Corn Consumption Update

ifr170203–025
Corn Consumption Update
Todd Hubbs, Agricultural Economist - University of Illinois

A University of Illinois agricultural economist has been thinking about the supply and demand for corn in the United States and elsewhere. Todd Gleason files this update on how fast the big crop harvested last fall is being used.

U.S. farmers harvested more than…
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U.S. farmers harvested more than fifteen billion bushels of corn last fall. That’s a very, very big crop. It is expected there will be more than the usual amount leftover from it by the time the next crop comes in. Todd Hubbs has been thinking a lot about that and how the corn crop is used. He says exports have been strong. Factually 69% of what USDA thinks will be shipped out, has either been shipped or booked, already. And, we’re not even half-way into the marketing year.

Hubbs :28 …it is a wait-and-see scenario in my mind.

Quote Summary - So, meeting that 2.25 billion bushels USDA projected for exports looks feasible right now, but we do have the South American crop coming on to compete. So far exports look strong. I am a little concerned about some of the policy issues surrounding our export market, but at this point it is a wait-and-see scenario in my mind.

Exports are the smallest primary component of corn consumption at a projected two-and-a-quarter billion bushels. Next up is ethanol at five-billion-three-hundred-twenty-five million. Those numbers suggest this sector is booming.

Hubbs :29 …will be pretty strong in the near-term.

Quote Summary - We’ve had record levels of ethanol production at over a million barrels per day for the last two months. The ethanol industry is putting out an incredible amount of ethanol. However, over the last couple of weeks we’ve seen ethanol stocks start to build. Which means the ethanol margins are starting to deteriorate. We could see production slow down some, but I still think the consumption pace we see for ethanol will be pretty strong in the near-term.

The last and largest segment of corn consumption to explore is feed usage. USDA in January estimated five-point-six billion bushels of corn would be fed to livestock. It is a really hard number to calculate says U of I’s Todd Hubbs.

Hubbs :30 ….has been reduced by 50 million bushels.

Quote Summary - You never know how much corn is being consumed as we move through the marketing year. Still, livestock numbers are up almost across the board. The hog herd is up. Broiler placements and egg settings are up one to two percent a week. So, when we look at the livestock sector there is a lot of livestock production going on. Having said that, the initial number USDA projected at the beginning of the marketing year has been reduced by 50 million bushels.

Some of that is because of competition to use the corn in the ethanol industry and some because of substitution. There is more available sorghum to feed and it can be cheaper than corn. In the near term Todd Hubbs says the consumption pattern should keep the price of corn in Chicago mostly in its current trading range. That’s somewhere between $3.40 and $3.70 per bushel.