Source:  Rita Jane Gabbett, MEATINGPLACE.COM., 4/8/11

USDA raised its forecast of U.S. corn use for ethanol, but left corn ending stocks and its corn price forecast largely unchanged in its monthly World Supply and Demand Estimates report.

Corn used to produce ethanol is raised 50 million bushels as strong blender incentives and positive ethanol producer margins continue to encourage expanded ethanol production and use. Rising gasoline prices have pulled ethanol prices higher, helping to offset increases in corn feedstock costs for ethanol producers, the report said.

U.S. corn feed and residual use is lowered 50 million bushels as increased prospects for 2011 soft red winter wheat production and higher year-over-year corn plantings in the South reduce expected corn feed and residual disappearance during the second half of the 2010/11 corn marketing year, which ends Sept. 1.
Other 2010/11 U.S. feed grain changes this month include higher feed and residual use and higher food, seed and industrial use for sorghum which boost expected domestic usage 15 million bushels.

USDA narrowed its season-average U.S. corn price projection to $5.20 to $5.60 per bushel, compared to a range of $5.15 to $5.65 last month.

Global corn production is raised 1.2 million tons with the biggest increases for Brazil, Uganda and Paraguay. Global 2010/11 corn trade is up slightly this month with imports raised 0.9 million tons for Indonesia and 0.5 million tons for China.

Analysts thoughts
Fears that USDA would make a sharp cut to its projection for end-of-season supplies had helped drive corn futures prices to record highs earlier this week. At 675 million bushels, corn-ending stocks are already projected to be at a 15-year low. Deutsche Bank had expected a cut to 595 million bushels.

“USDA expects wheat to replace higher-priced corn in feed rations and early new-crop corn usage ahead of September 1,” Deutsche Bank analysts said in a report.

Soybeans
U.S. soybean exports for 2010/11 are projected down 10 million bushels from last month. The slower-than-expected shipment pace through March combined with increased export competition resulting from larger crops for Brazil and Paraguay leave U.S. exports projected at 1.58 billion bushels.

Although there are no changes in the U.S. soybean meal supply and demand projections, the soybean crush is reduced 5 million bushels to 1.65 billion.

The U.S. season-average soybean price range is projected at $11.25 to $11.75 per bushel, up 15 cents on the bottom and down 35 cents on the top of the range. Soybean meal prices are forecast at $340 to $360 per short ton, down 10 dollars on the top of the range.

Global soybean production is increased 2.6 million tons to 261 million. Soybean production for Brazil is projected at a record 72.0 million tons, up 2 million from last month as ample moisture and favorable late-season weather in the southern states improved yield prospects. Soybean production for Paraguay is projected at 8.1 million tons, up 0.6 million, also based on higher yields.

Deutsche Bank analyst Christina McGlone called the report bearish for corn prices, as market analysts expected smaller corn ending stock. In a note to investors, she called the report neutral to bearish for soybean prices.

To view the report, click here. 

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