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Despite USDA revision, corn stocks higher than expected

12 Sep 2011, 3.31 pm GMT

Houston, 12 September (Argus) — Ending stocks of US-produced corn were revised down by 42mn bushels, the US Department of Agriculture (USDA) said, but inventories still stood at a higher level than traders had been anticipating.

Both corn output and ethanol production forecasts were revised down, the USDA said today in its World Agricultural Supply and Demand Estimates report.

The department's September estimate for 2011-12 ending stockpiles was down to 672mn bushels, a 5.9pc decline from last month's forecast of 714mn bushels. Expectations were lowered along with a reduction in corn production as the summer's dryness and heat were reflected in the estimates, the USDA said.

That put ending stocks projections 36mn bushels higher than corn traders expected, according to the CME Group. The USDA report's mixed tone led to choppy trading today, with surprisingly subtle movements amid both September and December Cbot corn futures contracts early in the session.

Ethanol producers are expected to buy 100mn fewer bushels of corn than last month's estimate – or 5bn bushels. The decline in outlook stems from “higher expected corn prices and continued weakening in the outlook for US gasoline consumption as forecast by the Energy Information Administration,” the report said.

Dry weather led the USDA to project total output would be lower by 417mn bushels, or 3.23pc, at 12.5bn bushels. The department predicts the national average corn yield will be 4.9 bushels lower than the previous forecast at 148.1 bushels/acre, making it the lowest yield since the 2005-06 harvest.

“Despite the lower yield, production is forecast to be the third highest ever with the second highest planted area since 1944,” the department said.

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