Still, the WASDE projection represents the largest feed and residual use of corn in six years. Even with minimal wheat feeding this summer, that projection implies a large residual component of the feed and residual projection since distillers’ grain consumption this year will likely be larger than that of last year and the number of grain consuming animal units will be less than that of last year.  

There seems to be some risk that the WASDE projection is too high even though it is well below the use implied by first quarter disappearance.

The USDA reports showing a smaller than expected 2013 production estimate and smaller than expected Dec. 1 stocks allowed the corn market to re-gain the price declines that occurred in the two weeks leading up to the report. Further price increases will require additional supportive information.

One factor that will be watched closely is the EPA’s final rule making for the 2014 renewable fuels mandates. While changes in the mandates from those in the preliminary rule making might have little impact on corn consumption in 2014, any increase might set a more positive demand tone for 2015.

Another price factor that will become increasingly important is the likely magnitude of planted acreage of corn in the U.S. in 2014. The market seems to be convinced corn acreage will decline from that of 2013 as other crops, particularly soybeans, offer better profit opportunities.

Forming expectations about acreage, however, is more complicated than in most years. First, planted acreage of corn in 2013 was two million less than reported planting intentions, due at least in part to spring weather that delayed planting in many areas.

Second, the 8.3 million acres of total prevented plantings in 2013, along with the 1.6 million acre net decline in acreage in the Conservation Reserve Program and the 1.1 million acre decline in winter wheat seedings suggests that total acreage of spring planted crops will be much larger than in 2013. 

With prevented plantings near a more normal 1.5 million acres and some decline in double-cropped soybean acreage due to fewer acres of soft red winter wheat, total acreage of spring planted crops could be 9.2 million acres larger than in 2013. 

That provides opportunity for large increases in acreage of soybeans or other crops without a significant decline in corn acreage.

Third, price relationships that should impact planting decisions continue to fluctuate so that producers receive changing signals about which crops the market prefers in 2014. Projected prices for crop revenue insurance that will be established in February will provide some basis for producers to solidify their planting intentions.

The information in last week’s USDA reports was friendly enough to halt the decline in corn prices, but does not point to a sustained rally yet this winter. The USDA’s estimate of March 1 stocks and prospective plantings to be released on March 31 will provide for a re-assessment of price prospects.