What is in this article?:
- Texas A&M Economist Mark Welch says there's still some bullishness left in the U.S. corn market.
- Worldwide per capita corn use continues to grower, more than other grains.
- There's still good incentive for U.S. growers to plant corn in 2014.
JUDGING FROM world per-capita consumption, it’s a good time to be a grain farmer
Fuel use limit has been reached
As far as fuel use, the limit has been reached, says Welch. “We made it to 5 billion bushels, and that seems to be it, given the current structure of the industry. Unless we can export ethanol or use more of it, we’ve done about all we can do for now. We just don’t consume much more ethanol than we did three years ago. There’s not a lot of growth in that industry even though there is some degree of profitability that has come back into the ethanol industry. Since March, we’ve seen profitability returning. When we lost the excise credit in December of 2011, things got a little tough.”
Looking at grain-consuming animal units, poultry, pork and beef segments are pretty evenly divided at about 30-percent each, he says. But since 2007, he adds, the numbers of livestock in terms of grain-consuming animal units have been on the decline, and producers are doing whatever they can to get more pounds out of less grain.
The U.S. has seen its export share of the world market decline, from about 70 to 80 percent share down to about 30 percent, says Welch. Soybeans have dropped to about the same amount, while wheat has gone from 50 percent of market share down to the high teens.
“There are some export opportunities out there. Looking at a 10-year period of grain consumption and production patterns, China has gone from being the No. 2 exporter of corn in the world to being the No. 5 importer. Long-term trade projections for China are for increasing imports for their textile and feed-grain sectors – they will maintain their self-sufficiency in food grain. They will not depend on us for wheat and rice. They’ll import our corn, soybeans and cotton, but they’ll take care of themselves when it comes to food.”
Thirty percent of China’s corn production is for food use, says Welch. China’s corn industry is a much larger component of its food industry than in the United States, where 13 percent of production is for food use.
“Evidently, there is a tremendous prejudice against the human consumption of genetically modified food products in China. They can’t produce it in China, but they’ll import it for their livestock. China’s acreage is as much as that in the U.S., but their yields are about half of ours.”