U OF I WONDERS, DID CORN USE FALL SHORT OF PREDICTION?
Yesterday, the University of Illinois’ Darrel Good released a quick update on his predictions for 2015-16 corn and soybean use. According to his summary, it seems likely that corn use will not reach the level USDA predicted, leaving larger carry out than expected. This will not help corn prices.
Following are the excerpts from his article that discuss corn use. To read the full article, click here.
The 2015-16 marketing year for corn and soybeans ended on August 31. The USDA's quarterly Grain Stocks report to be released on September 30 will reveal the magnitude of total consumption of those two crops during the year and the magnitude of stocks available for use during the 2016-17 marketing year. Based on data currently available, soybean consumption exceeded the forecast of 3.889 billion bushels contained in the USDA's August WASDE report. There is more uncertainty about the magnitude of corn consumption since feed and residual use during the final quarter of the year is never known until the September 1 stocks estimate is released.
The USDA has projected corn used for production of ethanol and co-products during the 2015-16 marketing year at 5.2 billion bushels. Based on the USDA's monthly Grain Crushings and Co-Products Production report, use during the first 11 months of the year totaled 4.748 billion bushels. To reach 5.2 billion bushels for the year, then, the crush during August needed to be 452 million bushels. Based on weekly ethanol production estimates provided by the U.S. Energy Information Agency (EIA), ethanol production during August 2016 was 1.04 percent larger than in July 2016. If the mix of feedstocks and the ethanol yield per bushel of feedstock was the same in August as in July, corn use would have totaled 460 million bushels. It appears that use for the year may have been 5.208 billion bushels, slightly larger than the USDA projection. The USDA's estimate of the August corn crush will be released on October 3rd.
The USDA has projected feed and residual use of corn during the 2015-16 marketing year at 5.2 billion bushels. Based on the quarterly Grain Stocks reports released in January, March, and June of this year, use during the first three quarters of the year totaled 4.552 billion bushels. To reach 5.2 billion bushels for the year, then, use during the last quarter needed to be 648 million bushels. That would be 110 million bushels larger than use during the same quarter last year and the largest use for the quarter in seven years. Use at that level would be somewhat surprising given the level of livestock and poultry inventories during the quarter and the widely expected increase in wheat feeding during the summer months. However, since revealed use varies substantially from quarter to quarter, use at that higher level cannot be ruled out.