Global Grains: Feed asserts influence in corn demand, biofuels wane

The resumption of feed demand as the main driver for corn may make consumption of corn harder to gauge, Emily French of consultancy group ConsiliAgra told delegates at the Global Grains conference in Geneva, Wednesday.

“Feed is now going to be more responsible for the growth engine for corn demand,” French told the audience, after a decade in which biofuels have been the primary driver for corn demand.

That is likely to pose challenges for those looking to estimate supply and demand balances in order to anticipate the direction prices will move in.

“There will be surprises on the demand side, it is not as transparent as ethanol,” French said, adding that weekly data published by agencies such as the Energy Information Administration made it easy to see what the US ethanol sector contributed to the overall demand picture.

Feed provides a much more price inelastic demand profile and is less transparent, French argued.

Demand from the biofuels sector has been declining in recent years, with the proportion of corn for animal feed versus energy production reaching 60% to 40% at its peak in around 2012.

Since then, biofuel demand has been waning in proportion to animal feed, with the trend set to accelerate as corn consumption grows.

ConsiliAgra anticipates corn demand to hit 2.9 million mt of corn per day, moving global demand through the one billion mt a year level in the coming years.