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 The increase has occurred in spite of high yields. With the
abundance of crops, most expect that prices will be lower; however,
a growing demand has contributed to a price increase. The demand
seems to be catching up to the supply due to stronger global demand
and use.
Sales are higher than last year at this time, though crop yields
overseas could affect sales during the first quarter of this year.
This price increase has occurred even though the corn harvest was
large, with the United States continuing to be the largest corn
producer. The USDA Economic Research Service says "Corn accounts for
more than 95 percent of total feed grain production and use."
Between the end of August and beginning of September, the market for
feed hit lows, but increased use and demand for feed crops suggest
prices will continue to be higher.
Recent reports show unchanged amounts of corn and soybeans being
produced as prices increase, so some are unsure what it means for
the future.
 On the international front, the USDA says production has increased
for both corn and soybeans in Brazil, with record high yields. The
USDA's World Agricultural Production reports for March say Brazil
corn production for 2016/17 is estimated at 91.5 million metric tons
(mmt), up 5.0 mmt from last month and up 24.5 mmt from last year.
Stocks for soybeans are also up from last month.
The same report shows 2016/2017 Brazilian soybean production at a
record 108.0 million metric tons, up 4.0 mmt from last month and up
11.5 mmt from last year. Other major production have been in India
and Canada. Exports have also increased.
Production of supplemental feed grains like wheat also saw increases
around the world. The WASDE reports says, "Internationally, global
production increased 2.8 million tons to 751.1 million, mainly due
to larger crops in Argentina and Australia more than offsetting a
slight reduction in the European Union. " Recent reports also show
consumption of wheat in feed has increased by over 3 million tons.
U.S. sorghum production and use has also increased with more exports
of Sorghum.
Another contributing factor is more livestock farming both in the
United States and internationally, which means there is more need
and overall demand for feed.
Population growth is an additional reason demand is increasing. The
USDA says food uses for corn will likely increase as the population
grows.
All these factors pinpoint increases in price for these feed
ingredients.
How prices have been affected
Various sources show season average prices for corn for 2016/2017
increased by .60 per bushel.
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A February 2017 USDA report on World Agricultural Supply and Demand
Estimates said the 2016/17 U.S. corn outlook is for increased food,
seed and industrial use and reduced stocks.
The USDA says 2016/2017 prices for soybeans increased to between
$8.70 and $10.20 per bushel, though soybean meal prices remained
same.
Overall, soybean prices are higher than this time last year. The
March 2017 USDA WASDE report shows soybean prices between $9.30 and
$9.90 per bushel. Last March, average prices were $8.95.
The USDA says the season average price of wheat for March 2017 is
around $3.85 a bushel, which is unchanged from recent months.
Meanwhile, the Chicago Board of Trade estimates the March price for
wheat at $3.75 a bushel, citing a gain of 11 cents from previous
months.
The USDA prices for sorghum in March show averages of $2.50 - $2.90
a bushel. WASDE estimates place the 2016/2017 average between $2.80
and $3.30 a bushel, a slight drop from last year's average of $3.31.
The latest reports indicate price increases for most feed
ingredients with exports accounting for many of the sales. The U.S.
Feed Grain and Equivalent Exports data shows that corn gluten
feed/meal has gone up ten percent. Sales of corn overall are up 75
percent from last year.
Changes in crops
Some economists expect shifts in the acreage of feed crops being
planted in 2017 as a response to some of the demand.
The USDA and others say soybean acreage could increase. A Farm
Futures survey in August 2016 indicated "Farmers may increase their
soybean acreage in 2017 because of the strong demand they are
seeing." The survey says if that happens, some farmers may be
planting less corn and wheat.
The survey also showed sorghum planting could pull away some of the
acreage from corn.
Demand and prices may influence these possible shifts.
Though prices will likely fluctuate, the trend towards higher prices
may keep up if demand for feed continues to grow.
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