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.
3:10
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.
…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.
…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.
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.