What is in this article?:
- No Room to Increase Corn Consumption
- Exports at 8-year low
The USDA projects that 13.245 billion bushels of U.S. corn will be consumed during the marketing year that ends on Aug. 31, 2011. That forecast is 60 million bushels below the July forecast but is 179 million bushels above the record consumption in the previous year, says University of Illinois Agricultural Economist Darrel Good.
"Corn exports during the year just ending are projected at a six-year low of 1.825 billion bushels. Domestic feed and residual use of corn is projected at only 5 billion bushels, the smallest use in 15 years," he says.
Declining feed use of corn since 2005-2006 reflects the increasing consumption of distillers’ grains and other co-products of ethanol production, he notes.
"Domestic processing use of corn during the current marketing year is expected to reach a record 6.42 billion bushels, 459 million more than consumed last year. The increase reflects an expected increase of 429 million bushels in the amount of corn used for ethanol and by-product production," he says.
Based on the current USDA projection of the magnitude of old-crop corn supplies on Sept. 1, 2011, and the projected size of the 2011 crop, corn consumption may have to be reduced by a small amount during the 2011-2012 marketing year, Good says.
Stocks of 940 million bushels, imports of 20 million bushels and production of 12.914 billion bushels provide for a 2011-2012 marketing year supply of 13.874 billion bushels. The projected supply is 311 million bushels less than the supply for the current marketing year, he says.
"Assuming that marketing year ending stocks cannot be reduced below 5% of consumption, projected supplies would limit 2011-2012 marketing year consumption to 13.213 billion bushels, leaving year-ending stocks at 661 million bushels," he says.
The actual supply of corn that will be available for use during the year ahead may differ from the current projection. The size of old-crop stocks on Sept. 1 will not be known until the USDA releases the quarterly Grain Stocks report on Sept. 30. The size of the 2011 corn crop will not be known until the USDA releases the final estimate in January 2012, says Good.
New forecasts, however, will be available in September, October and November. Historically, the October forecast has been reasonably close to the final production estimate, he adds.
"Assuming that available supplies will limit corn consumption during the year ahead, two important issues emerge. The first is: How will available supplies be allocated among the major consumption sectors? The second is: What price of corn will be needed to limit consumption to the level of available supplies?" he says.
The USDA's World Agricultural Supply and Demand Estimates (WASDE) report released on Aug. 11 projected a further decline in exports and domestic feed and residual use of corn during the year ahead. Domestic processing use is projected to increase as ethanol production continues to expand modestly, he adds.