September 27, 2007

 

Survey: Analysts expect slight rise in US quarterly corn stocks

 

 

US quarterly corn stocks are predicted to be modestly higher in the government's report because of an expected slow down in the amount of corn used for ethanol production and as animal feed, analysts said.

 

The average estimate from 12 analysts surveyed by Dow Jones Newswires projects quarterly corn stocks as of September at 1.147 billion bushels, 5 million bushels above the ending stocks figure of 1.142 billion bushels in the September 12 of the US Department of Agriculture's (USDA) supply and demand report.

 

"There shouldn't be too many surprises at this point in the season," said Randy Mittelstaedt, analyst at R.J. O' Brien. "There is a little bit of uncertainty about the amount of corn used for ethanol in the fourth quarter, with the USDA possibly overestimating the amount used."

 

US farmers produced 10.535 billion bushels of corn in 2006 with the ethanol industry utilizing slightly over 33 percent of the total as additional ethanol plants came on line because of the demand for the gasoline additive/fuel replacement increased.

 

However, in September, the amount of corn expected to be used for ethanol in the 2006-07 crop year was trimmed by 25 million bushels by the USDA, to 2.125 billion bushels, based on indications of declining plant utilization and a slower pace of ethanol plant start-ups, the government said.

 

"The amount of corn used as animal feed was probably lower in the quarter as the high price of corn caused animal producers to use feed more efficiently trimming overall use," said Don Roose, president of US Commodities in West Des Moines, Iowa. He forecasts fourth-quarter corn stocks at 1.153 billion bushels.

 

The increased use of distillers' grains in animal feed rations has probably led to a small reduction in corn used for feed, said Bill Nelson, associate vice president at AG Edwards & Sons in St. Louis. In the previous two quarters, feed use attributable to corn has been declining and that has probably been a result of the increased use of distillers' grains, he said.

 

Feed usage in 2006/07 was projected at 5.750 billion bushels in the USDA's September supply and demand report.

 

Some analysts believe corn feed usage might be better than otherwise anticipated. A surge to new all-time high wheat prices probably led to increased feed usage for corn, said Sid Love, with Kropf and Love Consulting in Overland Park, Kansas.

 

Love estimates corn stocks at 1.112 billion bushels, among the lowest of any analyst surveyed.

 

"Utilization of corn as feed picked up in the fourth quarter as wheat prices rallied and producers substituted corn for wheat," he said.

 

In addition, exports of US corn were probably a little stronger in the period than what the USDA projected and might also trim stocks levels, Love said.

 

In September, the government raised its estimate of 2006/07 corn exports by 20 million bushels to 2.120 billion.