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But where But is the second most produced crop in the world, and it’s more than just a staple in our diet.
From the sweetener in our coffees to the ethanol that powers our vehicles, corn has hundreds of uses. Therefore, high corn prices have a domino effect that can affect many supply chains and possibly even increase the cost of our weekly groceries, especially if they include tortilla chips.
Uses of corn in the United States
Although corn on the cob is quite popular, not all corn is sweet. There are five main types of corn grown in the world, and each one differs in taste and uses. Of these, yellow dent corn or field corn accounts for the majority of US commercial production.
Here is a breakdown of corn use in the United States in 2020:
|Segment||Bushels used (millions)||% of use (2020)|
|Ethanol (animal feed)||1,075||7.4%|
|Cereals / others||215||1.5%|
|Drinks / Alcohol||170||1.2%|
Corn represents more than 96% the use and production of feed grains in the United States. As a result, animal feed accounts for nearly 40% of the country’s corn consumption. This is because corn is a rich source of carbohydrates and, in combination with soy protein, it can be an effective diet for livestock.
In the United States, federal mandates require vehicles to use a mixture of gasoline and biofuels like ethanol—94% of which is produced from the starch of the corn kernel. Therefore, a large portion of American corn is destined for the production of ethanol.
Interestingly, the ethanol distillation process produces a co-product known as Dried Distillery Grain, which serves as a low-cost, high-protein feed for livestock. On average, the US ethanol industry product about 90,000 tons of distillers’ grains every week.
Animal feed and ethanol production collectively represent approximately 73% of the use of corn in the United States. Other uses of corn include the production of sweeteners, starch, grains, and alcoholic beverages like whiskey.
Breakdown of U.S. corn exports
The United States is the world’s largest producer and exporter of corn, accounting for around 36% of exports in 2020.
Until 2019, the majority of US corn exports went to Mexico, Japan and Colombia. China was not among the top 10 destinations, but that changed in 2020.
Between January 2020 and 2021, US corn exports to China increased exponentially, reaching a record high in December. China’s massive import appetite is due to a shortage of domestic supplies amid growing demand for feed from its herd of recovering pigs, which was hit by African swine fever in 2018.
As a result, China became the third largest importer of US corn in 2020 after Mexico and Brazil. In addition, the United States Department of Agriculture projects that China’s corn imports in 2021 will be much higher than 2020 levels, and the majority of these will come from the United States.
Soaring corn prices
Besides a drought-induced drop in yields in Brazil, growing demand from China has pushed corn prices to their highest level in the past eight years.
Since the start of 2020, corn prices have increased 68% and are around $ 6.50 a bushel as of May 19.
Rising corn prices will likely affect several industries and could translate into higher prices for our grocery products, including grains, tacos and corn syrups. In addition, it could also drive up the price of gas due to its key role in the production of ethanol.
Corn, in a bushel
In a world where products like corn are often taken for granted, it’s important to think about its value.
A single bushel of corn can provide 33 pounds of sweetener, 31.5 pounds of starch, or 22.4 pounds of polymers. It is also sufficient to produce about 3 gallons of ethanol and 16 pounds of dried distillers’ grain for animal feed.
Corn’s uses extend far beyond the cob, and just like other raw materials, it supports many industries that make modern life possible.