AMES, Iowa — According to the latest World Agricultural Supply and Demand Estimates (WASDE) report published by USDA July 12, 2018, World Agricultural Supply and Demand Estimates (WASDE)current marketing year (2017/18) corn ending stocks are estimated down 75 million bushels to 2.027 billion bushels. This reflects higher forecasts for corn exports and food, seed and industrial (FSI) use. Corn exports now are forecast at 2.4 billion bushels, up 100 million bushels from the previous month. Both record high shipments and outstanding sales support the new higher forecast for corn exports. Shipment declines from Brazil and Argentina’s lower production are contributing to the U.S. corn export pace. If export projection is realized, it would be the second-largest since the 2007/08 marketing year (2.437 billion bushels). However, based on the trade year, exports would be the second largest since 1979/80 (2.433 billion bushels).
Corn for Ethanol Projection Up
Based on reported use, 2017/18 corn use for ethanol was up 25 million bushels to 5.6 billion bushels. Corn use for glucose and dextrose was reduced by 5 million, leaving FSI with an estimated increase of 20 million bushels. In contrast with USDA’s first forecast for the 2017/18 marketing year, published in May 2017, corn use for ethanol has increased by 100 million bushels. At this rate, corn use for ethanol would account for a 38.3 percent share of corn production in 2017/18, up from the first estimate of 36.0 percent.
Corn for Feed Down
Meanwhile, based on disappearance data for the first three quarters of the 2017/18 marketing year published in Grain Stocks report (June 29, 2018), corn for feed and residual use was cut by 50 million bushels to 5.450 billion bushels from last month’s projection. The expected price was revised to a narrower range from $3.30 to $3.50 per bushel, with a season average midpoint price of $3.40 per bushel.
2018/19 Marketing Year
Corn Production Projection Up Month-over-Month
The July 2018 WASDE report indicates larger than anticipated 2018/19 corn production. The current forecast stands at 14.230 billion bushels, up 190 million bushels from the forecast in June. Supporting this projection is new data showing increased planted and harvested areas, which was published by USDA in the acreage report June 29, 2018. Despite the newest expanded forecast for planted and harvested area, the forecast for corn production in 2018/19 is expected to be 374 million bushels below the current marketing year estimate (14.604 billion bushels). Both planted and harvested area are down by 1.1 million acres and 0.9 million acres, respectively, from the corresponding 2017/18 estimates. In addition, the 2018/19 yield forecast is projected at 174.0 bushels/harvested acre, indicating 2.6 bushels per acre lower than last marketing year. For the yield projection, USDA uses a weather-adjusted trend assuming normal mid-May planting progress and summer growing season weather, which is estimated using the 1988-2017 period. The projection includes a downward stochastic adjustment to account for the asymmetric response of yield to July precipitation.
Corn for Ethanol Projection Down
This month’s forecast for 2018/19 U.S. corn supply increased by 115 million bushels to 16.307 billion bushels month-over-month. On the domestic disappearance side, 2018/19 corn use for ethanol was down 50 million bushels to 5.625 from the previous month, as sorghum for ethanol is forecast to increase by 50 million bushels to 100 million bushels in 2018/19. According to USDA, 40 million bushels of the increase in sorghum for ethanol come from the expected reduction in sorghum exports to China, resulting from the current policy in place. Corn for ethanol projection is up 25 million bushels from the estimate for the current marketing year. If this projection is realized, 39.5 percent of expected 2018/19 corn production would be crushed for ethanol production. In addition, corn use for glucose and dextrose was down 10 million bushels. As indicated by USDA, current pace for 2017/18 pulled volume down 5 million bushels, with this trend expected to continue into next year. With projected 2018/19 corn use for ethanol and glucose and dextrose, FSI use was reduced by 60 million bushels to 7.105 billion bushels.
Corn for Feed Up
Given the expected 190 million bushels expansion in corn production and reduced corn use for FSI for 2018/19, the July 2018 outlook for feed and residual use was up 75 million bushels to a volume of 5.425 billion bushel. If realized, corn use for feed and residual would represent 38.1 percent of projected 2018/19 corn production.
Export Projection Down Year-aver-Year
U.S corn export forecast in 2018/19 is up 125 million bushels to 2.225 billion bushels from last month as foreign demand pace for U.S. corn is expected to continue to spread into the new marketing year. However, relative to the current marketing year, the 2018/19 corn export forecast is down 7.3 percent. The USDA indicates this is the result of expected trade dynamics adjustments by trade partners as the year progresses.
Overall, total corn use in 2018/19 is forecast at 14.755 billion bushels, up 140 million bushels from the June forecast (14.615 billion bushels), but down 1 percent year-over-year (14.910 billion bushels).
The 2018/19 forecast season-average corn price ($3.80/bushel) is down 10 cents at the midpoint of the range $3.30 to $4.30 per bushel month-over-month, reflecting higher production offset with lower beginning stocks. As indicated above, 2018/19 production projection was increased from last month’s forecast, but it remains 374 million bushels short from last year’s estimate. This combined with the anticipated 266 million bushels reduction in beginning stocks results in the 2018/19 corn supply being lowered by 630 million bushels from the 2017/18 estimate (16.937 billion bushels). The smaller 2018/19 corn supply brings a projected price 0.40 cents above the current marketing year average price estimate ($3.40/bushel).
A summary of WASDE July 2018 changes to the corn balance sheet for 2017/18 and 2018/19 is shown in Figure 1 below.
Batres-Marquez, S. Patricia. 2018. “Corn Use for Ethanol in 2018/19 Updated Down, More Sorghum for Ethanol Expected.” Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. July 2018.
 Corn marketing year: September to August.
 Corn trade year (TY): puts all countries on a uniform, 12-month period for analytical comparison and in the case of corn TY goes from October to September.
— S. Patricia Batres-Marquez, Decision Innovation Solutions
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