The Pace of Corn Consumption

Darrel Good, Ag Economist – University of Illinois

Now that the nation’s corn harvest is complete, traders have turned their full attention to the rate at which the crop is being used. Todd Gleason has more on the pace of corn consumption.

There are three primary uses for corn…

There are three primary uses for corn. These are corn for livestock feed; corn for the production of ethanol; and corn for export… in that order. That makes the smallest consumption category, corn for export, the marginal category. This is the flex category the one that drives the price of corn on the high or low end of the market.

Here is what that means. The highest and lowest prices paid for corn depend a lot on how much corn the export market consumes because it is usually vying for the last available bushels.

Tracking how much corn is being consumed, therefore, is important to understanding the direction of the market. Some of the numbers are easier to track than others. Getting a handle on corn for livestock feed is difficult. Finding the ethanol number is much easier. So far this marketing year corn consumed for ethanol production is ahead of pace to meet USDA’s projection made in November. University of Illinois Ag Economist Darrel Good says that pace could slow down by one percent and remain on target.

Good :35  USDA projects 2014 marketing year corn exports…
…to reach the USDA projection.

The current pace of corn export sales, thinks Darrel Good, is encouraging. However, he notes sales and shipments aren’t the same thing, and says shipments need to accelerate to meet USDA export projections.

This leaves the corn for feed number. It can only be tracked using the quarterly grain stocks tally. USDA surveys all the places that store corn to figure out what’s left in the bin. Subtracting that number, the export figure, and ethanol consumption leaves a quantity that has gone somewhere – mostly to fed to livestock. The first marketing year of corn stocks will be released January 12th.

Good :28  Until the likely pace of feed use of corn is mainly…
…the number of dairy cows is up about one percent.

Add to those figures the number of beef cattle in feedlots as of November 1. That’s up about half percent – and those cattle are being fed to heavier weights. Those additional pounds take more corn per pound to produce.  Hogs are being fed to heavier weights, too; up about 3 percent. The numbers so far suggest a smaller herd. That’s expected to change.

Right now Darrel Good says it all means the 25 cent trading range for corn is not likely to change until USDA updates the Crop Production report January 12th, along with releasing the first quarterly stocks report.