ERS: “Corn Use Projected Slightly Higher than 2020/21 Record,” Cash Prices Firm During Harvest

In its Feed Outlook report this month, the USDA’s Economic Research Service (ERS) stated that, “Total corn use for 2021/22 is projected at 14,830 million bushels. This number is slightly larger than the 2020/21 record amount of 14,818 million bushels.

“Domestic corn use is projected to total 12,330 million bushels, while exports are projected to reach 2,500 million bushels for the year.  The current corn export projection is below the 2020/21 record amount of 2,753 million bushels.”

More narrowly, The Outlook noted that, “Domestic corn use for food, seed, and industrial (FSI) use is projected at 6,680 million bushels for 2021/22.  The total FSI number includes a projected 5,250 million bushels to be used for fuel ethanol.

“Corn mill’s margins for ethanol production have been strong since the harvest season began in September.”

With respect to the price of corn, ERS explained that, “Generally, cash markets across the country have steadily strengthened since September. For example, the Central Illinois average cash price for November 2021 was $5.80 per bushel, compared with $5.35 in September 2021 and $4.22 in November 2020. High cash prices, coupled with relatively strong basis levels (the difference between futures market prices and local cash prices), indicate strong market signals for supplies to move from producers to users and off-farm storage facilities.

“It is important to keep in mind that some of these price movements may be driven by factors beyond corn market fundamentals, such as global macroeconomic inflation concerns and supply chain issues.

Nonetheless, cash-market prices have remained firm during the harvest season, which typically sees seasonal lows.

The Outlook pointed out that, “The projected season-average farm price for corn in 2021/22 is $5.45 per bushel. This number is a large increase from the 2020/21 price of $4.53 per bushel. If realized, the current projection would be the highest annual price received since 2012/13.

“Monthly prices received reported in NASS’s Agricultural Prices report show that early 2021/22 prices have been stronger than 2020/21, which was characterized by steadily increasing prices throughout the year.”