What is in this article?:
• With corn producers reporting nearly 3.6 million acres of prevented planting in 2012 and with current 2014 crop prices favoring corn over soybean production in many areas, a decline in corn acreage in 2014 seems unlikely.
Strength of demand
Beyond the size of the U.S. crop, prices will be influenced by the strength of demand as reflected in the rate of consumption. The focus for the next 10 weeks will be on the pace of exports and the pace of ethanol production.
The pace of feed and residual use will not be revealed until the release of the USDA’s Dec. 1 stocks estimate in the second week of January.
Focus in the export market will likely be on the pace of sales and shipments to China. In September, the USDA forecast that China would import 275 million bushels of corn from all origins during the current marketing year. The bulk of those imports would be from the U.S.
Some expect Chinese imports to be much larger as current low prices are used to rebuild domestic reserves. As of Oct. 3, the USDA reported that 144 million bushels of U.S. corn had been sold to China for delivery during the current marketing year, 100 million bushels more than sales of a year earlier.
Only 19 million bushels had actually been exported as of Oct. 3. The pace of sales will be monitored closely, although the Chinese import strategy may be difficult to anticipate. For example, if low corn prices are expected to persist for the remainder of the year and into the 2014-15 marketing year, there would be no urgency for China to buy large quantities of corn immediately.
Prospects for U.S. exports will also be influenced by the magnitude of corn production outside the U.S. Of particular interest will be the forecasts of South American production beginning with the Nov. 8 USDA WASDE report.
U.S. ethanol consumption was fairly constant, near 13 billion gallons, from 2010 through 2012 and will be near that level again in 2013. Domestic production was also fairly constant in 2010 and 2011, but declined beginning in the summer of 2012.
The decline reflected a combination of stagnant consumption due to the E-10 blend wall, increased imports, declining exports, and a drawdown in inventories. Production began to recover in the summer of 2013.
In September, the USDA estimated corn used for ethanol production at 4.665 billion bushels during the 2012-13 marketing year and forecast use at 4.9 billion bushels during the current year. Use peaked at just over five billion bushels in 2011-12.