King Corn - Part 2
 

If you recall, last week I pointed out Brazil is set to overtake the US at the number-one corn exporter in the world.

In the February WASDE, USDA projected Brazil would export a record 50mmt of corn in the current marketing year.

This edges out the the US’s recently reduced estimate of 48.9mmt by 40 million bushels, marking the first time in history any other nation has surpassed the US as the world’s largest shipper of corn (aside from the drought year in 2012).

My “all hail king corn, but the bad news is the US has officially lost its crown” comment was picked up by a well-known Chicago broker who made mention of it in his wire the next morning.

While it is great to see my stuff making the rounds, his tone was a bit condescending which doesn’t sit well with me.

I won’t bore you with the details but he pointed out that my remarks about the United States being dethroned were a bit misleading as the US has put a larger emphasis on domestic demand rather than exports in recent years.

He was correct.

Rewind a handful of decades and feed use was nearly two-thirds of US corn demand with exports accounting for the other third.

Then, enter stage left the Renewable Fuel Standard (technically put into action by the Right) as Congress legislated ethanol into the picture.

Today, feed and ethanol combined keep more than 75% of US corn demand here domestically while exports’ slice of the pie has slid to a slim 14% in 2022/23.

As far as US corn demand (or any demand goes for that matter), the government giveth and the government taketh away with the stoke of a pen.

Cough cough, ethanol.

This will stay top of mind as we are entering the next chapter of the Renewable Fuel Standard (2023-25). First came ethanol, then renewable diesel and now the eRIN.

While we don’t even know what the rest of 2023 will bring, much less have a final rule for the next few year’s worth of RFS mandates, USDA did release revised long-term baseline projections earlier this week and notably they expect ethanol demand to stagnate and then decline by the time 2032 rolls around.

No - it isn’t a large decline (down a mere 25 million bushels annually) but it is an important one.

This serves as a reminder that US policy is pivoting away from land-intensive biofuels, paving the way for electric vehicles which shakes up US corn demand.

Ethanol is going nowhere fast while the baseline for both exports and feed use are expected to increase 27% over the next decade, taking a larger slice of America’s corn demand pie.

So, while my comment re King Corn was a bit skewed when taken out of context - now you know the rest of the story.

And speaking of know - the broker made sure to mention he has (and I quote) “NO idea who Susan David is” but I put out some “interesting comments” on occasion.

Well… if he knew Susan David he would know that she does in fact know what she is talking about and its best to not get on her bad side - and I will leave it at that.

For the full version of this week's No Bull, visit NoBullAg.Substack.com.

Thanks!