USDA feed outlook flags increased domestic competition for corn

Lower demand and increased competition between feed inputs will see US domestic corn demand drop 2.5 million mt, the USDA’s monthly feed outlook report flagged Monday.

The USDA expects 2017/18 feed and residual demand to fall to 148.9 million mt on lower animal counts and lower beef inventories in the year ahead, and lower beef inventories.

That is likely to spell greater competition for the main feed components of wheat, corn, sorghum, barley and oats.

With corn facing epic domestic stocks and US sorghum currently the subject of a Chinese investigation into accusations of subsidies depressing prices, the competition may be particularly acute between those two, as diverted sorghum looks to make inroads elsewhere.

Grain consuming animal units, known as GCAU, are projected 98.76 million mt, down from 99 million mt with feed per GCAU forecast at 1.51 mt, down 20 kg on the previous month’s projection.

Total supply of sorghum in the 2017/18 marketing year to date is put at 399.29 million bushels, according to the report, versus corn at 16.9 billion bushels, barley at 263 million bushels and oats at 200 million bushels.

Exports key
Acknowledging the surge in US corn exports, the USDA’s revision of export figures shifted 125 million bushels from the ending stocks column to the exports column with the February WASDE, as reduced competition opened up a window for US exporters to exploit.

During that time, the US made inroads into non-typical markets such as Egypt and Vietnam as economics overcame differences in qualities to make US corn more attractive.

US corn exports picked up sharply in December and continued to rise into January to post the second highest volume of the last six marketing years, second only to the record-breaking 2016/17 marketing year.

US exports of sorghum to China in the 2017/18 marketing year are running well behind the previous two marketing years already, according to the report, with the onset of an investigation likely to further dampen appetite.

China has already revised upwards its corn import expectations in an effort to head off a gap in supply triggered by the subsidy investigation.

Almost all US sorghum exports have been heading to China in the 2017/18 marketing year to date, with that volume likely to now displace other grains as it seeks new footholds.