A balance sheet has two sides. Modestly disappointing yields only speak the supply side of the ledger. What’s happening with corn demand?

Corn demand is segmented into three categories; exports, feed demand to support livestock, dairy and poultry industries, and “food, industrial and seed.” This final catchall category can be further segmented into corn used for ethanol production and everything else.

The accompanying table looks at the change in demand for each of these segments over the past decade. Exports are projected at 2 billion bushels, virtually unchanged from last year. This figure (plus or minus 10%) describes all but two of the last 10 years. Not much happening here.

Feed demand for corn peaked at over 6 billion bushels in 2004 and 2005 but the trend since has been lower. You must have your head in the sand if you not aware of the challenging environment in hogs and dairy.

Food, industrial and seed – not including ethanol – is the smallest piece of corn demand. Most of this is used to produce corn sugar (and please don’t call it high fructose). Demand is basically flat.

Ethanol demand – now here’s a change. Usage is up nearly 600% in 10 years. Many of us are under the impression that the boom went bust two years ago. Think again. It may not be as profitable as it once was, but corn used for ethanol production in 2010 is projected to be a billion bushels higher than 2008.

I try to avoid bold predictions but, if prices remain high, actual feed and ethanol demand will be smaller than the latest projections. Five-dollar corn has a way of shrinking demand.