Trends in Corn and Soybean Usage
For data that trend upward over time, it can be hard to consider the base level or what is “normal.” The challenge comes up frequently with yields, where 2004’s record-shattering national yield of 160.3 bushels per acre is actually a high-water mark for a big U.S. crop. There are also challenges when considering corn and soybean usage trends, the topic of this week’s post.
Figure 1 shows U.S. corn usage since 2000/21 and includes the current estimate for the 2021/22 marketing year. At 15.0 billion in 2020/21 and 14.8 billion in 2021/22, recent usage has been among the highest levels observed in history. However, we must consider the upward trend over time.
U.S. corn usage has increased at an average rate of 262 million bushels per year. You will also notice the trend line explains a decent share of the variability over time (r-squared of 0.874).
Figure 2 shows the annual departure from the trend line, or what actual usage was compared to what the trend line suggests as “normal.” First, 2012 stands out. Responding to the widespread U.S. drought and very tight stocks, market prices rallied to aggressively ration corn usage. That year, usage was 1.8 billion bushels below trend. On the other hand, usage was about 1.1 billion bushels above trend in 2007/08.
In recent years, commentary has centered around strong usage. While usage is certainly improved from 2019/20 levels, corn usage has been at or below the trend line. Usage has slipped below the current estimates for 2021/22 only three other times in the last two decades.
Figure 3 shows annual usage and the trend line for soybeans. Since 2000/21, soybean usage has increased by 87 million bushels per year. Again, the trend line is more insightful than one might initially expect. Like corn, soybean usage has improved in recent years.
In 2020/21, total soybean usage was at its highest departure from the trend in the data (+300 million bushels) (Figure 4). This was an abrupt change from usage that was 200 million bushels below trend during the trade war (2019/20). To that point, the trade war’s effect can be seen in Figure 4 as total soybean usage went from above the trend line by nearly 300 million bushels to well below it.
Figure 4 also provides some insights into price rationing. While commodity prices are higher for 2021/22, current usage estimates are still above trend. Usage during the 2012 drought was rationed by more than 400 million bushels.
Wrapping it Up
Total usage is affected by many individual components. While a simple trend line is not sufficient for creating a forecast, it can help you size up the situation. For corn, recent usage has been at or below the trend line. For 2021/22, usage is expected to slip well below the trend line. The corn story for 2021/22 is a bit tricky to summarize. On the one hand, usage is strong despite recently high prices. On the other hand, usage has slipped further below the trend line than one might initially expect.
Soybean usage is also expected to slip lower in 2021/22 but will fall from very strong levels in 2020/21 and will remain above the trend line. One can also see the effects of the trade war.
Finally, remember that data for 2021/22 are early estimates and could significantly change, especially if yields come in well above or below trend. We will continue to update and review the data in the Weekly AEI blog and regular AEI Premium content.