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Feed
Outlook provides an update each month (except in April)
of current market developments and their influence on
the corn industry.
For information on current and previous baseline projections
for corn and other feed grains, see the market
outlook chapter.
Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices explores the many factors that have contributed to the runup in food commodity prices over the last 2 years.
Corn
Prices Near Record High, But What About Food Costs?
traces the effect of higher corn prices on U.S. retail
food prices by analyzing data on price trends from 1987-2007
and the price responsiveness of corn-dependent food to
cost changes. The results indicate ethanol's impact
on retail food prices depends on how long the increased
demand for corn increases farm corn prices and the extent
to which higher corn prices are passed through to retail.
Ethanol
Expansion in the United States: How Will the Agricultural
Sector Adjust? examines effects of the expansion in
U.S. ethanol production. Market impacts extend well beyond
corn, the primary feedstock for ethanol in the United
States, to supply and demand for other crops, such as
soybeans and cotton, as well as to U.S. livestock industries.
As a consequence of these commodity market impacts, farm
income, government payments, and food prices also change.
See narrated slideshow
for an overview; see related Amber Waves feature
U.S.
Ethanol Expansion Driving Changes Throughout the Agricultural
Sector.
Ethanol
Reshapes the Corn Market reports that work is underway
to add billions of gallons to the annual production capacity
of the fuel ethyl alcohol market. Expanded ethanol production
in the United States has helped to reduce corn ending
stocks and boost corn prices.
Feed
Grains Backgrounder addresses key market and policy
developments that have affected the U.S. feed grains sector
in recent years. The size and speed of the expanding use
of corn by the ethanol industry is raising widespread
issues throughout U.S. agriculture. Discussions are ongoing
over the use of grain for fuel instead of for food or
feed and the adequacy of future grain supplies. During
the ongoing farm policy debate, the U.S. feed grain sector
faces uncertainty about the future level and type of government
support.
Valuing Counter-Cyclical
Payments: Implications for Producer Risk Management and
Program Administration illustrates an improved method
for estimating counter-cyclical payment rates by accounting
for the variability in market price forecast errors. Forecasters
and producers can use the model to calculate the probability
of having to repay advanced counter-cyclical payments.
The Changing Face of the
U.S. Grain System discusses the evolving nature of
U.S. grain handling and marketing, which is increasingly
marked by product differentiation and market segmentation.
More specialty crops now require either some form of segregation
or full-scale identity preservation to keep them separate
from conventional commodities. Market segmentation within
the grain system is driven by the need to preserve market
value or ensure product purity.
The First Decade of Genetically
Engineered Crops in the United States reports that
over the past 10 years, farmers have widely adopted genetically
engineered (GE) varieties of corn, soybeans, and cotton.
While consumer concerns about foods contain GE ingredients
vary by country—European consumers are the most
apprehensive—those concerns have not had a large
impact on the market for GE crops in the United States.
Characteristics and Production
Costs of U.S. Corn Farms reports that the operating
and ownership cost for producing a bushel of corn in 2001
ranged from an average of $1.08 for the quarter of U.S.
producers with the lowest costs to an average of $2.98
for the quarter with the highest costs. Production costs
varied considerably, depending on yields, farm location,
tillage practices, irrigation, previous field usage, enterprise
size, and weather.
Forecasting
the Counter-Cyclical Payment Rate for U.S. Corn: An Application
of the Futures Price Forecasting Model provides background
information on the model for corn, its data requirements,
the forecast procedure, and forecast results for crop
years 2003/04 and 2004/05. The Excel spreadsheet models
for corn, soybeans, and wheat are available at Season-Average
Price Forecasts.
Forecasting
Feed Grain Prices in a Changing Environment provides
price models for corn, sorghum, barley, and oats, along
with a statistical test for structural change in the feed
grains sector. The models offer a framework to forecast
season-average, farm-level prices and to gauge the consistency
of supply, demand, and price forecasts.
U.S.-Mexico
Corn Trade During the NAFTA Era: New Twists to an Old
Story profiles the growing corn trade between the
two countries. While U.S. corn exports to Mexico have
more than tripled since the North American Feed Trade
Agreement (NAFTA) was implemented, the majority of these
exports are still yellow corn, which is used primarily
to feed livestock. In contrast, Mexico's corn sector produces
mostly white corn, which is used to manufacture tortillas
and other traditional Mexican foods.
Is China's
Corn Market at a Turning Point? reports that China
curtailed corn exports in calendar year 2004 and may begin
to import corn during marketing year 2004/05. Higher prices
and increased shipping rates have kept U.S. corn out of
the China market, but growing demand and limited production
capacity will eventually make China a net importer of
corn.
The Poultry
Sector in Middle-Income Countries and Its Feed Requirements:
the Case of Egypt examines the interaction between
domestic feed and animal production and meat and feed
imports. Egypt, a country with little potential for growing
feed, faces the issues many middle-income countries experience.
Mycotoxin
Hazards and Regulations: Impacts on Food and Animal Feed
Crop Trade
addresses the difficulty of balancing food safety concerns
and efforts to limit the economic costs of trade disruptions.
This chapter reviews food safety risks posed by mycotoxin-contaminated
grains and demonstrates that a lack of international consensus
on mycotoxin standards has important trade implications.
China's
Corn Exports: Business as Usual, Despite WTO Accession
reports that China's corn exports continued at a near-record
pace during 2002 despite cancellation of export subsidies
following accession to the World Trade Organization. Other
policies have replaced direct export subsidies, although
details of these new measures are not clear. Rising international
prices in 2002 gave an added boost to China's corn export
program and delayed an expected increase in China's corn
imports.
The 2002 Farm Act: Provisions
and Implications for Commodity Markets provides an
initial assessment of the egislation's effects on agricultural
production, commodity markets, and net farm income over
the next 10 years. Results indicate that commodity market
impacts are fairly small. Net farm income is projected
higher than under a continuation of the 1996 Farm Act,
largely reflecting an increase in government payments.
Genetically
Engineered Crops: U.S. Adoption and Impacts
examines the use of genetically engineered (GE) crops
in the United States since their introduction in 1996.
Soybeans and cotton with herbicide-tolerant traits have
been the most widely and rapidly adopted GE crops, followed
by insect-resistant cotton and corn. Analyses by USDA's
Economic Research Service and others indicate economic
benefits to many farmers adopting first-generation GE
crops.
The
Energy Balance of Corn Ethanol: An Update
concludes that corn ethanol is energy efficient as indicated
by an energy output:input ratio of 1.34, which means that
the energy potential in every gallon of ethanol is 34
percent greater than the energy used to produce it. The
net energy value of corn ethanol has been rising due to
technological advances in ethanol conversion and increased
efficiency in farm production.
Characteristics and Production
Costs of U.S. Corn Farms reports that corn producers
in the Heartland and Prairie Gateway had lower per-bushel
production costs than corn producers in the Northern Crescent
and Southeast. Part-time farmers and farmers with small
corn acreage tended to have high per-bushel production
costs.
Soil, Nutrient, and Water
Management Systems Used in U.S. Corn Production used
data from the 1996 Agricultural Resource Management Study
(ARMS) to analyze relationships between operator/farm
characteristics and adoption of specific management techniques.
This is the first effort to associate management choices
of corn farmers, on a national scale, to so broad a set
of characteristics. Corn production accounts for over
25 percent of he Nation's cropland and more than 40 percent
of commercial fertilizer applied to crops.
Livestock
Feeding and Feed Imports in the European Union—A
Decade of Change examines events and policy changes
in the livestock sectors of the European Union during
the 1990s and their impacts on trade in feedstuffs. Lower
grain prices and a declining euro together with several
animal disease epidemics resulted in significant increases
in the feeding of grains and oilseed meals and a reduction
in the feeding of nongrain feed ingredients.
Stable
Field Crop Supplies Forecast for 2002/03
examines USDA's first projection of production and prices
for the next marketing year. Supplies of most major U.S.
field crops are expected to rise despite planted acreage
similar to or lower than last year. For corn and oats,
large projected increases in planted acreage are driving
production gains, while wheat and cotton output is expected
to show substantial declines. For some crops, higher use
may offset downward pressure on farm prices.
Oats
Market Strong in 2001/02
reports that tight stocks, particularly of high-quality
milling oats, have led to high prices, and buyers have
scrambled to ensure supplies. Thin U.S. supplies are attributed
to weather problems in the upper Midwest and in the oats-growing
regions of Canada, Sweden, and Finland.
Soybean
and Cotton Plantings to Decline in Favor of Corn in 2002
reviews USDA's Prospective Plantings report for
the eight major U.S. field crops (corn, soybeans, other
feed grains, wheat, cotton, rice, minor oilseeds, and
hay). Planting intentions are projected at 248.3 million
acres, nearly identical to last year's despite widespread
weak price signals.
Feed Grains: Background
and Issues for Farm Legislation addresses considerations
in the 2002 farm bill debate, including market conditions,
trade agreements, the needs of feed grain farmers and
other constituencies, and the interactions between policy
and markets.
Analysis of the U.S.
Commodity Loan Program with Marketing Loan Provisions
illustrates how marketing loans have enabled farmers to
attain, on average, per-unit revenues that exceed commodity
loan rates and assesses the impacts of marketing loans
on production, use, and prices.
The New Agricultural
Trade Negotiations: Background and Issues for the U.S.
Coarse Grain Sector
reviews accomplishments of the WTO Agreement on Agriculture
in the global coarse grain market. New multilateral negotiations
will likely address further tariff reduction and market
access, elimination of export subsidies, and urther limitations
on domestic government support to agriculture.
Price Determination for
Corn and Wheat: The Role of Market Factors and Government
Programs finds a number of factors affect U.S. farm-level
prices for corn and wheat, indicated by models based on
supply and demand conditions as well as government policies.
Biotechnology:
U.S. Grain Handlers Look Ahead
discusses potential costs of crop segregation and how
the U.S. marketing system has responded to changing demands.
Biotechnology:
Implications for U.S. Corn and Soybean Trade
discusses uncertainties in marketing bioengineered products
abroad and the potential impact on U.S. agricultural trade.
Supply Response Under
the 1996 Farm Act and Implications for the U.S. Field
Crops Sector analyzes the effects of planting flexibility
under the 1996 Farm Act on regional and aggregate planted
acreage, acreage composition, and farm prices for major
field crops.
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