Corn use for ethanol offsets lower USDA export forecast

By Susanne Retka Schill | February 09, 2016

A 25 million bushel increase in projected corn use for ethanol in USDA’s February supply-demand report is partially offsetting a 50 million bushel lower export forecast. Corn imports are projected 10 million bushels higher based on recent imports of corn into southeastern U.S. feed markets and corn exports are projected 50 million bushels lower as larger supplies of South American corn further increase competition for U.S. exports. The result is USDA is projecting feed grain ending stocks for the 2015-’16 crop year higher by 35 million bushels. USDA narrowed its projected range for season-average farm prices by 5 cents on both ends to $3.35 to $3.85 per bushel.

The increase in ethanol use projections are based on the strong pace of ethanol production during January, as indicated by weekly Energy Information Administration data and higher forecast gasoline consumption. Corn use for ethanol is now projected to reach 5.225 billion bushels, up from 5.2 billion in the January report. That compares with 5.124 billion used in the 2013-’14 marketing year (beginning Sept. 1) and the estimated 5.209 billion bushels in 2014-’15.

Global coarse grain supplies for 2015-’16 are projected 1.3 million tons higher.  Higher Brazil and Argentina corn production more than offset lower corn beginning stocks in these same countries and lower production elsewhere.  Brazil and Argentina 2015-’16 beginning stocks are lowered with higher 2014-’15 exports.  Brazil corn production for 2015-’16 is raised 2.5 million tons based on higher first-crop yields and indications that strong domestic corn prices, reflecting the devalued local currency, will increase second-crop plantings.  Argentina corn production is increased 1.4 million tons on higher area.  Argentina corn production is revised higher for 2014-’15, also on higher area.  South Africa corn production for 2015-’16 is lowered 1.0 million tons, as continued historic drought conditions further reduce crop prospects despite some stabilizing rain during the month of January.  Indonesia corn production is reduced 500,000 tons. 

Global coarse grain consumption for 2015-’16 is raised 900,000 tons with foreign consumption up 200,000 tons. The largest change this month is a 2.0-million-ton increase in China corn feed use as relative internal market prices are expected to support greater corn feeding at the expense of wheat.  Corn use is also increased for Mexico, India and Turkey.  Partially offsetting are corn feeding reductions for Brazil and Argentina. Sorghum feed use is lowered for Mexico. 

Global coarse grain imports for 2015-’16 are raised 4.3 million tons with corn imports higher for South Africa, Iran, India, Indonesia, Mexico, and Turkey.  Corn exports are raised for Brazil, Argentina, and South Africa, but lowered for the United States.  Barley exports are raised for Argentina and Kazakhstan, with higher imports for Saudi Arabia.  Global coarse grain ending stocks for 2015-’16 are slightly higher, as larger barley and rye stocks more than offset a small reduction for corn.