USDA Feed Grain Baseline, 2010-19
USDA Feed Grain Baseline, 2010-19
Each year, USDA updates its 10-year projections of supply and utilization for major field crops grown in the United States, including feed grains (corn, sorghum, barley, and oats) (see Overview of the USDA Baseline Process for more information). One key use of the projections is as a "baseline" from which to analyze the impacts of potential policy changes affecting U.S. agriculture. This discussion summarizes analysis underlying the feed grain projections for 2010-19. Details about projections for the U.S. macroeconomy, other U.S. crops, U.S. livestock, farm income and food prices, and U.S. and global agricultural trade, which are critical components of this analysis, can be found in the Agricultural Baseline Projections topic.
The discussion is divided into five sections:
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.
Key Baseline Assumptions
Global economic recovery with steady growth provides an improved demand foundation for agricultural commodities over the next several years. Increasing gross domestic product (GDP) raises incomes and boosts demand for meat and fuels. A growing livestock industry will need increasing supplies of feed grains.
Crude oil prices rose sharply from late 2002 into 2008, much of which reflected increased crude oil demand caused by robust world economic growth and rapid manufacturing growth in China, India, and other countries in Asia. At its peak in July 2008, the refiner acquisition cost of crude oil imports reached $147 a barrel. The weakening of the U.S. and global economies toward the end of 2008 and into 2009 resulted in a decline in demand for petroleum and other energy supplies. By early 2009, crude oil prices were down more than 70 percent from their peak, before generally rising over the rest of the year. Crude oil prices averaged close to $60 per barrel in 2009. Prices are assumed to increase over the remainder of the projection period as global economic activity picks up. From 2010 through 2019, crude oil prices are expected to rise somewhat faster than the general inflation rate. By the end of the projection period, the refiner acquisition cost for crude oil imports is projected to be around $100 per barrel.
Corn's use in fuel-alcohol production depends on the interaction of government incentives and policies, technology development, corn prices, prices of coproducts from ethanol production, and prices of energy substitutes. More than half of all fuel ethanol is blended into conventional gasoline as a fuel or an octane enhancer. Ethanol is also used in reformulated gasoline blends required in designated regions under the Clean Air Act. Ethanol serves as an oxygenate replacing methyl tertiary-butyl ether (MTBE) in these reformulated blends. Prices of ethanol relative to gasoline remain a key factor in determining how much ethanol is blended.
Policy incentives underlie the expansion of ethanol production. The Energy Policy Act of 2005 (P.L. 109-58) established a renewable fuel standard (RFS), which mandated the use of renewable fuels in gasoline. The U.S. Government blender tax credit, various State production subsidies, and some States' required use of fuel alcohol, as well as the cost and availability of substitute fuel additives, affect the amount of ethanol used.
The Energy Independence and Security Act of 2007 (P.L. 110-140) required the use of 9.0 billion gallons of renewable fuels in 2008, increasing each year to 36 billion gallons in 2022. In addition, the Act requires that an increasing share of the mandate be met with advanced biofuels, which are biofuels produced from feedstocks other than corn starch (and with 50-percent lower lifecycle greenhouse gas emissions than petroleum fuels). Potential advanced biofuels include ethanol from cellulosic material (such as corn stover, perennial grasses, and municipal solid waste), ethanol from sugarcane, and diesel fuel substitutes produced from a variety of feedstocks.
Although growth in corn-based ethanol production in the United States is projected to slow, the large expansion in recent years keeps this use of corn high. The projections assume the tax credits available to blenders of biofuels (ethanol and biodiesel) and the 54-cents-per-gallon of ethanol import tariff remain in effect through the 10-year period. These factors, along with projected increases for crude oil prices, contribute to favorable returns for ethanol production, providing economic incentives for a additional expansion in production capacity over the next several years, primarily from plants using corn as the feedstock.
Projections for U.S. Feed Grains Supply
Several factors underlie the long-term trends that will determine the size of the U.S. feed grain crops during 2010-19 ( corn, sorghum, barley, and oats Excel icon (16x16) ).
Although the number of U.S. acres available for field crop production is limited, higher expected net returns for corn relative to other crops supports expanding corn plantings during the period. Continuing high levels of domestic corn-based ethanol production and gains in exports keep corn demand high. Strong producer returns keep corn acreage growing in early years; acreage begins to level off, however, through middle of the projection period. Net returns are determined by yields, production costs, prices, and agricultural policy.
Among the feed grains, corn has the highest return above variable cost. Soybeans, while being an excellent rotation crop with corn, are also the major competitor with corn for acreage. Realized net returns for soybeans were above those for corn in marketing years 1996/97 through 2001/02 and also in 2006/07. Soybean planted area expanded during these years. Average net returns for soybeans are expected to be below those for corn throughout the projection period, due to lower relative prices caused by increased corn demand and higher soybean carryover stocks. Projected net returns for corn per acre are also expected to be more favorable than for the other feed grains. As a result, acres planted to corn, the primary feed grain in the United States, are forecast to increase slightly. In contrast, projected plantings of sorghum and oats remain unchanged, and barley acres are projected to decline.
There are benefits to growing crops that may not be reflected in a single year's cost and returns analysis, as individual producers' relative cosst and returns can vary widely. Thus, national average expected net returns do not explain all planting decisions. Maintaining rotations is an important objective for most farmers. This provides numerous agronomic benefits and may outweigh decisions based only on short-term price signals.
Soybeans and corn work well in rotation because many of the insects that attack one crop do not bother the other crop. Many corn farmers alternate annually between corn and soybeans. Corn benefits from increased fertilizer use, and carryover fertilizer benefits soybeans in the following year. Likewise, soybeans roots host bacteria that convert nitrogen from the air into a form usable by plants. Carryover nitrogen from this process benefits the following corn crop. Before genetically modified, herbicide-tolerant soybeans became available, corn in the rotation provided soybeans with greater weed control. Corn remains an important rotation crop as soybeans planted following soybeans typically suffer disease-related yield losses.
Feed grain production increases throughout the projection period, as yield growth accounts for most of the expanded output. Corn is expected to gain in share of total feed grain production and use. A gradual shift to corn away from other crops reflects the high levels of domestic corn-based ethanol production and gains in feed use and exports that keep corn demand and producer returns strong.
Corn acres to increase slightly. U.S. corn area is projected to experience moderate growth, rising to 90 million acres by 2011 and then declining slightly to 89.5 million acres for most of the projection period. Expanding output is attributable to yield growth. The projected 2010/11 corn yield is based on the simple linear trend since 1990. The longer term trend for 2011/12 and later years reflects an annual yield increase of 2.0 bushels per acre per year, resulting in record corn production in 2011/12 and beyond. Increases in corn yields have been driven by improvements in plant genetics, machinery, and cultivation practices that have allowed for faster, more precise planting and earlier harvesting. The latest round of advances in genetics and planting technology is expected to be fully adopted by the early years of the projections. Thus, longer term yield gains are expected to be somewhat slower than during the late 1990s and early 2000s. Gains continue to be supported by improved genetics, including advances in plant utilization of water and fertilizer.
Sorghum supply to stay constant. Sorghum production is expected to remain steady at 385 million bushels after a slight increase in the first year of the projection period. Sorghum yields are projected based on a 10-year average (excluding the extreme low yields observed in 2002 and 2003 and the extreme high yield in 2007) and are expected to be flat throughout the projection period. Traditionally, much more emphasis has been put toward improving the genetics and performance of corn and oilseed crops. Therefore, the lack of performance and genetic improvements limit the yield growth in sorghum and other feed grains. Total use is constrained by production, resulting in nearly constant ending stocks. Acres planted are expected to remain steady as yields remain unchanged.
Barley supplies decrease modestly. Rising yields are expected to be offset by reduced planted acreage, which lowers barley production to 210 million bushels by 2019/20. Lack of growth in planted area is a result of low net returns for barley. Yield per acre is expected to increase 0.6 bushel per year over the decade, in line with trend increases. Projected yield for barley is based on the simple trend in yield growth since 1960, which is considerably lower than the trend for corn.
Oats plantings unchanged. The declining long-term trend in oat acreage is projected to stabilize, as the crop remains important in some rotations and as a cover crop. Oats are widely planted in the United States, but only about half are harvested for grain. In the South, red oats are planted in the fall and used for small grain pasture. Farther north, oats are planted in the spring as a cover crop for starting forage crops. Some of these plantings are harvested as hay or silage. With oat plantings expected to remain constant during the projections, slow growth in yields results in a 5-million-bushel increase in production by the end of the period. Projected yield for oats is based on the simple trend in yield growth since 1960, which increase at an average 0.4 bushel per acre per year. Supplies drop in the beginning year of the projections because yields decline and acreage remains nearly unchanged. Supplies grow in subsequent years because of moderate growth in yields starting in 2011/12.
Projections for U.S. Feed Grains Use
Over the next 10 years, there are several long-term trends that underlie the outlook for domestic and foreign demand for U.S. feed grains and feed grain products. Furthermore, after the first year of the projections, total feed grain use is projected to set new records driven by expanding livestock herds (raising feed needs) and industrial corn use ( corn, sorghum, barley, and oats Excel icon (16x16) ).
Macroeconomic growth affects feed grain use.The projections reflect a recent global economic recession followed by a slow transition back toward steady growth at longrun sustainable rates in 2011 and beyond. The financial crisis had a significant impact on economic growth in the United States. The U.S. economy grew only 0.4 percent in 2008, contracted by about 2.5 percent in 2009, and is expected to grow 2.5 percent in 2010. After 2010, U.S. growth moves back toward a sustainable rate near 3 percent. Because U.S. GDP is growing more slowly than the world economy throughout the projections period, the U.S. share of global gross domestic product (GDP) falls from 27 percent to 25 percent. After growing an average of 2.9 percent between 2001 and 2008, the overall world economy is expected to have decreased by more than 2.5 percent in 2009. Global growth then is projected to average 3.3 percent in 2010 through 2019 mostly because of resumed high growth rates in emerging market countries such as China and India and a return to strong growth in other developing countries and countries of the former Soviet Union.
While the developed countries' share of global real GDP is still more than 60 percent at the end of the projection period, that share is down from 80 percent in 1970 and almost 70 percent in 2007. This reflects strong growth in emerging market countries as they become more important to the global marketplace.
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. World population growth declines from an annual rate of 1.7 percent in the 1980s to an average of under 1.1 percent per year for the projection period. Also supporting the outlook for U.S. agricultural exports is the cumulative effect of the depreciated U.S. dollar since 2002 and the continuation of depreciation into the projection period. This depreciation of the dollar makes U.S. agricultural exports increasingly competitive in international markets.
As foreign economies expand and personal incomes grow, consumers shift to more meat in their diets, and this requires more feed grains for meat production. Diets in the U.S. already have adequate quantities of meat, but an expanding economy will support gradual growth in meat consumption. Internationally, expanding economies are likely to change diets, especially in developing countries. As a result, the long-term projections expand world trade in feed grains and increase exports from the U.S.
Livestock products to increase long term, boosting feed grain use. Projections include adjustments in the global livestock sector for the first several years in response to high grain and soybean meal prices in 2007 and 2008 followed by weak meat demand caused by the global economic recession. With meat producer returns squeezed, production incentives fell, leading to declines in total U.S. meat and poultry production through 2011. These production adjustments combine with strengthening meat exports to reduce U.S. per capita consumption through 2012. The result is lower production at higher prices, which improves net returns and provides economic incentives for moderate expansion in the sector later in the projection period.
Distillers' grains, a coproduct of dry-mill ethanol production, can be used in livestock rations, partially substituting for corn and sometimes for soybean meal. However, distillers' grains can more easily be used by ruminants (such as cattle) than by monogastric animals (such as hogs and chickens). Beef cattle feedlots located close to ethanol plants are best situated to benefit from rising supplies of distillers' grains. Cattle feeders can use the wet form of distillers' grains, thereby reducing their costs and raising the feed value of the distillers' grains.
Higher grain prices and reduced demand push cattle inventories down through the start of 2011 and result in U.S. beef production declines in 2009-12. Beef production then rises in the remainder of the projection period as returns improve and herds are rebuilt. The total cattle inventory drops below 92 million head before expanding to about 94.5 million at the end of the projection period. Rising slaughter weights also contribute to a moderate expansion of beef production beyond 2012. Continued high feed costs are expected to keep stocker cattle on pasture to heavier weights before entering feedlots.
Pork production in 2010 is expected to be down 2.7 percent from 2009 and to continue to decrease through 2011 in response to high feed prices. Moderate growth is expected in late 2011 and throughout the remainder of the projection period as higher hog prices improve returns. The greatest gains are forecast for 2014 and 2015 at 1.6 percent per year. The eventual increase in hog numbers will necessitate use of more feed grains, primarily corn.
Due partly to higher feed conversion rates and a shorter production process, the poultry sector has adjusted faster than red meats to the combination of higher feed costs and reduced demand. As a result, poultry production is projected to resume growth in 2010. As producer returns improve, production strengthens further. Starting in 2011, broiler production will increase to 2.0-percent annual growth in 2014 and level out at 1.9 percent growth by the end of the projections. As broiler production expands, feed needs of the broiler industry are expected to grow over the period.
Feed needs for turkey production are expected to rise as increases in turkey production peak in 2012 at 1.8 percent then slow to 1.5 percent and rise back to 1.8 percent by the end of the period. Growth in demand for turkey products is supported by rising per capita consumption of all meat products over the longer term. After no growth in 2009, egg production is projected to grow slightly each year peaking at 1.1 percent in 2013-2016 and decreasing to 1.0 percent per year for the remainder of the projection period.
Milk production is projected to continue rising over the projection period, although at a slower pace than in the past several years. An upward trend in output per cow continues, but the 4-year increase in milk cow numbers from 2004-2008 ended in 2009. Dairy cow numbers are expected to continue their long-term decline during the next 10 years. As the transition from small, diversified farms to large, specialized dairy farms matures, cow numbers will decline at lower rates and level off toward the end of the projection period. Production gains are the result of increased production per cow, due to continued technological and genetic development in the industry. Over the long run, feed needs are expected to increase.
U.S. feed grain exports increase tightening stocks. By 2019/20, feed grain exports are expected to grow 16 percent from 58.8 million metric tons in 2010/11, supporting growth in global meat production. However, U.S. exports are expected to remain below the high levels attained in 2007/08 during the next 10 years. Faster growth in global imports is expected, and U.S. feed grain exports are expected to encounter only moderately higher competition throughout the period.
U.S. ending stocks of feed grains are projected to decrease slowly after 2011/12 then turn higher in 2017/18, reaching 41.7 million metric tons by the end of the projection period just below where they started in 2010/11. Productivity is projected to account for most of the production growth throughout the decade.
Increasing meat production boosts feed and residual use. Feed and residual use of corn bottoms out in the initial years because of reduced meat production and increased feeding of distillers grains, a coproduct of dry mill ethanol production. Feed use rises through the rest of the projections as meat production picks up and growth in availability of distillers grains slows with the reduced pace of corn-based ethanol expansion.
Despite its growth, direct feed use of corn is not as strong as it would be without coproducts from ethanol production. Ethanol wet mills produce corn gluten feed, corn gluten meal, and corn oil as coproducts, while dry mills produce distillers' dried grains (DDG). The projections assume that each 56-pound bushel of corn that goes into dry-mill ethanol production results in 17.5 pounds of DDG as a coproduct.
Ethanol use to grow more slowly than recent years. Corn used for producing fuel alcohol (i.e., ethanol) has grown sharply since the early 1980s. Production of corn-based ethanol has grown from less than 3 billion gallons in 2003 to nearly 11 billion gallons in 2009. As a result, fuel alcohol has become the largest component of the food, seed, and industrial (FSI) use category. Fuel alcohol production has overtaken exports in recent years as the second-largest use category for corn behind feed and residual use. Slower annual growth for corn‑based ethanol is projected, however, reflecting only moderate growth in overall gasoline consumption in the United States, the limits of market penetration of ethanol into the fuel market imposed by the blend wall, and the small size of the E85 market. By the end of the projection period, ethanol production accounts for 34-35 percent of corn use, which is up slightly from 32.4 percent in 2009/10. Additionally, corn-based ethanol production exceeds 9 percent of annual gasoline consumption.
Food, seed, and industrial use of corn (besides that for ethanol production) rises less than the rate of population increase. Gains in most food uses of corn are projected to be smaller than increases in population. Consumer dietary concerns and other changes in tastes and preferences limit increases in the combined use of corn for high-fructose corn syrup and glucose and dextrose to less than half the rate of population gain. Many food makers are changing their product recipes by switching out high-fructose corn syrup ingredients for sugar or other sugar derivatives. Starch use rebounds as the U.S. economy recovers, and continues to rise more than population gains through the rest of the projections. Increases in the manufacturing and construction sectors will bring greater demand for starch-based products. Starch is used in papermaking, adhesives, and wall board manufacturing.
U.S. corn exports rise in response to stronger global demand for feed grains to support growth in meat production. Nonetheless, the U.S. share of global corn trade drops below 60 percent by the end of the projections.
Ending stocks of corn are expected to rise in the initial years of the projections then gradually decline to 1.49 billion bushels by the end of the period. Corn prices initially fall from the high level of 2008/09 as increases in ethanol production slow and corn stocks build somewhat. 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. In the longer run, corn prices remain higher than their pre-2006 levels due to continued demand for corn to produce ethanol as well as to continued growth in feed use and exports.
Sorghumexports increase during the projections as a result of lower prices in comparison to corn, with exports into Mexico rising as its livestock feeding needs increase. With increased U.S. sorghum exports, decreased feed and residual use is projected.
Ethanol is the primary FSI category for sorghum. Sorghum use for ethanol production is estimated at 19.5 percent of total utilization for 2008/09. Corn is the dominant starch source used in most U.S. ethanol plants, but sorghum is the primary grain used in some plants, particularly in the Southern and Central Plains. Some ethanol plants use either corn or sorghum or a mix of both grains, depending on price and availability. Sorghum used for ethanol is expected to remain steady throughout the projection period.
Forward pricing opportunities are more limited for sorghum because there is no sorghum futures market. Sorghum producers sell most of their production after harvest on the cash market. Sorghum prices received by farmers are expected to average 93 percent of the price of corn by the end of the projection period as sorghum prices are supported by rising exports.
Barley. Food, seed, and industrial use increases slightly in the projection period, with U.S. malt barley production expected to remain steady. Similarly, barley feed and residual use is expected to remain steady during the decade. Barley exports are projected to be 15 million bushels per year, as shipments of feed barley to the Middle East continue. Imports are expected to remain unchanged at 25 million bushels because of continued malting barley imports from Canada. In the United States, the largest share of barley is used to make malted beverages-primarily beer, but also some malt whiskey and malted milk-and malt for use in cereals. Barley that is less suitable for malt is used as feed. In addition, some barley is grown specifically for feeding. Much of the malting barley is grown on contract, and malting barley usually sells at a premium to feed barley. The average barley price is projected to decline from recent highs, reaching $3.95 per bushel by the end of the period.
Oats. Total use increases to 197 million bushels due to higher food, seed, and industrial use during the projection period. Imports are projected at 100 million bushels, representing 38 percent of supply in 2010/11. Feed and residual use ranges from 110 million to 115 million bushels. Ending stocks are expected to decrease over the period. Oat prices decrease over the decade, and imports supplement domestic supplies.
Projections for World Trade of Feed Grains
USDA's long-term projections also provide estimates for global trends in feed grain trade ( coarse grains, corn, sorghum, and barley Excel icon (16x16) ).
World grain prices rose sharply between 2006 and 2008 as global grain stocks declined significantly. In turn, these higher prices stimulated grain production in 2008 and 2009. As a result, stocks rebounded and prices dropped sharply from their 2008 peaks. Grain prices are still above pre-2006 levels and are not projected to decline to levels prevailing during the last three decades.
Expanding consumption to boost corn trade. Increased global demand for meat is expected to boost world consumption of feed grains. However, production constraints, especially limited area, will keep many traditional importing countries from expanding production as rapidly as use, boosting global coarse grains trade from 114.5 million metric tons in 2010/11 to 139.2 million in 2019/20. Commercialization of livestock feeding has been a driving force behind the growing dominance of corn in international feed grain markets. Most of the growth is in corn trade, up from 87.7 million metric tons in 2010/11 to 105.9 million in 2019/20. However, large supplies of feed quality wheat compete with U.S. corn exports at the beginning of the projection period. The U.S. share of corn trade is expected to decrease from 62.3 percent in 2010/11 to 58.1 percent by the end of the projection period as exports rise from Argentina, the EU, and the FSU.
As recently as 2002/03, China was the second largest corn exporter. However, the country is expected to limit exports and gradually increase imports of corn, becoming a small net importer of 4 million tons by the end of the projection period. China will remain a significant player in the future of global corn trade. Meat demand in China is expected to rise because of strong income growth. Gains in meat production are expected to increase corn feed use. Other industrial uses for corn in China are expected to grow at a slower rate than corn used for feed. While growth in corn yield is projected to rise less than 1 percent per year, area increases will be limited by higher returns from other land uses. Nonetheless, northeast China is expected to remain a surplus corn-producing region, and because it is so close to South Korea-one of the world's largest corn importers-China is expected to continue exporting corn. However, southern China is expected to be an increasingly corn-deficient region, which will boost imports during the next decade.
Argentina, with a small domestic market, remains the world's second-largest corn exporter. However, due to higher export taxes on grains, Argentina shifts some cropland from corn to soybean production, and corn exports increase slowly. Argentina and other South American countries increase corn exports to Chile to support its expanding pork production and exports. Brazil is expected to remain a significant net exporter of corn because of attractive world prices. In past years, Brazil has targeted the EU market for non-genetically modified grain; however, as Brazil legalized planting of genetically modified corn varieties, the EU reduced imports. Also, strong growth in domestic demand from its livestock and poultry sectors and in the profitability of growing soybeans will limit corn exports. It takes government intervention and transport subsidies to sustain Brazil's corn exports. Budget constraints are expected to limit Brazil's market share.
Ukraine replaces Brazil as the world's third largest corn exporter, as FSU corn exports rise to 8.4 million tons by 2019/20. Favorable resource endowments, increasing economic openness, wider use of hybrid seed, and greater investment in their agricultural sectors stimulate corn production. Growing conditions in this northern area make high yielding short-seasoned varieties of corn key to production. However, efforts to reduce meat imports and increase meat production keep exports from growing more rapidly. Exports from Hungary, Romania, and Bulgaria are also projected to climb steadily, as theses countries contribute grain surplus exports through the Black Sea. The European Union (EU) becomes a more competitive corn exporter because of increases in area and yields, which enable it to more than double shipments during the projection period.
Steady long run growth in the livestock sectors of developing countries in Latin America, Asia, North Africa, and the Middle East are projected to account for much of the growth in world coarse grain imports during the next decade. Coarse grain imports by Africa and the Middle East did not decline during the recent global economic slowdown. The region accounts for more than 40 percent of growth in world trade through 2019 as rising populations and increasing incomes sustain strong demand growth for domestically produced animal products. In Egypt, government policy has shifted toward allowing more poultry meat imports. Still, poultry production in Egypt is projected to increase, boosting corn imports more than 20 percent to 6 million tons.
Barley trade to expand. Global barley trade is expected to expand 24 percent, from 17.9 million metric tons in 2010/11 to over 22.2 million by the end of the projection period. Demand for feed barley is expected to grow in North Africa and the Middle East, where production increases are limited by climate. The region is projected to account for 75 percent of the growth in trade during the coming decade and for 70 percent of total world imports in 2019. The amount of barley imported by Saudi Arabia, the world's largest barley importer, is projected to grow over the period, accounting for 30 percent of the growth in world barley trade. Saudi Arabia's barley imports are used primarily as feed for camels, goats, and sheep.
International demand for malting barley is boosted by strong growth in beer demand in some developing countries-notably China, the world's largest malting-barley importer. China's beer demand is rising steadily because of growth in incomes and population. Expansion in China's brewing capacity is aided by foreign investment. China's malting barley production is increasing, but imports also rise during the projection period. Australia and Canada are China's main sources of malting barley imports.
EU barley exports are projected to increase 46 percent to 3.8 million metric tons over the projection period, as the end of intervention makes EU prices competitive. Barley exports by Australia and Ukraine are expected to increase, with Ukraine remaining the largest exporter and accounting for 27 percent of barley trade. Barley exports by Canada are expected to remain relatively flat. U.S. barley trade is expected to remain small.
Global sorghum trade to increase. World sorghum trade, which averaged nearly 6.7 million metric tons during the last decade, declines to 6 million metric tons in the early years of the projection period before rising to 8.3 million metric tons at the end of the period. The United States is the largest exporter of sorghum, accounting for nearly 80 percent of world trade since 2000, driven mostly by U.S. exports to Mexico and Japan. In the last two years, both U.S. exports, and the U.S. share of world trade have declined. Projected U.S. exports gradually recover but remain below historical highs. The U.S. share of world trade also recovers, but remains well below levels of the last decade.
Mexico's sorghum imports are projected to increase to 4.3 million metric tons by 2019/20. At this level, Mexico once again accounts for more than 50 percent of world sorghum imports. Japan's sorghum imports have trended slowly downward during the past decade but are projected to level out around 1.5 million tons in the coming years in order to maintain diversity and stability in its feed grain supplies.
Sorghum exports by Argentina, the world's second largest exporter, and especially by Australia, have risen sharply over the last several years but are expected to level off through the end of the projection period. Both are expected to continue being prominent exporters during the coming decade. Both countries are also expected to retain a larger share of world trade than during the previous decade.
Other coarse-grain trade is expected to grow very slowly over the projection period, with a small increase in oats trade nearly offset by reduced rye trade. EU policy is expected to maintain oat production and exports, but a drop in EU rye production and exports is expected as a result of reforms to EU's Common Agricultural Policy that ended rye intervention prices. Canada will remain the major supplier of oats to the U.S. market.