New Crop Corn Supply/Usage Balance Comments – 04/20/2023

The US new crop corn carryout will increase modestly assuming currently published USDA forecasts. The March planting intention survey forecast 2023 corn planted area at 92 million acres compared to 89 million acres in 2022. The March area forecast would result in a 15.1 billion bushel US corn crop assuming USDA’s trendline yield forecast.

USDA’s benchmark projections put 2023/2024 US corn usage at 14.75 billion bushels leaving a 300+ million bushel increase in 2024 US corn carryout stocks. The USDA’s new crop usage includes … 

… 5.7 billion bushels feed usage which is 3% larger than the recent 5-year average. but about in line with the current outlook for growth in livestock production during the 2023/2024 crop year. Feed usage is a residual calculation and somewhat dependent on the size of the corn crop. Feed/residual usage would likely fall short of USDA’s trendline forecast if the 2023 corn crop was much smaller than the current March intentions – trend line yield projection.

… Food. Seed and industrial (FSI) use at 6.8 billion bushels which is a 3% increase from the five year average. Fuel use comprises the bulk of the FSI category. USDA has assumed a minor increase in corn used to produce fuel (ethanol) during the 2023/2024 crop year.

… Corn exports at  2.3 billion bushels. In recent years variation in US corn exports has been dependent on Chinese corn purchases.  A larger domestic corn crop allowed China to cut back on corn imports this season worldwide and not purchase any US corn in 2022/2023, at least not through mid April 2023. 

As is usual US Corn Belt weather will likely dominate new crop corn futures price discovery this summer with Chinese weather a secondary variable. New crop corn futures prices are trading well above levels expected this fall assuming the 2023/2024 US corn supply/usage balance as derived from currently available data. Corn market bulls should look for developments that cut at least 500 million bushels from the current trendline forecast as contained in the accompanying balance table.