FarmdocDaily seeks to examine strategic consumption and production trends that underlie the current U.S. and world corn market. Some of the summary observations drawn are that U.S. consumption of corn other than via ethanol has grown by little since the late 1990s. A key strategic question emerges for the U.S. corn sector: Is it time to diversify its strategy for future growth in demand?
If growth in U.S. consumption of corn more closely resembles the growth of non-ethanol consumption from 1996-2000 through 2010-2014, then U.S. acres of corn may need to decline since the increase in consumption can be met by the annual increase in U.S. corn yields. Such a situation could put sustained downward pressure on U.S. corn prices and bears watching.
Response of U.S. consumption to lower prices will depend on what acres of corn does in the rest of the world since this directly impacts U.S. exports of corn. China appears to be committed at present to increasing acres planted to corn to try to minimize the loss of domestic food security in its feed grain market.
The large role played by yield in the recent increase in production in Argentina and, especially, Brazil suggests these South American countries have improved their competitive advantage relative to the U.S., making them even more of an export competitor, everything else assumed the same. If this assessment is correct, it would mean that the recent period of farm prosperity produced a result similar to that of the 1970 period of prosperity, except that the crop involved is corn now vs. soybeans in the 1970s.
A critical question confronting the U.S. corn market specifically and the price of corn more broadly is how does corn acreage in Russia and the Ukraine change relative to the U.S.?
The full article can be found here.