Corn consumption continues to exceed projections
Exports have averaged 32.1 million bushels per week so far this year and inspections averaged 46.2 million bushels per week for the seven weeks ended April 10. As of April 3, USDA reported that 707 million bushels of corn had been sold for export, but not yet shipped. Those sales represent almost 97% of the exports needed to reach the USDA projection. While some sales may be canceled or rolled to next year, it appears there is room for exports to exceed even the most recent USDA projection.
As usual, the most uncertainty about corn consumption centers on the feed and residual category. Uncertainty is fostered by a number of factors.
First, there is no on-going measurement of corn used in the feed and residual category. Implied use is revealed quarterly based on the USDA's quarterly Grain Stocks report.
Second, feed use of corn is influenced by the rate of feeding of other feed ingredients and the use of many of those ingredients is also not measured.
Third, there is not a strong correlation between the number of grain consuming animal units estimated by the USDA and the magnitude of feed and residual use, which implies a varying level of residual use from year to year.
In general, residual use appears to be positively correlated to crop size. For the current year, the USDA projects feed and residual use of corn at a six-year high of 5.3 billion bushels, 22.3% larger than use of last year.
Some have questioned how use can actually increase by over 20% year-over-year. However, estimated use last year was at a 24-year low and likely reflected an abnormally small residual use associated with the very small crop of 2012. The large crop of 2013 would point to much larger residual use this year. In addition, there will likely be considerably less wheat fed this summer than was fed last summer. Most importantly, implied feed and residual use during the first half of the current marketing year was at a six-year high and exceeded that of a year ago by nearly 22%.
The June 1 corn stocks estimate to be released on June 30 will reveal the level of consumption during the third quarter of the year. For now, the USDA projection of 5.3 billion bushels appears attainable.
Based on current and expected consumption rates, it appears that corn consumption during the current marketing year could exceed the most recent USDA projection. Even if higher rates are confirmed over the next four months, the magnitude of year ending stocks will remain a mystery until the September Grain Stocks report is released on Sept. 30. The magnitude of those stocks will take on a little more importance due to the projected decline in corn acreage this year and what appears will be a slow start to the planting season.
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