Last week’s USDA World Ag Supply & Demand Estimates (WASDE) report projected corn stocks at the end of the current marketing year at 1.331 billion bushels. The year-end projection has declined for five consecutive months, and is now 556 million bushels smaller than the November 2013 projection, according to Darrel Good, University of Illinois ag economist.
Compared to consumption projections made in November, current projections are 100 million bushels larger for corn used for ethanol production, 350 million bushels larger for exports, and 100 million bushels larger for feed and residual use. There have been minor changes in the estimate of stocks at the beginning of the marketing year, the projection of imports, and the projection of other domestic consumption.
With about 4.5 months left in the marketing year, there is opportunity for the consumption projections to change again.
In the case of ethanol use of corn, USDA projects consumption during the current marketing year at 5.0 billion bushels. That projection is 352 million bushels, or 7.6%, larger than consumption in the previous year and equal to consumption in the 2011-12 marketing year.
The reasons for the decline in use last year were outlined in a previous newsletter. Based on monthly U.S. Energy Information Agency estimates of ethanol production for September 2013 through January 2014 and weekly estimates for February and March, ethanol production in the first seven months of the marketing year was 11.7% larger than production during the same period last year. That comparison is a little misleading since year-over-year production was down sharply in the first half of the 2012-13 marketing year and near the previous year's level in the last half.
Still, to reach the USDA projection of corn used for ethanol production this year, ethanol production during the last five months of the corn marketing year needs to be only two% larger than production in the same period last year. With a slight increase in domestic ethanol consumption, an improvement in domestic rail logistics, and a continued positive trade balance, it appears that ethanol production (and therefore corn consumption) could exceed the current projection.
Corn exports during the current marketing year are projected at 1.75 billion bushels. USDA reported cumulative export inspections through the first 31.7 weeks of the year at 991 million bushels. Official Census Bureau estimates of exports through the first six months of the year exceeded export inspection estimates by 28 million bushels. If that margin has persisted, exports during the remaining 20.4 weeks of the year will need to total 731 million bushels in order to reach the USDA projection for the year, an average of 35.8 million bushels per week.