The USDA will be out with its December monthly crop report on Tuesday at 11 am. As the old saying goes, “big crops generally get bigger,” there is a decent chance that both corn and bean carryouts could grow slightly after the numbers are released. Why? Because our exports are lagging the original projections from the USDA of 1.925 B bu of corn exports and 2.25 B bu of bean exports. When the grain does not leave the country, its starts to stack up in the interior. The Chinese have been aggressive buyers of US beans, and we have made recent corn trades with Mexico and possibly the Chinese as well. However, the current low price of corn and beans are starting to stimulate demand, and we are getting to the time of year where Brazil can no longer be the lowest cost world supplier of corn. The second best option is the US and I expect the corn export pace to ramp up considerably next month.
One item that might offset the lagging exports is the huge quantity of corn being used for ethanol this year. For several years, the amount of corn used for ethanol production was at the 5.0 B bu level and it stayed relatively constant. However, as the world becomes more comfortable using the 15% ethanol blend in their gasoline for their cars, or burning E85 which is 85% corn ethanol, the amount of corn consumed by the ethanol industry has grown in recent years. In 2016 we used 5.224 B bu of corn for ethanol, in 2017 we used 5.439, and this year I believe it will be over 5.5 B bu when the dust settles. This increase in ethanol production will offset the lagging exports to a degree and might leave corn ending stocks unchanged. We will all find out at 11 am today what the government’s opinion is on these categories.