What is in this article?:
- Corn market remains unsettled
- Exports started the year slowly
- This year, consumption, stocks, and price prospects are far from clear.
- There is considerable uncertainty about the pace of consumption for the rest of year in each of the major categories.
- If anything, the uncertainty outlined two weeks ago has intensified
The 2011-12 corn marketing year is approaching the halfway point.
"At this time of year," said University of Illinois agricultural economist Darrel Good, "prospects for marketing-year consumption and ending stocks are often fairly clear and the market begins to focus more on new crop prospects.
“This year, consumption, stocks, and price prospects are far from clear."
Good continued, "There is considerable uncertainty about the pace of consumption for the rest of year in each of the major categories. If anything, the uncertainty outlined two weeks ago has intensified."
The surprisingly small estimates of feed and residual use during the last half of the 2010-11 and first quarter of the 2011-12 marketing years had created expectations of a "correction" to be revealed in upcoming USDA Grain Stocks reports.
Now, the on-going year-over-year decline in broiler production, prospects for fewer numbers of cattle on feed later in the year, and the relatively mild winter weather to date point to some slowdown in feed use, whatever the pace actually is.
Good also noted that ethanol production during the first five months of the current marketing year was nearly 3 percent larger than in the same period last year.
"That rapid pace of production suggested corn used for ethanol and co-product production for the year might exceed the USDA projection of 5 billion bushels. Ethanol production in the last quarter of 2011 was likely accelerated by the impending expiration of the blenders' tax credit. Stocks of ethanol have now accumulated and prices have declined sharply from the record high levels of late 2011," he said.
Margins for ethanol producers have also declined sharply as the result of lower ethanol prices and the recent rebound in corn prices.
Combined with the rapidly approaching domestic "blend wall" and the uncertainty of ethanol exports, prospects for ethanol production in the last half of the marketing year have become less clear, according to Good.