USDA Feed Grain Baseline 2011
Strong use both domestically and worldwide keeps feed grain prices at historically high levels, but down from record highs attained in 2007/08. Expansion in the U.S. ethanol industry is projected to continue, although the pace is assumed to slow from the rapid gains of the past several years
October 6, 2010
USDA Feed Grain Baseline, 2011
The Economic Research Service (ERS) of the U.S. Department of Agriculture analyzes events in the domestic and global corn markets that influence supply, demand, trade, and prices. Corn is the most widely produced feed grain in the United States, accounting for more than 90 percent of total value and production of feed grains. Around 80 million acres of land are planted to corn, with the majority of the crop grown in the Heartland region. Most of the crop is used as the main energy ingredient in livestock feed. Corn is also processed into a multitude of food and industrial products including starch, sweeteners, corn oil, beverage and industrial alcohol, and fuel ethanol. The United States is a major player in the world corn trade market, with approximately 20 percent of the corn crop exported to other countries.
The return of global economic growth after 2009 and continued population gains are expected to boost food demand. The longer term increases in global purchasing power and population, competing against demand for biofuels and other domestic uses, are important factors shaping the projections for world trade, U.S. agricultural exports, and commodity prices. After 2009, exports are projected to rise as global economic growth resumes and the U.S. dollar depreciates.
With this growth, exports account for a growing share of U.S. meat use, although the domestic market remains the dominant source of overall meat demand. Increased global demand for meat is expected to boost world consumption of feed grains. However, production constraints, especially limited area, will keep many traditional grain-importing countries from expanding feed grain production as rapidly as use, boosting global coarse grain trade. (Coarse grains make up a common trade category that includes corn, sorghum, barley, oats, and rye.) Most of the growth in global coarse grain trade is in corn; however, the U.S. share of corn trade is expected to decrease. Global barley trade is expected to expand but remain small. Sorghum trade, even smaller than that for barley, is expected to increase throughout the projection period, as shipments from the U.S. to Mexico remain strong. In combination, these factors support longer run increases in global consumption and trade, with prices, although lower than in early 2008, remaining at historically high levels.
Strong use both domestically and worldwide keeps feed grain prices at historically high levels, but down from record highs attained in 2007/08. Expansion in the U.S. ethanol industry is projected to continue, although the pace is assumed to slow from the rapid gains of the past several years. The continued presence of ethanol demand in the corn sector, in combination with other long-term factors, holds prices for corn and many other crops well above their historical levels. Use of corn for corn sweeteners is expected to grow at the half the rate of population increase. Use of corn to produce ethanol for fuel will continue to climb. Feed and residual use will also expand over the period as livestock and poultry production continues to increase in the long term. As ethanol production expands, livestock producers will feed more distillers' grains and other ethanol co-products to livestock, which will limit growth in corn feed demand. Read the full analysis: USDA Feed Grain Baseline