January 15, 2007

USDA lowers US corn production forecast; tightens stocks

US corn production will be lower and ending stocks tighter for the 2006/07 marketing year, according to the US Department of Agriculture Thursday (Jan 11) in its January world supply and demand report.

The new USDA predictions were generally expected by analysts who pointed to late-season weather problems and continued demand from the growing US ethanol industry.

The new forecast for corn ending stocks was lowered to just 752 million bushels, down from the December forecast of 935 million. Ending stocks for the 2005/06 marketing year were more than 1 billion bushels higher at 1.967 billion.

The drastic drawdown on stocks is generally attributed to the massive boom in government subsidised ethanol production.

But also pressuring a new lower production forecast is USDA's latest increase in its expectations for exports.

The USDA lowered its 2006/07 corn production forecast to 10.535 billion bushels, down from 10.745 billion a month ago. The export forecast, USDA said, is raised by 50 million bushels to 2.25 billion bushels.