March 30, 2007
USDA data to show slowdown in US corn use-trade
The US Department of Agriculture (USDA) reports on quarterly grain stocks released on March 30 is expected to show a slowdown of domestic corn feed usage due to the grain's continued price spike.
The hike in corn prices to 10-year highs this winter on due to booming ethanol has reduced its demand from the poultry and livestock sectors, pressuring nearby corn futures contracts on the Chicago Board of Trade (CBOT).
The data will reflect the rate of usage over the previous three months, and can signal whether the USDA will eventually adjust its projections for annual ending stocks of each commodity.
The data is expected to highlight the US corn stockpile as CBOT corn futures has reached US$4 a bushel last month on expectations that the booming US ethanol sector will absorb more corn in the coming years, leaving less for traditional end-users such as livestock feeders and exporters.
But corn futures have since backed down, due in part to ideas that end-users have been rationing demand. CBOT May corn closed on Wednesday at $3.88-1/2 a bushel.
The USDA report will also spotlight US planting intentions for this year as prices have also been pressured by expectations of a big leap in US corn acreage in 2007.
The average trade estimate for US March 1 corn stocks among analysts was 5.994 billion bushels, down from 8.930 billion on Dec. 1 and 6.987 billion a year ago.
Smaller corn consumption could indicate that livestock producers are adding more distillers dried grains, a byproduct of ethanol production, into feed rations as a substitute.
It could also imply increased substitution of wheat into livestock feed and if the situation continues, a high corn stocks number could be paired with a low wheat stocks number.
Analysts pegged US March 1 wheat stocks at 881 million bushels, a drop from 1.315 billion on Dec. 1 and 972 million a year ago.
The average analyst estimate for US March 1 soybean stocks was 1.797 billion bushels, down from 2.697 billion on Dec. 1 but up from 1.669 billion a year ago, reflecting plentiful US soy supplies.
