MAY 1996
Exports Key Feed Grains Outlook
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
This process enables the USFGC to stay abreast of existing market trends and identify those emerging. Further, the review is useful in allocating resources for effectively developing and expanding markets. Some highlights from the recent USFGC world feed grains demand market forecast:
World Outlook
This year's outlook is driven primarily by growing markets as world producers rebuild record-low stocks. Current tight supplies were caused by long-standing consumption growth trends that outpaced production. The huge coarse grain surpluses of the mid 1980s that weighted down prices worldwide are now gone, consumed by markets fueled by vibrant economic growth.
Today, in a dramatic reversal, governments including the United States that traditionally restricted coarse grain plantings are concerned with obtaining more comfortable stocks levels. The result is an extremely positive outlook for the decade. Substantial increases in area are projected, with continued favorable prices into 2004. At the same time, markets likely will expand significantly during the period.
Continued modest stocks - Stocks will increase slightly as a result of increased area, yields and production but will be far below the burdensome levels of the mid 1980s. Average levels likely will be just over 12 percent of consumption (about 44 days' requirement).
Growing markets - Coarse grain use worldwide is projected to expand just under 2.1 percent annually during 1995-2004. Consumption grew 82 million tons during 1983-94, but is projected to expand more than 150.4 million tons during 1995-2004, 83 percent more than during the previous decade.
Improved supply/use balances - In part because current stocks are so low and the expected market expansion is so large. Production growth will be slightly larger than consumption growth (2.1 percent annually for consumption, relative to an average of 2.7 percent annually for production), but will rebuild stocks only modestly.
Increasing yield growth - Yields are projected to return to "trend" in 1996, and to grow an average of 2.2 percent annually(from 1995 weather damaged levels) throughout the period providing the bulk of the 2.7 percent annual production growth.
Reversal of trade decline - The coarse grain trade declines of the 1980s are projected to reverse during the 1990s, and trade is expected to increase to more than 126.8 million tons by the end of the decade.
Strong export growth - In 1986/87, implied world trade was 82.7 million tons. By 1995, that amount had grown just over 8.1 million tons. By the end of the 1995/2004 decade, coarse grain trade is projected to increase to 126.8 million tons, up nearly 40 million tons (46 percent).
Biggest market reversal: China, an exporter of nearly 12 million tons of coarse grains in 92/93, imported 4.3 million tons in 94/95 and likely will buy 3.2 million tons this year.
Hot markets for coarse grains: Mexico, Brazil, Latin American countries, South Korea, Taiwan.
Quieter, but still important: Japan is the world's largest coarse grain importer, accounting for nearly one-fourth of the world total. But better market access to more finished products because of GATT has Japanese market potential growing only very slowly into 2004.
Lukewarm potential: Russia will be a smaller coarse grains market than years past, but reliable. Other former Soviet Union republics and parts of eastern Europe will become more self-reliant.
Growing exporters: Argentina, which is projected to boost its sales modestly. European Union sales declined to 2.5 million tons in 95/96, but are projected to increase once again during the coming decade. South Africa and the Ukraine will also expand their export sales.
Less aggressive exporters: Australia and Canada, which are projected to increase coarse grain production relatively little as they concentrate on expanding wheat exports.
U.S. feedgrains Outlook
The outlook for U.S. coarse grain producers is highly favorable this year, perhaps the most optimistic in more than a decade. Domestic sales are expected to grow by more than 2.3 percent annually during 1995-2004, and export sales more than 4.6 percent annually. Growing world markets and reduced subsidized competition will help drive U.S. market potential. Export sales will account for nearly 40 percent of total market growth during 1995-2004.
Assumes new program-The USFGC made its projections under the assumption that traditional farm programs are not renewed in 1996; that land-idling would end and farmers would have more planting flexibility.
Moderately strong prices -While farm prices could weaken somewhat in the late 1990s as corn land in CRP is reduced and harvested area expands, growing markets add substantial strength during the later years.
Conditioning factors: weather, world politics and regional hostilities, continued economic growth and any change from the assumption of a new farm program.