US corn supplies on course for record high

US corn inventories could be on course to hit a 22-year high, boosted by last year's strong harvest at a time of diminished livestock herds.

Broker Linn Group believes that the USDA will, in a key crop report due on Friday (Apr 9), peg corn supplies at the end of 2009-10 at 2.15 billion bushels.

Such a figure would represent a rise of 351 million bushels on the USDA's last estimate, and put supplies at the August 31 year end at their highest since 1987-88.

The forecast follows the week after the USDA reported a surprise 11% rise in corn supplies as of the beginning of March, an increase analysts have attributed to weaker-than-expected demand by livestock farmers, who have cut back cattle, poultry and hog numbers.

Data last week showed the US hog herd falling 3% over the last year to its smallest in three years.

The US has also struggled to improve exports of corn, with weak economic growth sapping demand, and the firm dollar encouraging buyers to source crop from other destinations, such as Argentina and Brazil, which are expecting bumper harvests.

On average, analysts expect Friday's report to show American corn inventories ending 2009-10 at 1.92 billion bushels, a rise of 123 million bushels on the USDA's last estimate. Only one broker, Indiana-based Global Commodity Analytics, expects the USDA to cut its corn supplies estimate.