The US corn CIF New Orleans outright price for barges, for current-month shipment, was assessed at $3.6926/bu, $145.35/mt, on Wednesday, the lowest level since August 30, 2017, when the assessment was at $3.6550/bu.
Corn paper values have been hammered in recent weeks by dramatic cuts in ethanol production. On Wednesday, the US Energy Information Administration showed the US ethanol production fell to 570,000 b/d, the lowest level in 12 years. Ethanol production has plummeted as demand for motor gasoline and blendstocks have dried up due to the coronavirus pandemic.
Corn is the primary feedstock for ethanol production in the US and the main competitor for dried distillers grains in feed rations.
The front-month CBOT corn futures contract fell 6.75 cents on Wednesday to $3.1925/bu.
The ongoing lower demand of corn for ethanol production has been pressuring the corn cash and CBOT values, sources said.
The corn that was to be used for ethanol production in the US Midwest has been hitting the Mississippi River and New Orleans, looking for the export market. Midwest corn is reaching the New Orleans port by barges as well as by rail.
The US Department of Agriculture on April 9 dropped its estimates of corn used for ethanol production to 5.050 million bushels from 5.425 million bushels, but with the US Energy Information Agency showing a 43% drop in production in the last three weeks, traders are expecting a lower use of corn for ethanol.
In addition, a weak Brazilian real is making Brazilian corn very competitive and not helping to create export demand for the US corn.
In August 2017, the corn values were pressured by exceptional weather conditions that resulted on corn yields and production higher than expected.
Of the total estimated US corn production for 2019-20, 12.4% is projected to be exported, and US corn total exports are estimated to be 26.4% of the total corn exported in the world.
In the current marketing year (2019-20), which started September 1, corn consumption for ethanol production represented the largest single demand sector at 36.4% of total use.
