USDA increases corn ending stocks on less use for ethanol

By Susanne Retka Schill | June 10, 2015

In the June supply/demand report, USDA increased corn beginning stocks for the 2015-‘16 crop year based on new projections that lower the corn use for ethanol production. The June 10 supply/demand report left projected corn production for 2015-‘16 unchanged at 13.63 billion bushels and raised corn beginning stocks for 2015-‘16 “due to a 25-million-bushel reduction in 2014-‘15 forecast corn use in ethanol production based on data reported in Grain Crushing and Co-Products Production report through  April.”

The reduction in corn used for ethanol is most likely not reflecting a drop in ethanol production, however. Shortly after the first crush report was released in February, USDA commented that the new survey-based corn crush report was showing the ethanol conversion rate is higher than assumed. The agency had previously estimated corn use for ethanol based on calculations involving the assumed conversion rate and the Energy Information Administration’s ethanol production reports. The most recent EIA short-term outlook is predicting ethanol production will remain near current levels, averaging 936,000 barrels per day in 2015, 1,000 barrels per day higher than 2014. The USDA’s estimate of 5.2 billion bushels for ethanol production remains unchanged from the previous month’s report, up from 5.175 estimated for the 2014-‘15 crop year and 5.134 for 2013-‘14.

Corn ending stocks for 2015-‘16 are now projected at 1.77 billion bushels, up 25 million bushels, the same as for beginning stocks. The range for the 2015/16 season-average farm price is unchanged at $3.20 to $3.80 per bushel, compared with the 2014-‘15 range of $3.55 to $3.75 per bushel, which is also unchanged this month.

Foreign coarse grain supplies for 2015-‘16 are projected up 2.8 million tons, mostly reflecting larger 2014-‘15 production and carryout for Brazil.

Brazil corn production for 2014-‘15 is raised 3 million tons to a near-record 81 million tons with higher area reported for the second crop that will be harvested over the coming months. Yields are also projected higher reflecting extended rainfall through May, well beyond the normal end of the rainy season in central west Brazil.

Global corn production for 2015-‘16 is projected down 500,000 tons with reductions for Zambia, Nepal, Zimbabwe and EU more than offsetting a 1-million-ton increase for Russia. Russia 2015-‘16 corn production is raised 1 million tons on a higher area and yield. Planting progress data indicate a year-to-year increase in seeded area, which is also reflected in higher year-to-year imports of agricultural chemicals. While hybrid seed imports have been reported down from last year, these imports have also been stronger than expected as corn remained a favorable alternative compared with other spring crops.

Global 2015-‘16 coarse grain consumption is raised slightly supported by higher expected corn trade. Foreign corn exports are raised for 2015-‘

16 with a 1-million-ton increase for Russia as higher production makes the country’s corn supplies very competitive in the Middle East and

North Africa. Corn exports are raised 300,000 tons for Zambia, despite this month’s lowered production outlook, as demand for imported corn, especially white corn, soars in the region with crop shortfalls in Zimbabwe and South Africa.

Global corn ending stocks for 2015-‘16 are projected 3.3 million tons higher mostly on the higher stocks expected for Brazil. Small reductions in corn stocks for Russia and EU offset most of the increase projected this month for the United States.