Is the U.S. corn boom ending?
Feed and residual use of U.S. corn has gradually declined since 2007-08 (Figure 5). From a peak of over 6.1 billion bushels in 2004-05 and 2005-06, consumption declined to just over 4.5 billion bushels in 2011-12. The primary reason for the decline was the rapid substitution of distillers grain (a co-product of ethanol production) for whole corn in livestock feed rations. The number of livestock being fed in the U.S., as measured by the USDA's estimate of grain consuming animal units, has been relatively constant since 2004-05 (Figure 6). The USDA projects little change in those numbers for 2013-14. The domestic market for meat and livestock products is mature. Slow population growth and stable per capita meat consumption suggests that feed consumption will also stabilize. Without growth in ethanol production and a resulting increase in production of distillers grain, corn feed consumption would be expected to also stabilize near recent levels. The potential for an increase in livestock production and a related increase in corn feeding probably lies with the potential for an increase in livestock exports. That potential is likely the highest for pork exports to China.
Marketing year exports of U.S. corn from 2004-05 through 2010-11 ranged from 1.8 to 2.4 billion bushels per year, but were not trending higher or lower (Figure 7). However, exports declined to 1.543 billion bushels in 2011-12 and are projected at a 42-year low of 700 million bushels in 2012-13. Some of the recent decline in corn exports has been offset by larger exports of corn in processed form (ethanol, distillers grains, livestock), but that increase is captured in the other categories of corn use. The recent decline in exports of U.S. corn is likely associated with high corn prices that have stimulated production in the rest of the world and also allowed other exporters to sell at prices below the cost of U.S. corn. As indicated in Figure 8, foreign corn production increased from about 16 billion bushels in 2004-05 to 23 billion bushels in 2012-13 (an increase of 44 percent) and foreign exports grew from about 1.2 billion to near 3 billion bushels (an increase of 150 percent). The larger exports were mainly from Brazil and the Ukraine. Lower corn prices may slow the increase in foreign corn production and also allow U.S. corn to be more competitively priced. However, the production capacity that has been put in place in the rest of the world will likely persist, making it difficult for the U.S. to rebuild exports. Larger U.S. exports than are occurring this year are expected beginning in 2013-14, but returning to annual sales of two billion bushels will likely require more significant growth in foreign consumption than is now being projected. Similar to livestock export prospects, growth in U.S. corn exports may be dependent on Chinese demand.