I recently saw a headline that didn’t quite fit with my expectations. In short, the headline was along the lines of “U.S. corn usage remains strong, only 2% below all-time records.” This prompted me to dig into the usage trends for corn, soybeans, and wheat. For this week’s post, I’ll share some observations about corn usage and how the argument could be made that corn usage has already been aggressively ratcheted lower.
Current Usage Data
Figure 1 shows U.S. corn usage since 2010. For the 2022/23 marketing years, the USDA has estimated usage at 14.57 billion bushels. This is only slightly below the 2021/22 anticipated record usage of 14.89 billion bushels. Specifically, usage for the upcoming market year is only 320 million bushels, or 2.1%, below the all-time high. If you consider, for instance, the change in usage from 2010/11 to 2012/13, you’d notice a nearly 2-billion-bushel change in usage.
Considering how high commodity prices are – and have been for the past 12+ months – data presented in this way makes the situation seem impressive.
Each year, we discuss how the upward trend in yields over time can make it difficult to meaningfully compare data over time. For the same reasons, usage data have the same problem. With bigger crops harvested each year, we’d anticipate more bushels to be used. With that, the implication of 14 or 15 billion bushels of usage would largely depend on the year that it occurs.
Just as a trendline and departures from the trendline can help us compare yields over time, the same is true with usage. And this is where the corn story gets complicated.
Figure 2 shows corn usage going back to 2000. Included is the trendline, which accounts for an impressive 87% of the variability in the data over time. Furthermore, the trendline tells us that corn usage increases by an average of 250 million bushels per year.
For 2022/23, trendline usage is 15.6 billion bushels. In other words, a different framing indicates the 2022/23 corn usage situation is that usage is 1 billion bushels below the trendline. Only in 2012 was usage further below the trendline (-1.8 billion bushels).
Although not shown, one could also measure the departure from the trendline as a percentage. For 2022/23, usage is 7% below the trendline. Usage was 6% below the trendline in 2019/20, nearly -17% in 2012/13, and -8% in 2002/03.
Wrapping It Up
We often use the “alternative headline” method to frame up situations. While the headline “U.S. corn usage just 2% below the all-time record” is true, it missed a broader point that usage has largely trended sideways in recent years. The headline “U.S. corn usage 1 billion below the trendline, the worse since 2012” could also be used.
Keep in mind that U.S. corn usage has been largely unchanged in recent years. Just a few years ago, usage of 14.8 billion bushels was half a billion bushels above the trendline (2017/18), but today it’s not nearly as impressive.
We leave it to the readers to decide if corn usage is strong or weak, especially given current commodity prices. Our goal is to simply share some additional perspectives.