“Based on weekly export inspections through August and Census Bureau export estimates through July, we estimate fourth quarter exports at 285 million bushels,” Good said. “That compares to 290 million bushels implied by USDA’s forecast of marketing year exports.”

Based on weekly estimates from the U.S. Energy Information Administration, ethanol production during the fourth quarter of the 2011-12 marketing year was about 6 percent less than in the previous year, implying corn consumption for ethanol and by-product production during the quarter of 1.193 billion bushels.

“If consumption for other processing uses was near the 331 million bushels implied by the USDA’s projection of use for the year, total processing uses of corn during the quarter were near 1.524 billion bushels,” Good said.

“If the USDA projection of year-ending old-crop inventories of 1.181 billion bushels is correct, implied feed and residual use during the quarter was between 160 and 165 million bushels. That compares to implied use of 448 million bushels last year and 495 million bushels in 2010. The implication is that at least one-third of the crop harvested before Sept. 1 was used in place of old-crop corn, mostly during the last half of August,” he said.

A second issue associated with the early corn harvest is whether respondents to the USDA’s survey will correctly report old-crop inventories. The USDA specifically asks respondents to report inventories of corn harvested in 2011 or earlier years.  

“For the most part, producers should have little difficulty differentiating between new- and old-crop stocks stored on the farm,” Good said.

“In some cases, however, commercial facilities storing corn received in late August may not be able to differentiate between old and new crop, but errors should be mostly offsetting. Reporting errors then should be the result of respondents who incorrectly report total inventories rather than old-crop inventories only,” he said.

According to Good, the Sept. 1 estimate of old-crop corn stocks can have important price implications in some years, particularly when stocks are relatively small and the new crop is also expected to be small, like this year.

This year, however, the market will have some difficulty interpreting the stocks number as it will reflect both the total magnitude of consumption during the quarter and the degree of substitution of new-crop for old-crop corn in August, without revealing the magnitude of either. Good said,

“That mystery will be at least partially solved with the Dec. 1 stocks estimate to be released in January 2013.”