October 15, 2007

USDA raises forecast for 2007/08 corn end stocks by 322 million bushels

The US Department of Agriculture (USDA) Friday (October 12) raised its forecast for corn ending stocks in the 2007-08 marketing year to 1.997 billion bushels, a 322 million-bushel increase from the government's September prediction.

The increase in carryout, the USDA said in its monthly supply and demand report, is due to "larger supplies and lower domestic consumption which more than offset an increase in projected exports."

Expected ethanol use for corn dropped as much as the forecast for exports increased.

"Corn use for ethanol in 2007-08 is lowered 100 million bushels reflecting lower indicated plant capacity utilization and lower returns for ethanol producers due to recent declines in ethanol prices and continued strength in corn prices," USDA said in the report.

This is the second month in a row that the USDA has lowered its forecast for corn consumption by the ethanol industry. The USDA reset its prediction this month at 3.2 billion bushels, down from 3.3 billion in September and 3.4 billion in August.

The US ethanol industry used 2.15 billion bushels of corn in the 2006-07 marketing year.

Domestic feed and residual use for corn will also be weaker than previously forecast, the USDA said. The new October prediction, according to the report, is for 5.7 billion bushels, a drop from the September forecast of 5.85 billion.

Another decrease in domestic usage, USDA said, came in the category of "food, seed and industrial." That forecast was lowered to 4.59 billion bushels, down from the 4.69 billion bushels that was predicted a month ago.

The prediction for US corn exports, meanwhile, was raised to 2.35 billion bushels this month, up 100 million bushels from 2.25 billion in September.

"Exports are projected 100 million bushels higher on tighter foreign grain supplies and strong export sales," the USDA said. "At the projected 2.35 billion bushels, 2007-08 exports would be the highest in 18 years."