How many acres of corn are needed in 2013?
The amount of corn consumed next year with an average price of $5.00 depends on the strength of demand. Demand strength, in turn, is determined by a large number of factors that include world and domestic economic conditions, profitability of livestock production domestically and internationally, biofuels policy, and production of competing crops domestically and internationally. We do not attempt to analyze these factors, but draw on recent consumption levels in various categories to forecast 2013-14 marketing year consumption under the assumption of "reasonable" prices. Consumption is forecast in 4 categories: exports, feed and residual, ethanol and by-products, and other domestic processing.
U.S. corn exports have been highly variable in recent years, ranging from a record 2.437 billion bushels in 2007-08 to 1.543 billion last year. Exports have trended lower and will be very small in the current marketing year due to limited domestic supplies and completion from large Brazilian supplies. We do not anticipate a return to extremely large exports in 2013-14, but a recovery to the 1.8 billion bushel level is anticipated under the scenario of larger supplies and lower prices.
click image to zoom Domestic feed and residual use of corn has also been declining steadily following record consumption near 6.2 billion bushels in 2005-06 and 2006-07. The large increase in feeding of distillers grains has accounted for much of the decline. For the current year, use is expected to be at a 24-year low of 4.15 billion bushels due to limited supplies and record high corn prices. A leveling of distillers' grain feeding, larger corn supplies, lower corn prices, and improved livestock feeding margins are expected to result in a rebound in feed and residual use next year. Smaller cattle numbers will limit the recovery to some extent, but modest expansion in other livestock sectors is anticipated. Feed and residual use is projected at 4.8 billion bushels.
Ethanol and by-product use of corn will depend on a combination of biofuels policy, transportation fuel consumption, blending economics, ethanol imports, and the pace of implementation of 15% blends (E-15). In an earlier post we made a case for consumption in the 2013 and 2014 calendar years of 4.74 billion bushels of corn for ethanol production and that forecast is used here for the 2013-14 marketing year.
Consumption of corn for other domestic food and industrial products is relatively constant from year to year, ranging from 1.37 billion to 1.426 billion in the three years prior to the current marketing year. A forecast of 1.45 billion is used for 2013-14.