Higher gasoline prices might not be good for the travel industry, but it sure seems to be good for corn fundamentals. USDA projected U.S. old crop corn ending stocks at 50 million bushels lower in its March 11 World Agricultural Supply and Demand Estimates and Crop Production Report.
The report said that higher ethanol use is expected to more than offset a reduction in U.S. exports. Corn use for ethanol is projected 100 million bushels higher on indications of improving blender incentives and higher ethanol use.
Blender margins have become increasingly favorable since late February as gasoline prices have risen relative to those for ethanol, USDA says. A continuing recovery in weekly production of gasoline blends with ethanol is also supportive of ethanol demand.
On the downside, corn exports are projected 50 million bushels lower based on sales and shipments to date, and pressure from increased foreign supplies of corn and wheat.
World old crop corn production was raised 600,000, while global sorghum production was lowered 500,000 tons. Global corn ending stocks are projected 8 million tons higher with the largest increase for China where stocks are projected 6 million tons higher.
USDA did not change its cotton production estimate from last month, but reduced domestic mill use by 150,000 bales to 3.75 million bales. However, exports were raised 500,000 bales to 12 million bales, as recent export sales indicate a stronger U.S. share of world trade than previously projected. U.S. ending stocks were reduced 5 percent to 7.3 million bales.
USDA reduced world cotton production slightly, due mainly to reductions for China and Pakistan. World consumption was cut by 1.4 percent from last month to 111.1 million bales. World ending stocks were raised slightly to 62.5 million bales.
Rice exports for 2008-09 were lowered 4 million hundredweight to 94 million hundredweight. Rough and combined milled and brown exports (on a rough- equivalent basis) were each lowered 2 million hundredweight. All rice ending stocks are projected at 30.2 million hundredweight, 4 million above last month, but less than 1 million above 2007-08.
Global rice production is estimated at a record 441 million tons, up 2 percent from the previous year due mostly to an increase in India. World consumption is projected at a record 433.4 million tons, down 700,000 tons from last month, but up 1 percent from 2007-08.
Global rice ending stocks were raised mostly due to an increase in India. India’s ending stocks are estimated at 17 million tons, the largest stocks since 2001-02.
U.S. soybean ending stocks for 2008-09 were projected at 185 million bushels, down 25 million bushels. Soybean exports were raised 35 million bushels to 1.185 billion bushels reflecting record sales to China and reduced export competition from Argentina.
Soybean oil used for biodiesel was reduced to 2.2 billion pounds as biodiesel producers face poor margins, reduced export prospects, and strong competition from other feedstocks.
Global soybean production was reduced 900,000 tons to 223.3 million tons. Soybean production for Argentina is projected at 43 million tons, down 800,000 tones from last month due to lower harvested area. Soybean production for Brazil is projected at 57 million tons, unchanged from last month.
U.S. wheat ending stocks for 2008-09 were projected 57 million bushels higher this month. Imports were raised 10 million bushels reflecting the strong pace to date. Food use is projected 25 million bushels lower.
Global 2008-09 wheat production was projected 1.6 million tons higher this month to a record 684.4 million. Production was raised 1.4 million tons for Australia on higher harvested area and better-than-expected yields.
Projected world wheat consumption for 2008-09 was lowered 3.7 million tons, mostly reflecting lower expected feed use in Russia and reduced food use in the United States.
Global ending stocks were raised 5.9 million tons with larger stocks in Russia, the United States, Iran, and China accounting for most of the increase. At 155.9 million tons, world ending stocks are projected at a 6-year high.