A 75-million-bushel increase in forecast 2014/15 corn use for ethanol boosts expected supplies of distillers’ grains reducing the outlook for feed and residual use and leaves ending stocks 50 million bushels lower this month. There are no changes to supplies this month. Exports and other food, seed, and industrial categories were also unchanged. Higher reported cattle inventories increase grain consuming animal units. The midpoint of the projected range for the corn price received by farmers is unchanged at $3.65 per bushel. Surging sorghum exports to China lift the 2014/15 export projection to 300 million bushels, the highest level since 1989/90. Exports are projected to utilize fully 64 percent of available sorghum in the current marketing year.

World coarse grain production and beginning stocks boost 2014/15 supplies this month, but increased projected use leaves forecast ending stocks little changed. Corn trade for 2014/15 is increased mostly due to larger exports for Argentina and Ukraine.

Feed and residual use declines

On a September-August marketing year basis for 2014/15, U.S. feed and residual use for the four feed grains (corn, sorghum, barley, and oats) plus wheat is projected at 142.8 million metric tons, down 1.0 million from last month due to lower corn, sorghum, and barley feeding while oats and wheat held steady. This is an 8.3- million-ton gain over the 2013/14 estimate of 134.5 million. Corn is expected to account for 93 percent of feed and residual use, the same as last month and down slightly from 95 percent last year. This month’s 2014/15 feed and residual use projection for corn is reduced as increased use for ethanol boosts available supplies of distillers’ grains for feeding. Sorghum feed and residual is reduced as supplies are being exported to meet strong demand from China.

Grain-consuming animal units up on higher cattle inventory

The projected index of grain-consuming animal units (GCAU) in 2014/15 is 92.9 million units, 1.8 million above last month and 1.9 million above last season’s revised 90.9 million. Feed and residual per GCAU is estimated at 1.54 tons, up from 1.48 tons in 2013/14. USDA’s National Agricultural Statistics Service (NASS) Cattle report, released January 30, revised January 1, 2014, cattle and calves and cattle on feed inventories upward and released even higher numbers for January 1, 2015. For the major index components, GCAUs are increased for cattle on feed and other cattle as inventory numbers were revised upward for 2013/14 and increased for 2014/15. Poultry is also increased, and hogs are unchanged.

Supply side of the corn balance sheet unchanged from last month

U.S. corn supplies are unchanged from last month’s projection. With 83.1 million acres estimated as harvested for grain and yield estimated at 171.0 bushels per acre, production is pegged at a record 14,216 million bushels. Beginning stocks of 1,232 million bushels and imports of 25 million put supplies at a historic high of 15,472 million.

Surge in ethanol production boosts food, seed, and industrial use, trims feed and residual and carryout

Total projected corn disappearance for 2014/15 is forecast at 13,645 million bushels; 50 million over last month’s forecast. Feed and residual use is projected 25 million bushels lower at 5,250 million, and exports are unchanged at 1,750 million bushels. Food, seed, and industrial use (FSI) is raised to 6,645 million bushels on higher corn use for ethanol.

The pace of ethanol production quickened during December and January, based on Energy Information Administration weekly data, with estimated corn used for ethanol production exceeding 465 million bushels both months. Corn used for ethanol received an additional boost as shipments of sorghum to China pulled most available sorghum away from ethanol plants to export channels.
As a result, projected corn use for ethanol for 2014/15 is raised 75 million bushels to 5,250 million (equal to feed and residual use), 116 million over the 2013/14 estimate.
Projected corn feed and residual use is reduced 25 million bushels for 2014/15 as corn grain use for feeding is expected to be displaced by increased supplies of distillers’ grains as a result of higher ethanol production. With projected exports unchanged, the 50-million-bushel gain in total disappearance reduces projected carryout 50 million bushels to 1,827 million bushels, 596 million greater than 2013/14.

Corn price forecast unchanged

The season-average corn farm price forecast for 2014/15 is narrowed 5 cents on both the low and high end to $3.40 and $3.90 per bushel, respectively, and the midpoint is unchanged at $3.65 per bushel.