USDA predicts modest growth in corn demand through 2023
The USDA has released new 10-year agricultural projections, predicting a moderate growth in corn demand over the next decade. According to the report, titled “USDA’s Agricultural Projections to 2023,” while corn-based ethanol production has rebounded since the 2012 decline, the pace of further expansion is slowing. However, the USDA notes that the combination of world economic growth, a continued low-value dollar, and expanding global biofuels production supports longer-run gains in world consumption and trade of crops.
The USDA indicates that U.S. corn production has rebounded since the 2012 drought, resulting in declining prices, increased domestic use and increased exports during the 2013-’14 season.
The report predicts only a small growth in corn-based ethanol production over the next 10 years. The ethanol sector is expected to continue its strong presence in the corn market, however, with 35 percent of total corn use expected to go to ethanol production through 2023.
The USDA predicts that lower corn prices and increasing meat production will result in gains in feed and residual corn use. The report specifies that a slowdown in the growth of distillers grains will also support increases in the use of grains in feed.
Food and industrial use of corn, other than for ethanol production, is expected to increase over the next decade. Exports are also expected to increase, responding to strong global demand for feed grains to support meat production. Over the projected period, the USDA predicts the U.S. will account for about 40 percent of the global corn trade.
Corn exports to China are expected to show a particularly strong increase. Mexico is also expected to be a significant importer of U.S. corn. Africa and the Middle East are also described as key growth markets for corn exports.
In the European Union, the USDA predicts the use of corn for ethanol production will increase over the next decade. The E.U. is also expected to become a larger net importer of corn and is projected to remain the world’s largest importer of biofuels.
The USDA’s long-term projections are published annually. According to the USDA, the projections are developed by interagency committees. The projects do not represent a USDA forecast, but a conditional, long-run scenario based on specific assumptions about farm policy, weather, the economy and international developments. The projections to not reflect the provisions of the 2014 Farm Bill, which was recently signed into law.
The full report can be downloaded from the USDA Economic Research Service’s website.