Fundamentally Speaking

Record First Half 2013/14 US Corn Use

The last major set of USDA reports was back on January 10 and they were bullish for corn and proved instrumental in fueling what now is a three month rally.

This week’s USDA corn numbers are also friendly and this should keep the market well supported all the way into the Fourth of July weekend.

There may be setbacks here and there especially if the 2014 crop gets in the ground quickly but the combination of lower than expected stocks and less than anticipated intended acreage could pop prices another 40-50 cents.

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Clearly the most bullish number was the stocks for there was a lot of concern that the un-expectantly low December 1 stocks figure implying strong Sep-Nov feed demand was inaccurate and March 1st number would find back some of those “lost” bushels.

This apparently is not the case and as we have noted in past posts, despite the lowest U.S. cattle herd since 1951 and the PEDv virus resulting in a hog herd 3.3% less than a year ago per Friday’s quarterly hog and pig report, feed/residual usage in the Dec-Feb period was also quite strong.

This should be no surprise to the nation’s livestock, dairy, and poultry producers for corn is the cheapest ingredient around, especially compared to other energy based feeds.

Usage has been high throughout the country, accentuated in our opinion by the brutally cold temperatures this past winter.

This, along with a buoyant pace of exports even with no corn sold to China and robust ethanol demand, implies total corn use in the first half of the marketing year (Sep-Mar) at 7.788 billion bushels, up an astounding 20.2% from the year ago figure.

Both the total bushels used and the percent increase vs. the prior year are records by far as detailed in the accompanying graphic.


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