.corncrop.

Figure5.WorldCornUsage&EndingStocks:MY2007/08thruMY2011/12

(July12,2011USDAWASDEReport)
1,200

MillionMetricTons

1,000
800

795 799 813 820

872

810
773 782

844 874

600
400
200

99 84 97 90 95

131 147 144 121 116

Trade

EndStocks

Production

MY2007/08

Usage

MY2008/09

MY2009/10

MY2010/11

MY2011/12

Page|13

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