Now, the devastating earthquake and tsunami in Japan may challenge the Japanese and world economies, pointing to the possibility of a further slowdown in global demand growth.

The second perspective of corn demand comes from the flow of information relative to the pace of consumption. During the first half of the 2010-11 marketing year, ethanol production, and presumably the amount of corn used for ethanol production, was 15 percent larger than during the same period last year. Last year, however, ethanol production was relatively small during the first half of the corn marketing year and accelerated rapidly in the last half of the year.

Year-over-year increases in ethanol production will be much smaller for the last half of the 2010-11 marketing year. Still, use during that period needs to be only 2.3 percent larger than use of a year ago to reach the USDA projection of 4.95 billion bushels of corn used for ethanol production.

The pace of corn exports has also been slow enough that the USDA projection of marketing year exports of 1.95 billion bushels is not expected to be exceeded. While the pace of corn export sales accelerated during the 5 weeks ended Feb. 24, the pace of shipments remains generally slow. 

Cumulative marketing year export inspections through March 10 were about 10 million bushels less than the total of a year ago. In addition, Census Bureau estimates of corn exports through January were only 26 million bushels larger than cumulative inspections. 

Last year, Census estimates through January exceeded inspections by 63 million bushels. Like last year, exports will have to increase rapidly in the last half of the year in order to reach the USDA projection for the year. 

That pace may now be threatened by the situation in Japan, although not much is known about damage to total port capacity, transportation infrastructure, or the livestock industry. Japan is the largest importer of US corn and as of March 3, 116 million bushels of corn sales to Japan had not been shipped.

Finally, corn prices have been pushed lower by ideas that producers have already made plans for a large increase in corn acreage in 2011. Some are projecting planted acreage above the USDA expectation of 92 million acres and even above our calculation of a needed 93 million acres. These expectations of large corn acreage underscore the importance of the USDA’s March 31 Prospective Plantings report.