Recent weak action in corn has been tied to ideas that despite very tough planting and harvesting seasons, generally favorable growing conditions in the summer resulted in still a decent crop. Production was down just slightly from the USDA’s October estimate.
Perhaps eclipsing this are ideas that, based on the current sluggish overseas sales pace, the USDA’s export projection of 1.90 billion bushels may be as much as 400 million overstated.
We should also mention that the plateauing of ethanol demand has resulted in U.S. corn food-seed-industrial (FSI) demand for the past decade growing at a mere 0.6% per year. The accompanying graphic shows the capital annualized growth rate (CAGR) of total corn FSI usage and its various subcomponents including use for high fructose corn sweetener (HFCS), other sweeteners such as glucose and dextrose, starch, ethanol, alcohol for beverages (whiskey), cereal and other food products and finally seed for four periods including 1980-2010, 1980-1999, 2000-2019 and the most recent ten year period of 2010-2019.
We have discussed the end of the big fuel ethanol boom in prior posts given poor exports, increased fuel-efficient vehicles and the falling number of miles driven. The declining usage for high fructose corn sweetener is due to consumer backlash about having such products in their diet. The drop for use in cereals is linked to concerns about processed foods such as this having too much sugar and fewer and fewer people sitting down for cereal at breakfast.
The only categories that have shown growth over the past ten years has been for glucose and dextrose and alcoholic beverages where dark liquors such as bourbon are making a real comeback, especially with the younger age consumers.