Zeroing in on corn demand factors

Zeroing in on corn demand factors

WITH its November supply and demand estimates, the U.S. Department of Agriculture projected that lower corn prices would goose feed, export and ethanol demand for corn.

Total usage is expected to be up 16.6%, with increases of 92% for exports and 20% for feed and residual usage.

According to American Farm Bureau Federation economist John Anderson, those year-over-year increases are mathematically feasible but would be "unprecedented."

"Going back to the 1975-76 marketing year, the largest year-over-year change in exports was 64% in the 1994-95 marketing year," he explained. "Now, one might argue that this year's change only looks remarkable in percentage terms because it is a change from a pretty small base (just 731 million bu.), and that is certainly true."

However, even in absolute terms, Anderson argued that the huge increase in exports is noteworthy because it would mark the second-largest volume increase since 1975-76, with the 1994-95 marketing year again setting the record.

Anderson said the underlying factors certainly lend credence to such a massive hike in exports. Cheap corn and plentiful bushels mean the U.S. will be extremely competitive in a hungry global market, and overall corn exports will still be at a historically low level.

Perhaps more interesting, then, is the 20% jump in feed and residual usage. Anderson acknowledged that residual usage is, almost by definition, a tough figure to figure out.

"In either percentage or absolute volume terms, this would be the largest year-over-year increase in this category going back to at least 1975-76," he said. "Modest increases projected for broiler and pork and dairy production certainly argue for higher feed use, but probably not the sharply higher figure now projected."

Ethanol production, meanwhile, is humming right along. According to the latest data from the Energy Information Administration, ethanol production has averaged 909,000 barrels per day over the past four weeks, and production for the week ending Nov. 8 was the largest daily volume since February 2012.

Volume:85 Issue:47

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