A mixed rate of corn consumption, but does it matter?
“Domestic ethanol consumption in the 2012-13 marketing year should be near that of the past two years, suggesting that corn used for ethanol production could exceed the current projection of 4.55 billion bushels,” Good said. “The magnitude of ethanol trade and the change in ethanol inventories will determine how much ethanol actually gets produced and how much corn is consumed.”
Good reported that ethanol exports during the first half of the current corn marketing year were nearly 400 million gallons less than exports of a year earlier. Imports during the first eight months of the year were 240 million gallons larger, and domestic inventories were reduced by 70 million gallons. The net impact of those differences is equivalent to a decline of about 260 million bushels in corn consumption. Unfolding ethanol production, trade, and inventory numbers will indicate where corn consumption might end up relative to the current projection, but use slightly above 4.55 billion bushels might be expected.
“Feed and residual use of corn continues to be the wild card,” Good said. “Due to the early harvest of the 2012 crop, some of the new crop was consumed before the start of the marketing year but was counted as consumption in the new year. As a result, apparent feed and residual use was quite large in the first quarter of the 2012-13 marketing year. However, the USDA’s March 1 Grain Stocks report indicated very small consumption during the second quarter of the year. Given the recent history of USDA quarterly corn stocks estimates, there is some chance that the surprisingly low rate of use in the second quarter will be followed by a surprisingly high rate of use in the third quarter. In addition, the likelihood that quantities of early harvested corn this year will be substantially less than that of a year ago suggests that fourth-quarter use will be large as well. Feed and residual use for the year could well exceed the current projection of 4.4 billion bushels, resulting in smaller year-ending stocks than the current projection of 757 million bushels.
“Although year-ending stocks may be less than currently projected, smaller stocks only matter if the size of the 2013 crop is seriously threatened,” Good said. “With improving weather conditions, current expectations are for a crop that will be large enough to meet consumption needs and lead to some buildup of stocks next year.”
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