Fundamentally Speaking

Corn Fed Per Animal vs. Average Farm Price

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

U.S. corn feed/residual usage continues to recover from years of declining consumption based on drought and the ethanol inspired price surge.

After attaining an all-time high of 6.158 billion bushels back in the 2004/05 season usage in this category declined for seven of the past eight seasons cratering at 4.315 billion bushels in the 2012/13 season.

Since then a dramatic fall in corn prices with average farm prices this year more than $3.00 per bushel below levels seen that year and a rise in grain consuming animal units (GCAU) has boosted feed/residual usage back up to 5.275 billion bushels.

This is 25 million below the prior year with the USDA having cut its projection in the September WASDE linked to this year's forecasted lower crop output and higher prices.

As far as GCAU's, the latest index for the 2015/16 season is 95.7 and that is up from the 95.2 figure in August and well above the revised 93.3 for last year.

The question is how much corn is each of these GCAU's eating?

The accompanying graphic shows a scatterplot of corn fed in metric tons per grain consuming animal unit vs. the average farm price in $ per bushel.

The r squared indicates that that the average farm price explains about 87% of the variability in the amount of corn consumed per GCAU with higher prices such as seen from 2010-2013 resulting in a low amount of corn fed vs. the low prices from 1996-2006 that resulted in a high rate of corn fed per GCAU.

This year's 1.40 metric tons of corn fed per GCAU may be a little light as the graphic suggests maybe 1.45 MT/GCAU is the correct figure.

Keep in mind that in recent years of high corn prices end-users have become more resourceful with regard to the feed rations incorporating more sorghum, feed quality wheat, DDG and other byproducts to offset the lower corn inclusion rate.

(KA)

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