It is a long way to harvest in the Midwest, and corn demand is not slowing down.
USDA reports fewer bushels of corn on hand in the United States than in any other time in the last 16 years. Ag Economist Darrel Good says the June 1 grain stocks report implied that about 920 million bushels of corn were fed to livestock in March, April and May. That figure is 60 million bushels more than last year, and more importantly, given the increased number of animals now on feed compared to summer of 2012, it also implies increased corn feeding for June, July and August.
The corn stocks number, at face value, implies that feed and residual use of corn is progressing a bit more rapidly than the USDA’s projection of 4.4. billion bushels for the year.
I think, to be limited to 4.4. billion, corn feeding the last quarter of the year, summer quarter, would have to be about equal to that of last year, and we know that last year, old crop corn feeding was down very sharply because of feeding of new crop corn. That doesn’t appear likely to happen this year in the Midwest.
So, this suggests that USDA’s projection of feed use may be about 100 million bushels too low.
If Good is correct, USDA’s supply figure will need adjustment. Such adjustment would necessarily result in a substantial drop in the old crop ending stocks number. Good says it would be down sharply from the June estimate of 769 million bushels.
The July World Agricultural Supply and Demand Estimates or WASDE report is out on July 11, and is expected to support the price of old crop corn. However considerably more uncertainty about new crop production and price prospects exists. Good says he expects the number of acres planted to corn to drop over the coming months, as USDA adjusts for the lateness of the season. But at this point, Good says the market should be concerned with yield rather than acreage.
Audio courtesy of Todd Gleason of the University of Illinois.
