The USDA's monthly update of prospective supply and demand for U.S. corn and soybeans released on April 8 contained some changes from the March report, but reaffirmed the tightness of supply, said University of Illinois agricultural economist Darrel Good.

"For corn, the USDA increased the projection of use for production of ethanol and byproducts by 50 million bushels, to a total of 5 billion bushels. The increase is consistent with the current pace of use and the strong economic incentive for ethanol consumption provided by high gasoline prices," he said.

The projection of feed and residual use of corn during the current marketing year was reduced by 50 million bushels, so that the projection of year-ending stocks was unchanged at 675 million bushels. At 5.15 billion bushels, feed and residual use is expected to be about equal to use of last year.

"The USDA will provide an estimate of feed and residual use during the second quarter of the marketing year in the Feed Outlook report to be released on April 12. Our calculations show use at 1.533 billion bushels, bringing consumption during the first half of the year to a total of 3.606 billion bushels, 7 percent more than used a year earlier," he said.

If the USDA projection for the year is correct, use during the last half of the year will total 1.544 billion bushels, nearly 13 percent less than use of a year ago.

The USDA expects the rapid slowdown in feed and residual use of corn to be made possible by an increase in summer wheat feeding and feeding of new-crop corn in southern states during August. Increased wheat feeding, however, may not occur unless corn prices continue to increase relative to wheat prices. Until July, corn feeding is expected to continue at a rapid pace due to increased livestock and poultry numbers and high livestock prices.

"The June Grain Stocks report will allow a calculation of feed and residual use during the third quarter of the year and an indication of how much of a slowdown will be required this summer. Calculated feed and residual use during the third quarter this year, however, cannot be directly compared to use of a year earlier," he added.

The surprisingly small June 1 stocks estimate of a year ago resulted in a likely inflated estimate of feed use in the third quarter and an underestimate of use in the fourth quarter, he added.